The global climate crisis requires investment on an unprecedented scale for both mitigation and adaptation. At the centre of this challenge lies the energy transition, shifting from fossil fuels to renewable and clean technologies. Yet in many developing and climate-vulnerable economies, mobilising private capital faces major headwinds due to perceived and real risks.

Among the institutions seeking to address this gap is the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the insurance arm of the Islamic Development Bank (IsDB) Group and a committed Berne Union member. Through its Shariah-compliant credit and political risk instruments, ICIEC is working to de-risk investments in renewable energy and climate-resilient infrastructure in its 50 member states. Over the past year, ICIEC has refined its approach to climate finance, introducing new risk-sharing mechanisms. These initiatives aim to make climate projects more bankable by addressing constraints that limit private investment.

Global risk landscape: Scale and barriers

According to the International Energy Agency, annual clean energy investment must reach
USD 4.5 trillion by the early 2030s to remain on track for net-zero by 2050. Meanwhile, adaptation finance needs in developing countries could hit USD 340 billion annually by 2030. Public funds alone are not up to meeting this demand.

Yet for private investors, particularly in the markets where ICIEC operates, political and regulatory risks ranging from shifting policy frameworks to permitting delays continue to stall critical projects. Credit risk is another constraint, with concerns about off-taker solvency and sovereign payment reliability undermining project bankability. Currency convertibility and performance risks around newer low-carbon solutions such as green hydrogen and advanced storage add further layers of uncertainty. All of this is compounded by physical climate risks, including severe weather events that directly threaten infrastructure and livelihoods, and by transition risks such as the impacts of stranded assets and market shifts on economies that rely on traditional sectors. These risks deter investors and escalate capital costs, threatening the viability of essential climate projects.

ICIEC’s climate change framework

In 2024, ICIEC launched its comprehensive Climate Change Policy, fully aligned with the Islamic Development Bank Group and Paris Agreement principles and integrating sustainability across operations, products, risk management, capacity-building, and communication.

The policy’s pillars include improving internal operations by reducing ICIEC’s carbon footprint, optimising travel, and digitising workflows; prioritising insurance and reinsurance for renewable energy, circular economy, disaster risk management, and resilient infrastructure; embedding climate risk management across the entire risk framework; building capacity via training and knowledge-sharing; active engagement in the InsuResilience Global Partnership (IGP); and enhancing communication and transparency through Annual Sustainability and Development Effectiveness Reports.

De-risking and innovating in climate investment

ICIEC surpassed its target of dedicating 13% of total insured business to climate-friendly initiatives, reflecting a shift in portfolio composition towards sustainable sectors. As a multilateral insurer focused on development, ICIEC deploys and adapts robust, tailored solutions. Political risk, credit, and project finance insurance represent ICIEC’s core products for addressing investor concerns over expropriation, breach of contract, payment default, and currency inconvertibility, all of which continue to weigh heavily on clean energy projects in emerging markets. Through co-insurance and reinsurance partnerships with ECAs and MDBs, the corporation also extends capacity for larger and more complex transactions.

Recent projects highlight the measurable impact these tools are having. In Egypt, ICIEC’s provision of USD 68 million in equity insurance across four solar plants in the Benban Solar Park, one of the world’s largest photovoltaic complexes, helped attract international investors. The Benban project has enabled hundreds of megawatts of clean power and stimulated local job creation and supply chain development. In Senegal, ICIEC’s EUR 103 million insurance supported the installation of 50,000 off-grid solar-powered streetlamps in rural communities, boosting safety, extending productive hours, fostering rural economic growth, and contributing substantially to Senegal’s climate and energy goals. And in Türkiye, approximately USD 80 million in reinsurance supported the expansion of solar and wind energy, diversifying the national energy mix, improving energy security, and creating sustainable employment.

Circular economy and urban sustainability

Waste management and urban infrastructure are often overlooked in climate finance but vital for reducing emissions and improving quality of life. ICIEC’s cover for the Sharjah Waste-to-Energy plant, the region’s first commercial facility of its kind, helped divert more than 300,000 tonnes of waste from landfill and avoid roughly 460,000 tonnes of CO₂ emissions annually, while advancing Sharjah’s zero-waste target and creating green jobs.

In Saudi Arabia, a Shariah-compliant reinsurance facility of USD 360 million, arranged jointly with Atradius Dutch State Business, enabled global participation in one of the world’s largest urban transit developments. This transformative PPP modernises Riyadh’s transportation, cuts emissions and traffic congestion, and supports KSA Vision 2030’s urban sustainability objectives. Both cases highlight how risk-sharing can catalyse investment in large-scale initiatives with measurable environmental and social returns.

Resilience, water and food security

Across water and agricultural sectors, ICIEC has used political and credit insurance to support adaptation and livelihoods. In Côte d’Ivoire, EUR 107 million in cover facilitated the development of climate-resilient water infrastructure, enhancing health outcomes and agricultural productivity for millions. In Egypt, insurance for strategic desalination and sanitation projects supported adaptation to water scarcity in a changing climate. And in the West Bank, ICIEC partnered with MIGA to provide reinsurance cover for investment in seven date farms, packaging, solar energy, and cold storage. The project is a lifeline for local employment, women’s empowerment, and economic resilience through international export of premium Medjool and Barhi dates – all in a climate-stressed, fragile district.

Driving impact through partnerships and Islamic finance

In 2024, ICIEC inked 138 partnership agreements and deepened its collaboration with the IsDB Group entities, ICD (private sector), ITFC (trade), and major innovators like Masdar and IRENA through the Energy Transition Accelerator Financing programme. These alliances support climate finance mobilisation, technical innovation, and knowledge exchange across member states. The corporation is extending the reach of Islamic finance with Shariah-compliant solutions such as the Green/Sustainability Sukuk Insurance Policy. Green and sustainability-labelled sukuk now represent around 5% of total issuance, and volumes continue to grow as standards mature. The wider Islamic finance sector, valued at over USD 4 trillion, remains an immense but under-utilised source of capital for climate projects.

Scaling through project finance and PPPs

In 2024, ICIEC expanded its risk solutions to cover non-payment risks in project finance and public-private partnerships (PPPs), recognising their growing importance in scaling sustainable infrastructure. By combining public and private capital, PPPs enable risk-sharing and technical collaboration essential for the delivery of energy, water, and transport projects. As transition projects grow in scale and complexity, PPPs are emerging as the preferred model for mobilising foreign direct investment and driving innovation in emerging economies.

Providing the ‘oxygen’ for a sustainable future

Mobilising private capital to address the climate crisis remains one of the defining challenges of the years ahead. With an AA- rating and a developmental mandate focused on the most vulnerable regions, ICIEC is enabling member states to transform climate ambition into bankable, insurable reality. Through collaboration and its evolving de-risking toolkit, ICIEC is helping to build resilient, low-carbon economies; its recent initiatives illustrate how such models can align commercial and developmental objectives, drawing in private investment. These experiences point to the broader potential of partnership-based finance in building a greener, more equitable future.

Smart Growth Anchored in Resilience

The outcomes of ICIEC’s redefined risk model are clearly visible. The Corporation posted a record net surplus of USD24.9 million in 2024, with its combined ratio improving to 20.0%, down from 35.8% in 2020. This was driven by enhanced underwriting and cost efficiencies.

From 2020 to 2024, ICIEC insured USD57.5 billion in new business, accounting for 47% of the cumulative total of USD121 billion since inception. Gross Written Premiums (GWP) rose 67%, from USD85.8 million in 2020 to USD143 million in 2024.

Gross exposure increased 16% annually. The 2024 exposure mix was 21% short-term (ST), 15% medium-term (MT), and 64% foreign investment insurance (FII).

Credit Rating and Capital Efficiency Impacts

ICIEC has maintained a Moody’s Insurance Financial Strength Rating (IFSR) of Aa3 for 17 consecutive years. In 2024, it secured an additional rating from S&P Global Ratings AA-, for both issuer credit and financial strength, which was reaffirmed in 2025 with a stable outlook. S&P also assessed ICIEC’s enterprise risk profile as strong and its financial risk profile as very strong. These high-grade ratings underscore strong market confidence in ICIEC’s risk management practices and financial resilience, positioning it among the top-rated institutions in its segment.

The AA- rating, further supported by the IsDB’s AAA umbrella effect, provides strong credit confidence and significantly enhances ICIEC’s stature in international financial markets. This high-grade rating allows financial institutions to assign only a 20% risk weight to exposures covered by ICIEC, thereby providing up to 80% capital relief under Basel regulatory frameworks. As a result, ICIEC becomes a more attractive partner for banks, reinsurers, and development finance institutions (DFIs).

For international reinsurers, the rating supports stronger capital calibration, enabling greater capacity for risk transfer involving ICIEC. Financial institutions and investors also view ICIEC-backed policies as high-quality instruments, improving their risk appetite.

Importantly for Member States, the AA- rating translates into more competitive pricing for ICIEC-covered capital market instruments, improving access to international finance and foreign direct investment (FDI). It also supports favourable treatment of ICIEC-guaranteed instruments as high-quality assets, thereby facilitating better financial terms and deeper investor confidence in projects across member states.

Looking Ahead: Risk as an Enabler of Transformation

ICIEC’s capital and liquidity planning, anchored in strategic alignment with the IsDB Group’s Strategic Framework and the phased GCI, positions it for sustainable expansion. Future initiatives include enhanced portfolio reserving, capital modelling improvements, and income efficiency analyses across business lines.

Looking ahead, key priorities include optimizing portfolio pricing, recalibrating capital modelling, and enhancing income efficiency across business lines. The annually published and quarterly updated Risk Perception and Portfolio Direction (RPPD) plays a central role in informing the Business Plan by guiding capital allocation across underwriting activities in line with the RAS.

For strategic and prudent capital allocation within ICIEC’s internal risk framework (EC based consumption), operating countries are classified into Low (Focus Market), Medium (Mixed Market), and High (Cautious Market) risk clusters, based on macroeconomic and geopolitical factors, providing a strategic framework for evaluating political and commercial risks.

Additionally, ICIEC is undertaking a comprehensive, forward-looking capital and risk assessment for 2026–2028, aligned with the upcoming IsDB Group strategic cycle. This assessment aims to integrate historical performance, capital consumption trends, and optimization metrics to ensure long-term solvency and capital efficiency. It is particularly timely as global trade and investment dynamics adjust to a new normal shaped by heightened political risk. The exercise also reinforces ICIEC’s commitment to developmental impact while maintaining financial resilience in an increasingly uncertain global risk landscape.

A Model for Smart Risk Management in Development Finance

At ICIEC, risk management has evolved from a traditional control function into a strategic enabler of institutional transformation. It now underpins the Corporation’s ability to deliver on its mandate with enhanced credit confidence, operational agility, and long-term sustainability.

This paradigm shift marks a fundamental redefinition—from merely preserving capital to prudently optimizing it for sustainable and inclusive growth. Risk Management now acts as a balancing mechanism and a bridge between business operations and the oversight role of internal audit, reinforcing its position as a second line of defense with strategic influence.

This transformation is especially timely as development finance institutions worldwide face mounting expectations to achieve greater impact within increasingly constrained capital and risk parameters. ICIEC’s smart risk approach directly responds to this imperative—balancing risk mitigation with the proactive pursuit of opportunity.

Amid global volatility, ICIEC has consistently outperformed expectations and demonstrated resilience—driven by a deeply embedded risk culture, sound governance, and a forward-leaning stance on economic and financial sustainability. It’s prudent underwriting and strategic capital optimization, and enterprise risk integration have positioned risk management not merely as a safeguard, but as a central catalyst for long-term development value creation.

Economic Overview

Nigeria, Africa’s most populous nation and 4th largest economy by purchasing power parity, is undergoing a profound economic transition driven by structural reforms, rebalancing of fiscal policy, and renewed efforts to restore macroeconomic stability. The Government has embarked on a bold reform agenda aimed at reversing years of underperformance caused by oil dependence, fiscal leakages, and currency market distortions.

The Government focuses on large-scale privatization and asset sales as part of its economic stabilization measures. These measures aim to address balance-of-payment stresses and stabilize the economy.

According to the Central Bank of Nigeria (CBN), the economy is projected to grow by 4.17% in 2025, up from an estimated 2.9% in 2024. The International Monetary Fund (IMF) is slightly more conservative, forecasting 3.0% real GDP growth. Growth is supported by higher oil production volumes (approaching 1.6 million barrels/day), the full commissioning of the Dangote Refinery, improved FX liquidity, and rising non-oil sector contributions – particularly in agriculture, telecommunications, construction, and financial services.

Public investment is being catalysed by high-profile infrastructure projects, including the Lagos–Calabar Coastal Highway, rail line modernizations, and rural electrification schemes. The government also seeks to drive job creation through domestic value chains in agriculture, automotive assembly, and pharmaceuticals under its “Renewed Hope” economic agenda.

Nigeria does not currently have a formal IMF programme (such as an EFF or SBA), but maintains active engagement through technical consultations, surveillance missions, and Article IV assessments. The 2024 Article IV Consultation recognized the boldness of Nigeria’s initial reform momentum including fuel subsidy removal and FX liberalization but also warned of reform fatigue, inflation risks, and the need for better-targeted social safety nets.

While Nigeria has not pursued budgetary support from the IMF, it continues to draw on IMF policy advice to guide fiscal consolidation and monetary tightening. The IMF’s Debt Sustainability Analysis (DSA) rated Nigeria’s debt as sustainable but vulnerable to interest and exchange rate shocks, underscoring the importance of revenue mobilization and FX inflow management.

Nigeria remains a significant client of the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) and is implementing a wide range of Results-Based Financing (RBF) operations across education, power, social protection, and state-level reforms. One of the most notable developments in early 2025 is Nigeria’s decision to prepay USD500 million of its outstanding World Bank debt.

This prepayment is politically and economically significant as it reflects the renewed FX inflows and stronger fiscal buffers due to higher oil revenues and improved investor sentiment. It is designed to reduce debt service burden over the 2025–2027 period, freeing space for critical capital expenditures and potential market issuances (e.g., Sukuk). It also sends a positive signal to credit rating agencies and international capital markets, reinforcing Nigeria’s commitment to prudent debt management.

Ultimately and according to internal reports from the Federal Ministry of Finance and the DMO, the prepayment is also aligned with Nigeria’s broader Debt Management Strategy (2024–2027), which prioritizes:

1. Extending average debt maturities.
2. Increasing concessional debt-to-commercial debt ratios.
3. Using guaranteed and insured market instruments to access affordable long-term capital.

It is worth noting that in April 2025, Fitch Ratings upgraded Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B’ from ‘B-’ citing improved FX reserve buffers, strengthened fiscal management and fuel subsidy removal and stabilized and transparent exchange rate system through implementation of Bloomberg B-Matching System, progress in reducing inflation and rebuilding investor confidence.

Tackling Inflation

Nigeria faced intense inflationary pressure throughout 2023 and early 2024 due to subsidy reforms, FX devaluation, and food supply shocks. Headline inflation peaked at 34.8% in December 2024, before gradually easing to 24.48% in January 2025, driven by tighter monetary policy and relative currency stabilization. The IMF projects average inflation at 26.5% for 2025. The Monetary Policy Rate (MPR) currently stands at 24.75%, following successive hikes by the CBN’s Monetary Policy Committee to combat price instability.

The naira has seen reduced volatility after the unification of multiple exchange rates in mid-2023, with a more market-reflective FX window now in place. CBN has prioritized clearing its FX backlog and restoring investor confidence in the I&E window.

Current Account Situation

Nigeria has recorded a notable improvement in its current account position since 2023, marking a significant turnaround in its external balance sheet. In 2024, the country achieved a current account surplus of approximately USD6.83 billion, according to data from the CBN. This is a marked reversal from the USD3.3 billion deficit recorded in 2023.

This improvement was largely driven by a USD13.17 billion trade surplus, underpinned by robust oil exports and a sharp reduction in fuel import bills. Additionally, remittance inflows surged to USD20.9 billion in 2024, representing an 8.9% year-on-year increase. While service account deficits persisted, they narrowed compared to previous years, contributing modestly to the overall improvement.

On a quarterly basis, the current account surplus expanded from USD3.38 billion in Q1 2024 to USD5.14 billion in Q2 2024, reflecting stronger oil receipts, improved non-oil exports, and moderate import growth. Looking ahead, the IMF projects that the current account surplus will moderate, falling from 9.1% of GDP in 2024 to 6.9% in 2025, and further down to 5.2% in 2026, as oil prices stabilize and imports gradually pick up.

Foreign Exchange Liquidity

Foreign exchange (FX) liquidity in Nigeria has improved significantly since mid-2023, following the Central Bank of Nigeria’s decision to unify the multiple exchange rate windows and allow the naira to trade more freely under a managed float system.

This reform—implemented in June 2023—reversed years of rigid FX policies and was one of the most critical components of the new administration’s economic stabilization agenda. In the months following the reform, Nigeria faced acute FX shortages and volatile exchange rate movements, with the naira depreciating sharply in both official and parallel markets.

However, by early 2024, FX market conditions began to stabilize, supported by improved supply from oil exports, higher remittance inflows, and increased portfolio investment. CBN also undertook clearing of the FX backlog, estimated to be over USD6 billion in Q3 2023, with most of the backlog fully repaid by April 2024. This was a critical confidence-building measure for investors and foreign suppliers, many of whom had been waiting for months to repatriate funds or receive payments.

As of May 2025, Nigeria’s gross foreign reserves are estimated at approximately USD38.45 billion, up from USD33.1 billion in mid-2024. Net reserves, after accounting for swaps, forwards, and encumbrances, stood at USD23.11 billion at the end of 2024. The increase in reserves has been attributed to a combination of higher oil revenues, reduced fuel import costs, and inflows from Eurobond repayments, World Bank disbursements, and limited FX interventions by CBN.

To further deepen FX liquidity, the CBN has reintroduced and strengthened the “Willing Buyer, Willing Seller” window, allowing exporters, investors, and banks to set rates more transparently. The gap between the Investors’ and Exporters’ (I&E) window and the parallel market has narrowed considerably in 2025, declining from a peak of over 30% to below 10%, indicating increased confidence in the formal market.

Furthermore, FX turnover on the Nigerian Autonomous Foreign Exchange Market (NAFEM) has improved, with average daily trading volumes now surpassing USD200 million, compared to just USD75– USD100 million at the height of the FX crisis in 2023. The return of foreign portfolio investors to the Nigerian debt and equity markets – following the clearance of backlogs and interest rate normalization—has also provided fresh FX supply into the system.

However, despite these positive developments, structural FX demand pressures remain, especially for capital goods, refined fuel, and machinery. The government’s push for local production and import substitution under the Industrial Revitalization Roadmap, as well as the start of operations at the Dangote Refinery and other industrial zones, are expected to reduce long-term FX demand.

Debt Sustainability

The International Monetary Fund (IMF) concluded its 2024 Article IV Consultation with Nigeria in April 2024, providing a comprehensive assessment of the country’s economic landscape and debt sustainability. The IMF acknowledged the Nigerian government’s ambitious reform agenda aimed at restoring macroeconomic stability and promoting inclusive growth.

Nigeria’s public debt increased to approximately 46% of GDP by the end of 2023, largely due to the depreciation of the naira. While this debt level remains below the regional average for Sub-Saharan Africa, the burden of debt servicing has intensified. External debt accounts for roughly 16% of GDP and is primarily concessional, limiting exposure to commercial external risks. However, the country’s debt portfolio is heavily skewed toward domestic borrowing, which comes at high interest rates and presents rollover and cost-related challenges.

Nigeria: Public Debt Structure Indicators

Nigeria’s Active Cooperation with the IsDB Group

Nigeria is a significant and active member of the Islamic Development Bank (IsDB), having joined the institution on 3 November 1999. To date, Nigeria holds a capital subscription of ID4,298.51 million, representing 7.33% of total IsDB subscribed capital, making it the fifth largest shareholder in the Bank. The IsDB maintains a strong operational footprint in the country through its Regional Hub in Abuja, established in 2018, which also oversees development interventions in neighbouring West African states.

Nigeria has benefited from a wide-ranging IsDB Group portfolio, with more than 145 projects approved. Out of this, around 60% have been completed, covering critical sectors such as infrastructure, agriculture, education, and finance. The infrastructure sector alone accounts for over 89% of IsDB’s total financing in Nigeria, encompassing sub-sectors like transportation, water and sanitation, energy, information and communications, and urban development.

The Bank’s financing has been notably directed toward key national development priorities, with major investments in agriculture, education, finance and health, industry, and mining. IsDB Group entities have been active in Nigeria.

Since inception, the IsDB Group has approved a total funding of about USD2.2 billion for Nigeria. This includes USD1.24 billion in project financing by IsDB, USD333 million supported by ICD; USD537 million trade operations by ITFC, and USD90 million by other IsDB Group funds and operations.

Nigeria’s Special Relationship with ICIEC

Nigeria joined ICIEC in 2006, and since then the Corporation has insured over USD2 billion in cumulative transactions in Nigeria, historically focused on trade risk cover for Tier 1 banks. ICIEC is now expanding from traditional short-term trade finance to long-term investment guarantees and sovereign risk coverage. Since this shift, we were able to build up a comprehensive pipeline of transactions in several areas, including Islamic capital market instruments, as well as enhanced partnership with key local stakeholders.

ICIEC has successfully participated in the following initiatives and transactions:

• At the 2025 IsDB Group Annual Meetings in Algiers in May, ICIEC signed a strategic Memorandum of Understanding with NEXIM Bank, establishing a framework for collaboration in export credit insurance, reinsurance, joint product development, and institutional capacity building. The partnership aims to expand risk mitigation tools for Nigerian exporters and deepen NEXIM’s integration into the global Islamic insurance architecture.
• In 2024, ICIEC closed its first-of-its-kind sovereign-backed SOE (State Owned Enterprise) cover in Africa through Project Gazelle, a structured pre-export finance (PXF) transaction in favour of the Nigerian National Petroleum Company (NNPC). The cover mitigates payment risk while enabling NNPC to raise international financing based on its crude oil flows..
• Following the success of Project Gazelle, ICIEC has replicated this model through Project Leopard, which closed in 2025. Both transactions underscore ICIEC’s ability to innovate in complex structured trade finance and support national champions like NNPC through Shariah compliant risk mitigation..
• The Lagos-Calabar Coastal Highway, valued at USD1.067 billion (Phase 1 only), is backed by USD465.9 million in ICIEC insurance provided to major banks under a 7-year Islamic Murabaha structure with NHSFO cover. As ICIEC’s first sovereign NHSFO cover in Nigeria, the project is a milestone in regional infrastructure financing. It supports job creation, improves coastal connectivity, reduces travel time, and aligns with SDGs 8, 9, 11, and 13.

Berne Union Members Record Historic Highs in New Commitments in 2024 Despite Rising Geopolitical Risks and Supply Chain Disruptions as New Businesses and Investments in Green Clean Energy Flourish

In times of global uncertainty comes both challenges and opportunities. As risk absorbers and mitigators the credit and investment insurance industry have a defining role to play to ensure the continued flow of trade and investment, the lifeblood of the global economy. In an exclusive interview, Mr. Yuichiro AKITA, President of the Berne Union (the International Union of Credit and Investment Insurers) discusses how members have consistently demonstrated resilience and innovation in responding to past crises, and through the development of new products, the launch of fresh initiatives, and enhanced collaboration with partner institutions, how they have actively worked to safeguard global trade and investment flows during these challenging times, and the unforeseen crises in the years ahead.

ICIEC Newsletter: The BU’s Export Credit and Investment Insurance 2024 Industry Report shows that members recorded a historic high of USD3.3 trillion in new commitments amid escalating geopolitical tensions, war, natural disasters, and economic headwinds. At the same time, members paid a record total of USD10 billion in claims across all business lines. Which aspects of the state of the industry is most heartening and gives hope that BU members and the industry at large are indeed in a good position to meet the current challenges in the industry and the global economic landscape?

Mr. Yuichiro AKITA: Amid rising geo-political risks, impacts of conflicts, and severe natural disasters increased supply chain disruption risks globally. Since recovery from the pandemic, inflation-driven costs increase deteriorated economics of projects globally. This has created headwinds for new businesses and investments, including clean energy technologies, such as offshore wind and EV sectors. Last year, in many developed countries, the ruling parties lost a significant number of seats in the national elections, the voters prioritized addressing domestic income equality, inflation countermeasures, and social instability, while interests in transition to a green or low-carbon economy or international cooperation in public policy issues appear to have become secondary.

Nevertheless, BU members recorded a historic high in new commitments. In relation to MLT (medium-and-long-term) space, the long-term trend towards increasing capacity of private insurers is evident, now they provide more than 20% of new MLT commitments annually. In addition, new commitments of renewable energy have increased steadily, amounting to USD15 billion in 2024 (2.5 times the level of 2019). We still expect to see solar and onshore wind power projects and other clean energy, such as geothermal biomass and nuclear power as well as sophisticated ancillary technologies, such as energy storage and carbon capture.

Lastly, the high claim payment showed the members’ indispensable function to increase clients’ resiliencies. It is important for BU members to promptly pay insurance claims for covered incidents to gain customers’ trust, which is also crucial for the future of the industry.

The mainstay of your tenure as BU President is the BU STRIDE initiative. Can you expand on the rationale behind this initiative and its progress towards strengthening the foundations of international trade and investment, and reaffirming the BU’s commitment to be “the guardians of free trade and foreign direct investment in this new era of uncertainty?

The theme of the BU Spring Meeting held in Croatia was “Resilience,” one of the pillars represented in STRIDE (Sustainability through Resilience, Innovation, Diversity, and Empowerment).

Among BU members, ECAs have played a vital role as national export credit agencies in complementing market failures during crises such as the global financial crisis and the COVID-19 pandemic, thereby supporting international trade and investment. Now, facing new uncertainties, we believe it is imperative – and indeed possible – to fully mobilize the tools developed and implemented over the years to fulfil our mission as guardians of trade and investment.

While this market-complementing role remains critical, the mission of ECAs has expanded significantly. Some ECAs now support the future export opportunities of their national industries, overseas investments, supply chain and resource security, and the growth of SMEs. In recent years, many ECAs have also engaged in supporting climate action, energy transitions, pandemic responses, and social infrastructure in emerging and developing countries. Even when these activities primarily aim to support national industries, they often bring social impact to developing countries. Moreover, in cases such as untied financing, the social impact in host countries itself becomes a primary purpose, rather than direct economic benefits to the provider country.

Given these realities, the work of ECAs can no longer be contained within the traditional framework of “export credit.” It is increasingly important for ECAs to recognize themselves as entities capable of contributing directly to sustainability and the SDGs. The BU STRIDE Presidential Platform that I advocate, as such, is a slogan to foster new innovations that enable BU to contribute to the realization of the SDGs, not only through ECAs but also in close collaboration with private insurers within BU and MDBs such as ICIEC and IsDB.

Under your erstwhile hat at NEXI you are familiar with ICIEC’s unique position as the world’s only Shariah-compliant multilateral insurer. Do you see an enhanced role for Islamic risk mitigation and credit enhancement solutions, albeit niche now, and what can the Berne Union do to help facilitate this?

Inter-agency cooperation requires significant energy and commitment, regardless of whether the partner is an Islamic finance institution or otherwise. A natural question arises: when one already has well-established relationships with trusted partners, why seek new collaborations? What benefits could outweigh the costs of building new partnerships? This question is shared by both parties when embarking on new relationships.

The challenge is even greater when partners have different approaches to business – differences in organizational missions, procurement rules, environmental and social safeguards, risk management methods, and risk appetites. Distinct characteristics, such as those found in Islamic finance, can further add to this complexity. However, collaboration becomes particularly meaningful when there are risk taking barriers that cannot be overcome alone but can be addressed together with a partner.

Reflecting on NEXI’s cooperation with ICIEC, despite differences in financing and insurance structuring, the partnership delivered greater benefits—such as enhanced intelligence, negotiation leverage, and deterrence in specific markets—making it easier to take on risks collectively.

It is essential to share the merits of such collaboration through mutual exchange of operational insights and case studies. BU serves precisely as such a platform, and we are eager to create further opportunities within BU to facilitate these meaningful engagements going forward.

A recent UNCTAD Report stresses that Political Risk Insurance (PRI) plays a vital role in de-risking investments and mobilizing finance towards achieving the UN’s SDGs. Between 2018 and 2022, PRI providers insured USD150 billion worth of projects in developing countries, including LDCs. UNCTAD findings point to low investor awareness, high costs, and inconsistent ESG standards as key barriers to credit insurance market entry. This has led to increased cost of finance due to higher risk premiums paid. Do you think that LDCs are getting a fair deal from the credit insurance industry?

The recent UNCTAD report has shed light on how Political Risk Insurance (PRI) can contribute to mobilizing private investment for the achievement of the SDGs, while also identifying the challenges that remain. For many years, the role of the BU and ECAs in advancing the SDGs has often been overlooked. In this context, it is highly encouraging and indeed groundbreaking that PRI has been highlighted so prominently. Furthermore, the outcome document of FFD4 has reaffirmed the importance of ECAs and the critical role of tools that mitigate risks associated with overseas investment. This report, therefore, marks a significant milestone in the field of development finance.

Although the importance of PRI is increasing amid rising geopolitical risks, a key challenge lies in the low awareness of PRI as a product and of Berne Union members who provide it. PRI is not new, yet only a limited number of national insurance providers actively offer it. Institutions such as SINOSURE, NEXI, and PwC on behalf of the German government have developed strong capacities, while many others possess limited underwriting experience or are not actively promoting PRI.

To address this, the Berne Union seeks to facilitate knowledge exchange among its members by sharing best practices in product design, underwriting, monitoring, and claims management. We also provide a forum to discuss marketing strategies and case studies, enabling members to learn how to re-enter the PRI market or expand their offerings.

Through these initiatives, the Berne Union is strengthening the PRI capabilities of its members, enhancing the global availability of PRI, and channelling greater private investment into SDG-relevant sectors. In doing so, we support sustainable development and resilience in emerging markets, contributing to a more stable and inclusive global economy.

In 2024, medium-and-long-term commitments by Berne Union members reached USD160 billion, with private insurers contributing over 20%, highlighting the growing synergy between public and private actors. In your view, how critical is this collaboration, particularly through instruments like untied support and working capital solutions for building resilience in the current global trade environment? Additionally, what role can the Berne Union play in facilitating more effective blended finance structures involving DFIs, ECAs, and MDBs to mobilize capital for sustainable trade and investment?

The role of ECAs is expanding well beyond traditional export credit to include support for overseas infrastructure development through untied financing, securing critical resources, and providing development finance that contributes directly to the SDGs. Alongside this, we are seeing greater participation by private insurers in the MLT finance sector, as well as increased reinsurance cooperation between ECAs and private insurers. Beyond ECAs, collaboration among MDBs, private insurers, and institutional investors through portfolio syndication and securitization is also gaining momentum. Such public-private partnerships are vital for expanding the industry’s overall risk capacity and for bridging gaps in trade finance and SDG financing.

Blended finance was one of the most widely discussed topics at FFD4. Currently, collaboration between MDBs and ECAs often involves a vertical risk split, with each institution cofinancing a distinct portion of a project. Looking ahead, we should advance to the next stage: horizontally slicing risk within a single project to leverage the differing risk appetites of ECAs— who back private investors and banks—and MDBs—who can assume higher political or project risks.

This approach can strengthen blended finance structures, attract greater private investment into high-impact SDG projects, and foster stronger, complementary roles among ECAs, DFIs, and MDBs to channel foreign direct investment more effectively while managing risks efficiently across all stakeholders.

As the Berne Union, we aim to provide a practical platform for deeper discussions that explore and advance this kind of ECA – MDB collaboration. Through this, we hope to contribute to further innovation in the field of blended finance and support sustainable development worldwide.

The International Credit Insurance and Surety Association (ICISA) recently highlighted the rising incidence of fraud and money laundering risks in credit insurance due to rising economic challenges, higher trade volumes and the appearance of advance fake document technology especially through the introduction of electronic trade documentation. How important is this development for Berne Union members and what is the Union doing to help member entities mitigate these risks?

There is a rapidly growing awareness among Berne Union members regarding the critical issue of fraud. This is a matter that directly impacts the trustworthiness and financial soundness of our industry, and it is essential that we address it collectively and effectively.

At the recent BU Spring Meeting, a dedicated session on fraud was held, where members actively shared their experiences and discussed current mitigation measures. This issue is particularly pressing for ECAs handling short-term export credit insurance, where the sheer volume of transactions exposes them to significant challenges, with numerous cases already identified in practice.

In July, the BU ECA Committee will host a dedicated exchange among ECA practitioners focused on fraud. While technological advancements continuously evolve alongside new fraudulent methods, we recognize fraud as a shared challenge for our industry. The Berne Union is committed to promoting ongoing information sharing among members as we work to safeguard the integrity and resilience of our sector.

Looking forward, what are the challenges ahead, and what are the lessons drawn from past crises such as the global financial crisis in 2008, the Covid-19 pandemic, and the ongoing conflict in Ukraine and the Middle East?

Berne Union members have consistently demonstrated resilience and innovation in responding to past crises, ensuring the continued flow of trade and investment—the lifeblood of the global economy. Through the development of new products, the launch of fresh initiatives, and enhanced collaboration with partner institutions, BU members have actively worked to safeguard global trade and investment flows during challenging times.

During the global financial crisis, members expanded untied financing to support working capital for domestic and international companies and developed direct lending mechanisms to secure short-term liquidity. These liquidity provision tools have since been effectively utilized during the European debt crisis and the COVID-19 pandemic. In Asia, even as the private trade credit insurance market contracted, a reinsurance network among ECAs was established to maintain regional trade flows, forming the foundation for ongoing ECA cooperation in the region.

Today, amid rising geopolitical risks and the ongoing war in Ukraine, untied financing is being used to support resource offtake projects for resource security. In the PRI domain, some ECAs have re-entered the market, offering innovative solutions that enable the underwriting of war-related risks even within conflict-affected regions.

We will undoubtedly face unforeseen crises in the years ahead. However, the tools developed during past crises and the strengthened inter-agency cooperation frameworks now in place have prepared us to launch new joint initiatives swiftly and effectively. The Berne Union is committed to serving as a catalyst for these collaborative efforts, ensuring our industry continues to support global trade and investment, even in the most challenging circumstances.

With some USD4 to USD64 trillion dollars wiped off US, European and global stocks in the two days after President Donald Trump’s declaration of “economic independence” and the imposition of a range of tariffs starting with a baseline 25% on steel and aluminium imports to the US, 10% tariffs for certain countries and a range of tariffs for other countries, the second-term Trump administration has disrupted the existing world trade, investment and business order. There are no signs of a retreat from this unilateral and isolationist US playbook which will impact every corner of the world including the US. Rao Farid Khan, Lead Legal Counsel and Head of Claims and Recoveries at ICIEC, considers the potential fallout for the credit and investment insurance industry and how the Corporation is positioning itself as a unique stabiliser and enabler of global and intra-OIC trade and investment.

President Donald Trump’s recent return to office and the policy shifts of his current administration have once again marked a critical juncture in the global economic landscape. Building on the disruptive strategies of his previous term, the renewed focus on protectionist trade policies, strategic decoupling, and a retreat from multilateral cooperation have intensified global economic uncertainty.

Actions such as renegotiating international trade agreements, reasserting national sovereignty over global institutions, and limiting U.S. engagement in global initiatives continue to challenge the foundations of international economic governance. These developments hold significant implications for global trade, investment flows, and credit insurance, potentially affecting the role and operations of multilateral institutions like ICIEC.

As a specialized multilateral insurer dedicated to promoting investment and trade among its 50 member states from the Global South, ICIEC now stands at a critical juncture. The current geopolitical and economic climate presents both elevated risks and profound strategic opportunities. The reinstatement of trade protectionism under Trump 2.0, marked by tariffs on imports from China, Europe, and various developing economies, has disrupted global supply chains and increased transaction costs. These changes have retendered cross-border commerce more unpredictable and significantly heightened the risk of defaults in international transactions. For the credit insurance industry, including ICIEC, this has led to a surge in demand for trade credit insurance, particularly from exporters in emerging markets who are increasingly seeking protection against non-payment risks and contractual disruptions.

In response to the current market challenges, ICIEC is uniquely positioned to play a crucial role in stabilizing and enabling trade. By enhancing its short-term credit insurance offerings and expanding its technical assistance services, ICIEC can develop robust credit insurance products tailored for high-risk markets, including the United States. This will provide vital support to exporters from its member states, helping them to remain resilient in the face of market volatility. Through these efforts, ICIEC not only fulfils its developmental mandate but also establishes itself as a dependable partner in an increasingly unpredictable trade environment.

Moreover, the U.S. retreat from key multilateral frameworks, such as the Paris Climate Accord and the World Health Organization (WHO), under President Trump has weakened the foundations of international cooperation. The diminished role of the United States in global governance has created institutional voids, particularly in areas such as public health and climate change. For multilateral insurers, this fragmentation imposes coordination challenges, undermining collective responses to systemic risks. However, this also presents a unique opportunity for ICIEC to assert leadership within its member states by deepening regional integration and fostering South-South cooperation.

ICIEC’s mission, grounded in Islamic principles of financial and insurance intermediation, allows it to offer a compelling alternative to the nationalist and isolationist rhetoric that has gained prominence. By promoting inclusive trade and investment models that prioritize sustainable development, ICIEC can emerge as a beacon of multilateralism and collaborative resilience amongst its member states. ICIEC’s ability to foster intra-OIC economic ties through innovative insurance mechanisms will be pivotal in offsetting the impact of global fragmentation.

Simultaneously, the Trump administration’s aggressive posture toward geopolitical hotspots such as Iran and China, has contributed to heightened regional instability and a more precarious global investment climate. These developments increase demand for Political Risk Insurance (PRI), which offers protection against risks such as expropriation, political violence, currency inconvertibility, and contract frustration. ICIEC can respond to this rising demand by broadening its PRI offerings and enhancing its insurance products tailored to infrastructure, energy, and social development projects in member states. By engaging in co-insurance and reinsurance partnerships with other Export Credit Agencies (ECAs) and private reinsurers, ICIEC effectively manages largescale exposures while supporting transformational projects that align with national development priorities.

The third pillar of the IsDB Group Strategic Realignment 2023-2025 focuses on driving green economic growth. By supporting climateresilient infrastructure projects and offering insurance solutions for green Sukuk and ESG-compliant investments, ICIEC facilitates sustainable development while managing emerging climate-related risks. This aligns with the strategic objective of driving green economic growth, as it promotes investments in sustainable and environmentally friendly projects, thereby contributing to the overall goal of green economic development. ICIEC’s Sukuk Insurance Policy, alongside its Non-Honouring of Sovereign/Sub-sovereign Policy, offers a framework through which it can mobilize capital for environmentally responsible projects and attract private sector participation in sustainable investment.

Perhaps the most defining feature of Trump-era economic policy is its unpredictability – a trait that intensifies demand for comprehensive risk mitigation instruments. In such a volatile global environment, credit and political risk insurance are not mere tools of financial prudence; they are essential components of resilience and continuity for governments, corporations, and SMEs alike. ICIEC can respond to this need by offering bundled insurance solutions that address both commercial and political risks, particularly in high-volatility markets. ICIEC’s ability to support small and medium enterprises (SMEs), which often lack the capacity to absorb shocks, will be critical in maintaining inclusive trade and investment flows.

Further, ICIEC can expand its capacity-building initiatives to enhance the risk mitigation capabilities of stakeholders in member states, thereby contributing to greater institutional and economic resilience.

The reality of Trump’s presidency and its current policies introduces new layers of complexity into the global trade and investment landscape, with potential trade wars, a NATO rethink, and the deportation of millions of migrants. Nevertheless, within this turbulence lies an opportunity for ICIEC to redefine its role and expand its influence. By embracing innovation, reinforcing strategic partnerships, and aligning its offerings with the values and aspirations of its member states, ICIEC can rise as a leader in the global credit and investment insurance domain. Its ability to navigate uncertainty while remaining committed to sustainable, inclusive, and ethical development will determine its trajectory in the years to come.

As the world continues to fragment and global leadership remains in flux, institutions like ICIEC are not only tasked with protecting trade and investment flows but also with enabling them in ways that are just, resilient, and aligned with long-term development goals. By scaling up support for SMEs through agile credit insurance, diversifying political risk coverage, deepening regional collaboration, and pioneering climate-aligned insurance instruments, ICIEC can help build a more equitable and sustainable global economy. The path forward demands strategic foresight, bold innovation, and a steadfast commitment to the developmental aspirations of the IsDB Group member countries. In this mission, ICIEC is not merely an insurer—it is also a catalyst for stability, growth, and shared prosperity.

Lotfi Zairi, Associate Manager, Operations, Sovereign Risks at ICIEC, considers the important supportive and technical role that the IsDB Group and ICIEC could play in developing the Islamic finance industry in Algeria by enhancing its existing cooperation in trade and project finance and credit and political risk policy cover for Algerian entities through the Group’s Country Engagement Framework (CEF) and ICIEC’s pioneering Green Sukuk Insurance Policy.

Economic Context

In last July 2024, Algeria has gained back its position within the uppermiddle income category under the World Bank’s country income classification. The merits of this classification invoke the advances made by the country in “economic and human development, investing in infrastructure projects and introducing redistributive social policies that alleviated poverty and significantly improved human development indicators.”

A recent World Bank report highlighted Algeria’s “strong” economic performance in 2024. Growth in the first half of the year reached 3.9 percent, driven by “resilient” agricultural output.

Algeria is the largest country in Africa and the third largest economy in the Arab world. Aiming at addressing the predominance of the hydrocarbons in the economy which counts for almost 95 % of exports and 14% of GDP, Algeria has taken major steps to diversify its sources of revenues and improve employment prospects since 2020.

New laws on Hydrocarbons, on Investment, and on Money and Credit have been promulgated, lifting restrictions on the foreign ownership of domestic firms, to boost foreign and domestic investment. The country has clearly adopted a transition strategy towards private sector-led growth, rationalized public-spending, optimized imports and further developed non-hydrocarbon exports.

The government is optimistic about the economic and financial situation, guided by an expected increase in the exports of goods and hydrocarbons and a forecasted growth in non-oil economic activity around 5% during the next three years 2025-27. The 2025 budget amounts to a projected USD126bn with 4.5% growth forecast compared to 4.2 percent in 2024. Public spending includes the revitalization of the oil sector both in terms of exploration and recovery. In addition, the 2025 Budget includes several infrastructure projects and other socially oriented sectors such as health, education, transportation, housing, and support for vulnerable communities accounting for 35.3%.

The country has brought its debt down from the highs of recent years and now has relatively low levels of external debt. To optimize its external debt, the government is exploring new funding channels to cover the growing budget deficit estimated at USD62bn, compared to USD45bn in 2024. In that respect, Algiers is arranging to promote the sustainable financing of strategic projects and to stimulate local investment. The Treasury is authorised to issue sovereign bonds, to let investors participate in the financing of infrastructure programs.

Islamic Finance Sector Development

While the international market offers significant potential, the government is focusing in the first instance on reintegrating the USD90bn parallel market, a sizeable shadow market that is hindering growth. The Islamic Finance industry is seriously considered by the Government for that purpose, counting on its efficient role in achieving a maximum financial inclusion of Muslim populations. Developing the Islamic banking sector, Takaful and Islamic Capital Market seems to be the battle horse in that respect.

The Finance Ministry expressed firm intention to issue Sukuk in early 2025 as part of the country’s budget. In that regard, Algeria can benefit from the services of ICIEC, which offers a Sukuk Insurance Policy (SIP) in full compliance with the Islamic Shariah.

Sukuk is an efficient financial instrument for resource mobilization from the international capital market, in full compliance with Islamic finance principles. Member Countries are using it for the funding of their infrastructure projects and other developmental initiatives including renewable energy and environment friendly projects. For these latter categories, ICIEC has also developed a Green Sukuk Insurance Policy. As such, the Sukuk Insurance Policy will contribute to the economic and social development of Member Countries.

The development of the Sukuk Insurance Policy has been widely appreciated by Member Countries as well by Islamic finance organisations, financial institutions and international reinsurance companies. It is expected to create an additional flow of Sovereign Sukuk issuances in the Islamic capital market based on the ICIEC third-party guarantee structure, in full compliance with Shariah principles.

Thanks to its AA- credit rating and to its remarkable track record in covering the risk of Non-Honouring of Sovereign Financial Obligations, ICIEC can provide a strong credit enhancement to Sukuk issued by Member Countries such as Algeria, lowering their dividend and cost, and facilitating their subscription across the international capital market.

IsDB Group Technical Assistance

The government is preparing a comprehensive legal framework for the Shariah-compliant finance industry, aiming to position Algeria as a regional hub for sukuk issuance within African, Arab, and European free trade zones, thereby increasing its financial importance in the Algerian economy.

In 2021, the Islamic Development Bank Institute (IsDBI) and the Central Bank of Algeria signed a technical assistance agreement valued at USD270,000 to develop the legal and regulatory framework for Islamic banking in Algeria. This project, once completed, will lay the foundation for the development of Islamic banking in Algeria. The technical assistance is in an advanced stage of implementation, and once completed, Algeria will have a comprehensive framework conducive for the development of Islamic banking activities and with the required tools for the central bank and regulators to supervise the system.

Furthermore, a second technical assistance grant of USD272,000, signed in 2022, is being provided to the Ministry of Finance to assist the country in issuing sovereign Sukuk. Algeria is trying to tap the Islamic Capital Market with sovereign Sukuk, and this technical assistance is intended to update the legal framework to accommodate Sukuk structures and to guide the country through the process of Sukuk issuance.

In addition, in collaboration with the Government, the Islamic Development Bank Group launched the first Country Engagement Framework (CEF) for Algeria in the period 2025-2027. This framework is designed to develop a short-term country engagement strategy and interventions in support of Algeria’s development programme.

Under its Re-aligned Strategy 2023-2025, the IsDB will support priority development projects and initiatives under two strategic pillars:

A. Enhancing the competitiveness of the economy and the private sector for an efficient renewal and diversification of economy
B. Partnering for capacity development and south-south cooperation

The envisioned CEF would provide a robust platform that would enable not only the IsDB, but also the Group entities to align and intervene, in complementarity, to contribute to the implementation of Algeria’s Development objectives. The CEF would thus be at the nexus of (i) national development priorities as highlighted in the Government Action Plan, and (ii) IsDB’s realigned strategy.

Pillars 1 and 2 complement each other and include both hard and soft interventions for the comprehensive development of the pre-requisites for Algeria’s Economic Development Programme. In addition, they will be supported by the cross-cutting pillars of:

• Islamic Finance.
• Women & Youth Empowerment.
• Climate Change adaptation and mitigation.
• Capacity Development to address the needs.

ICIEC Support to the Economy

ICIEC has insured a total amount of USD10 bn in Algeria since inception. ICIEC has facilitated USD5.3bn for imports of strategic goods, USD3.2bn for exports, and USD1.5bn for foreign investment inflows.

ICIEC provides reinsurance support to CAGEX, the Algerian national ECA, for the export and domestic treaties. To boost Algerian exports, CAGEX and ICIEC are closely cooperating in offering required support to Algerian Non-Oil exports allowing them to diversify the Algerian economy.

Furthermore, ICIEC has been insuring several Jordanian pharmaceutical companies having established separate legal entities in Algeria. This allowed the transfer of know-how especially Jordan’s remarkable comparative advantage in the pharmaceutical sector.

Furthermore, it helped to accommodate the market needs in terms of good quality generic products at affordable costs and helped at later stage to create a good platform for Algerian pharmaceutical exports to African countries.

Lately, ICIEC insured financing provided by ITFC and a pool of commercial banks to STEG Tunisia to import gas from Sonatrach, Algeria. The cooperation with Algeria is characterized by the close coordination between ICIEC and CAGEX under the framework of the AMAN Union, which is an association of commercial and non-commercial credit insurance providers in the OIC member countries. In this regard, ICIEC, as the responsible entity for managing the AMAN Union Secretariat General during the years 2023-2024, organized in partnership with CAGEX the 14th Aman Union Annual Meeting in Algiers, in December 2024.

In addition, ICIEC catalysed a Foreign Investment in Algeria for the expansion of Tosyali Steel Factory, a large steel production project promoted by Turkish Investors.

ICIEC Support to Tosyali Steel Project -Algeria

The collaboration between Tosyali Holding and ICIEC demonstrates the potential for successful large-scale industrial projects supported by robust financial and insurance frameworks. This partnership not only benefits the involved parties but also serves as a model for other companies and investors looking to explore opportunities in emerging markets, taking advantage of ICIEC support in terms of risk mitigation as well as capacity building.

In 2018, Tosyali Holding, a prominent Turkish steel manufacturer, received substantial support from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC). ICIEC issued a 5-year equity investment insurance policy to back Tosyali Holding’s ambitious 3rd phase of development for its steel factory project in Algeria, valued at USD 450 million.

This project represented the largest foreign investment ever made by a Turkish company, highlighting Tosyali Holding’s significant role in the global steel industry. It was the most substantial Foreign Direct Investment (FDI) in Algeria outside the petrochemical sector, underscoring its strategic importance for the country’s industrial diversification.

The support from ICIEC not only provided financial security to Tosyali Holding as a foreign investor but also demonstrated a high-level confidence in the capability of quality investors from the Organisation of Islamic Cooperation (OIC) to execute large-scale international projects. This collaboration marked a landmark milestone in strengthening economic ties between Türkiye and Algeria, paving the way for future investments, industrial growth, regional economic integration and more Intra-OIC Investments.

By securing the production of 70% of Algeria’s building materials needs, Tosyali steel project has largely contributed to reducing the country’s imports of steel, enabling remarkable currency savings. In addition, the project has provided over 4,000 direct jobs and thousands of indirect jobs.

Tosyali Holding initiated its Algerian operations in 2013 through affiliate company Tosyali Iron Steel Industry Algerie A.Ş. (Tosyali Algerie). The complex covers 4 million square meters and has easy access to the Mediterranean Sea.

Phase 1 included a 1.5 Mt/y EAF steel meltshop and a 1.2 Mt/y rolling mill. The initial production capacity of reinforcing bar (rebar) was 1.2 million tons and represented 28% of demand at this time. Like reinforcing bars, wire rods are in high demand and a vital product for development.

Phase 2, which was completed in 2015, added a 0.5 Mt/y wire rod mill, which met 60% of the total needs of Algeria at that time. Wire rods are used for the manufacture of dozens of products such as wire mesh, wire, nails, and screws.

The third phase of development started in 2018 aimed at completing the integration of iron ore into the finished product process. In this phase, Tosyali Algerie set up a 4 Mt/y iron ore plant and a 4 Mt/y pellet production unit to transform iron ore fines into iron oxide pellets.

Phase 4 of the Tosyali Algerie steel complex, a DRI-EAF integrated flat steel production facility, began in 2022. In July 2021, Tosyali Holding awarded Midrex and its partner Paul Wurth a contract to build a second DRI plant at the Tosyali Algerie steelworks. The new DRI plant is to produce 2.5 million tons of HDRI and CDRI with the capability to operate with increased percentages of hydrogen in the future. HDRI will be fed via a hot transport conveyor to the new 2.4 Mt/y EAF melt shop, providing greater EAF productivity and energy savings. During melt shop outages, the MIDREX Plant can continue producing CDRI up to full capacity.

Algeria’s Islamic Banking Voyage of Discovery

Despite being a founding member of the IsDB and a member of ICIEC since 1996, Algeria is a relative latecomer to the Islamic finance industry per se. The country is keen to open up to the Islamic finance industry and the Ministry of Finance is mooting the issuance of Algeria’s debut sovereign Sukuk reportedly in First Half 2025. As Mushtak Parker maintains the potential for and the synergies between Islamic finance and a people-centred sustainable development agenda in Algeria are huge, particularly in the issuance of Sukuk for infrastructure and budget rebalancing, raising funds through Murabaha syndication for trade finance, and through the utilisation of ICIEC’s unique Shariah-compliant credit and investment insurance solutions in a world beset with growing uncertainties.

Algeria, a founding member of the OIC and the IsDB, is now poised to embrace the estimated USD5 trillion global Islamic finance industry.

Hitherto, the country has seen a modest but growing level of activity mainly through the IsDB, ICIEC and through its growing number of Islamic financial institutions including Al Baraka Bank Algeria and Al Salam Bank Algeria, and several Islamic Banking Windows of public and overseas banks such as Crédit Populaire Algérien (CPA), Exterior Bank of Algeria (BEA), the National Bank of Algeria, ABC Bank-Algeria, Banque de Dévelopment Locale (BDL) with its Islamic window Elbadil, and the Bank of Agriculture and Rural Development (BADR).

This follows the proactive policy support from Algerian President H.E. Abdelmadjid Tebboune and his government to embrace and promote Islamic finance in the country’s development agenda, which has manifested in the fact that Algeria is the host country of the 2025 Algeria key islamic finance indicators 2025 IsDB Group Annual Meetings on 19-22 May in Algiers along the theme “Diversifying Economies, Enriching Lives.” H.E. Mr. Abdelkrim Bouzred, Minister of Finance and current Chair of the IsDB Board of Governors, emphasized: “This event is of great significance for Algeria, offering an important opportunity to elevate its standing on the global economic stage by highlighting the reforms implemented and showcasing the country’s strengths in cooperation, investment, and sustainable development.”

Catching Up

The reality is that Algeria as an Islamic finance market has a lot of catching up to do in all the facets of the industry. The good news is that there is a new-found realisation in the government of President Tebboune that Islamic finance has much to offer Algeria in its development journey.

To facilitate this, the government has introduced several pieces of enabling legislation based on parity with the conventional finance sector over the last few years. The main legislation was the Finance Law 2018 which for the first time saw the facilitation of several Islamic banking products.

In October 2024, for instance the government introduced Islamic real estate and mortgage finance regulations which has allowed Algerians wishing to access Shariah-compliant mortgages for their house and commercial property as their financing choice. The government also started in 2022 to licence family and general Takaful operators and introduced legislation to facilitate Shariah-compliant auto financing products.

Islamic finance deposits according to the finance minister H.E. Laaziz Faid had reached DZD794 billion at end June 2024. In December 2024, he confirmed that the finance ministry was working on a Sukuk Issuance Framework and a new law to facilitate the offering of the country’s maiden sovereign Sukuk issuance, aimed at financing projects and infrastructure. funds for its infrastructure projects. Quoted by the local Aljumhuria newspaper, the Minister said that the plan was to issue a debut Sukuk in First Half 2025 to complement the funding needs of the 2025 National Budget, to attract a wider base of foreign investors by diversification the source of funding and investor base, and to boost confidence in the local capital market.

An important development also was in 2021 when the Bank of Algeria (the central bank) signed an MoU with the Bahrain-headquartered Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to collaborate to enhance the Islamic finance industry in Algeria.

Financial Inclusion

But the most important recent development is the repeal of existing legislation to make way for the introduction and adoption of the 2025 Finance Law which includes provisions for regulating Islamic consumer finance products in sectors such as tourism and hospitality, education and healthcare using Murabaha, Ijara Muntahiya Bil Tamleek (hire purchase) and Diminishing Musharaka structures targeting financial inclusion objectives, SMEs, real estate and infrastructure projects, and also reincorporating an estimated USD90bn parallel market, a sizeable shadow market through Islamic banking products and services.

The Islamic Banking Window (IBW) of Crédit Populaire Algérien (CPA), for instance had over 70,000 customer accounts at end 2024 and customer savings of DZD47 billion. According to CPA these initiatives point to the fact that the Islamic finance industry is entering a new phase of offering tailored solutions to customers in key sectors of the economy.

The proposed debut sovereign Sukuk has also been approved under the 2025 Finance Law. According to Al Majalla newspaper, the debut Sukuk issuance is likely to be denominated in local currency DZD. A major problem with all nascent Islamic finance markets is the dearth of reliable and regular market data and whether the data includes the official figures and the estimates for the unofficial black economy. The current Islamic finance data landscape of Algeria is at best sparse and fragmented, and information is ad hoc, dated and sometimes exaggerated depending on the source. This makes it difficult to assess the state of the Islamic finance sector in the country. Date disclosure and transparency is really the task of the financial regulator, the Bank of Algeria, to which all authorised and licenced financial institutions obliged to report to.

According to the Bank of Algeria in a February 2024 report, Islamic banking deposits rose by more than 14% in the last two years, from around USD4 billion in 2022 to USD4.7 billion by June 2023, when there were 12 licensed providers operating in Islamic banking (six state-run,six private providers). There was no delineation of whether they were dedicated or IBWs.

Algeria’s Islamic finance journey needs to transform from a fragmented approach to a more structured one, in which policy making, enabling legislation, various frameworks and guidelines, regulatory standards, acceptance and compliance with international standards, disclosures and clarity of purpose should be paramount. Industry bodies such as IFSB, IILM, AAOIFI and others, together with the IsDB Group could play a crucial role in market education and technical expertise to ensure better understanding of and Shariah certainty and confidence in the industry, which after all has a large natural constituency for Islamic finance products.