By Trend

International Islamic Trade Finance Corporation (ITFC) financing the processing and production of cotton raw materials in Uzbekistan will be geared towards the purchase of fertilizer and petroleum products for production of agricultural crops (cotton and wheat), Senior Account Manager at ITFC Marjorie Chapas told Trend in an interview.

Recently it was reported that The State Agricultural Support Fund under Uzbekistan’s Ministry of Finance has signed a $50 million agreement with ITFC for the processing and production of cotton raw materials, as well as for the organization of production based on processing.

"The deal is the first Sovereign deal of ITFC in Uzbekistan and it is first ever foreign borrowing by the Fund for State Support of Agriculture. Once the deal is successfully made, the parties will look into financing of other sub-sectors (production of vegetables and fruits). The end beneficiaries are local farmers in Uzbekistan whose livelihoods depend on agriculture," Chapas said.

ITFC’s mandate is to support the development of strategic value chains in Organization of Islamic Cooperation (OIC) member countries in line with the strategic development plans of each country.

"This financing agreement is in line with the ITFC’s commitment to support the national plan of Uzbekistan to develop its cotton and textile sector which the government has earmarked as an important sector that will contribute to the creation of jobs and GDP growth," Chapas noted.

Chapas stated that the trade financing worth $500 million that the ITFC is providing Uzbekistan with, support for strategically important sectors, including agriculture, which remains a crucial sector in Uzbekistan, particularly in terms of employment in villages and remote areas.

In addition to boosting access to financing, ITFC’s Uzbek strategy focuses also on capacity building initiatives, a strategy that includes working with the banking regulator and financial institutions on capacity building activities.

"We had two capacity building events in Uzbekistan since May 2018. ITFC is going to organize Islamic Trade Finance training for Uzbekistan’s Central Bank and other Central Asian countries regulators. The event will be held in Istanbul by ITFC in November, and ITFC will bring along international experts and experts from Central Bank of Turkey to share their experience with their Uzbek Central Bank fellows," Chapas added.

The agriculture sector remains important for employing people in rural areas of Uzbekistan. Uzbekistan’s government has been implementing reforms recently, which are having positive impact in the sector. Despite improvements, many challenges have yet to be overcome at local level. ITFC is committed to supporting the Uzbekistan’s government’s efforts to bring reforms to state financing of its Agricultural Sector and to make the State financing more transparent.

ITFC has signed a $500 million Framework Agreement with Uzbekistan in January 2019. The purpose of the Framework Agreement is to ensure close cooperation and coordination of efforts between ITFC and Uzbekistan and to pave the way for a strategic partnership between the parties. One of the main areas of cooperation is to provide pre-export financing for agricultural products of Uzbekistan.