INTRODUCTION .....................................................................................................................................2

I.

CONCEPTUAL FRAMEWORK: TRADE FINANCING POLICIES..........................................4

1.1. An Overview of Trade Finance ....................................................................................... 4

1.2. A Framework for Understanding Trade Finance ............................................................ 5

1.3. Islamic Finance and Trade Finance............................................................................... 20

1.4. Transactional View of Trade Finance ........................................................................... 22

1.5. The Importance of Financing to Global Trade.............................................................. 24

1.6. Key Providers of Trade Finance: Private, Public and International Sectors ................. 27

1.7. Importance and Common Challenges for SMEs in Accessing Financing and Trade

Finance ................................................................................................................................ 38

1.8. Policy Considerations and Framework ......................................................................... 44

II.

GLOBAL TRENDS AND PATTERNS IN FINANCING SME EXPORTS ............................. 46

2.1. The State of Global Trade............................................................................................. 46

2.2. Selected Global Trends in Trade & Trade Financing .................................................... 46

2.3. Global Supply Chains and the Rise of Supply Chain Finance ........................................ 46

2.4. Technology in Trade and Payments ............................................................................. 48

2.5. The Bank Payment Obligation ...................................................................................... 49

2.6. SMEs and International Commerce.............................................................................. 51

2.7. IFI’s and Export Credit Agencies in Support of SMEs ................................................... 52

2.8. Risk Mitigation as a Core Element of Trade Finance .................................................... 53

2.9. Capacity: A Common Challenge in Trade Finance........................................................ 54

2.10. Islamic Trade Finance ................................................................................................. 55

2.11. Political and Policy Context around Trade Finance .................................................... 55

III.

MAIN COMMON CHALLENGES FOR THE SMEs OF THE OIC MEMBER STATES IN

TRADE FINANCING............................................................................................................................. 57

3.1. SME Access to Trade Finance: A Near-Global Challenge.............................................. 57

3.2. Current State Highlights ............................................................................................... 58

3.3. Trade Finance Today in OIC Member States ................................................................ 70

3.4. Implications for OIC Objectives and Member States ................................................... 78

IV.

CONCLUSIONS AND RECOMMENDATIONS ........................................................................ 83

4.1. Conclusions................................................................................................................... 83

4.2. Recommendations........................................................................................................ 84

V.

APPENDIX A: BAFT-IFSA PRODUCT DEFINITIONS......................................................... 91

VI.

APPENDIX B: SELECTED SOURCES AND REFERENCES ............................................... 101