Improving the SMEs Access to Trade Finance DRAFT
in the OIC Member States
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The Turkish ECAs mandate is linked directly to public policy and covers the promotion of trade
as well as the international activities of Turkish investors, with Turk Eximbank noting that it is
one of a relatively few ECAs in existence that also engages in direct lending activity in pursuit
of its objectives. Senior leaders at the ECA are said to participate in and influence the
development of policy: a notable observation, exhibiting a clear recognition of the importance
of trade finance and risk mitigation – and the relative domain expertise – in the broader
context of trade and foreign policy.
Certain ECAs, including multilateral institutions, explicitly aim to support and facilitate the
conduct of trade on the basis of Shari’ah compliant structures, and have included Islamic Trade
Finance specifically in their mandates and value propositions. PT Asuransi Ekspor Indonesia
(PERSERO), for example, created an affiliate entity on the basis of a public/private partnership,
to enable the development and delivery of a wider range of products. Additionally, the ECA
devised another affiliate aiming specifically to meet the financing and risk mitigation
requirements of businesses and banks seeking to do business on the basis of Islamic Finance
and commercial principles.
The current state of trade finance in OIC Member States covers a wide range of circumstances.
It is worth noting that well-established entities in mature jurisdictions all appear to recognize
the importance of considering trade and supply chain finance in the wider context of
international commerce, policy and economic growth and value-creation.
While policy positions across 57 OIC Member States cannot practically be reviewed in detail,
the positions, mandates and areas of focus of various ECAs provide a view of the priorities of
national governments and help in identifying opportunities for other jurisdictions to evolve
their own activities and value propositions.
3.4. Implications for OIC Objectives and Member States
The most significant linkages arising from the challenges related to SME access to trade
finance, both conventional and based on Shari’ah Law, relate to the capital markets and trade
facilitation objectives of the COMCEC.
It is evolving to be the case, that trade development and promotion initiatives, including trade
promotion capacity development through international and multilateral efforts, are
recognizing the imperative to include access to trade financing as an element of the broader
trade facilitation effort. This is both appropriate and applicable in the context of the needs and
opportunities linked to OIC Member States.
Similarly, efforts to assist in the evolution and in some level of alignment in capital markets
and financial services can, and should, link directly to considerations around providing
adequate trade financing resources to SMEs across OIC Member States.
This dimension can cover regulatory and central bank supervisory policy and mandates
related to trade finance, as well as the facilitation of access to trade finance through non-bank
capital, as is currently an area of critical importance under consideration by leading
international trade finance banks (London Group Initiative, BAFT-IFSA).