The COVID-19 pandemic has created a devastating global health crisis, leaving no country or citizen spared from the ensuing economic and social repercussions. The necessary lockdown measures employed by governments have greatly impacted global supply chains and trade flows, leaving import-dependent countries vulnerable. The pandemic has also exacerbated the risk environment and stymied investment, particular for countries with already fragile economies.

In an effort to combat the challenges posed to select member countries, ICIEC and the Islamic Solidarity Fund for Development (ISFD), the poverty alleviation arm of the IsDB Group, have collaborated to create a rapid COVID-19 response and resilience initiative which is prioritized for certain IsDB member countries to meet their import needs of medicine, medical equipment, food supplies and other essential commodities. Eligible countries were determined by their level of import dependence.

ISFD has allocated a grant of up to USD 400 million to ICIEC, which is being utilized to subsidize the premium on the insurance cover to facilitate the procurement of medicine, medical equipment, food supplies and other essential commodities to eligible countries.

IsDB Group President and Chairman of the ISFD Board of Directors, Dr. Bandar M. H. Hajjar, addressed the need for IsDB Group support in his statement. “In the face of the rising protectionism that has been further fueled by the pandemic as well as the associated economic cost for our member countries, IsDB Group recognizes the need to mobilize relief for OIC countries that are heavily reliant on imports, especially for essential commodities such as pharmaceuticals and food supplies. ISFD’s contributions to the ICERI are an effort to work jointly with ICIEC to expand capacity for maintaining these vital trade and investment flows.”

In a separate statement, ICIEC CEO, Oussama KAISSI, echoed the sentiment, “ICIEC is committed to supporting the OIC member countries in their recovery from the Covid-19 Pandemic. The Corporation is pleased to collaborate with ISFD, utilizing IsDB Group synergy to enhance both organizations’ capacity to support relief efforts. The ICERI is prioritizing transactions for urgent imports, ensuring citizens have access to critical commodities through these challenging times.”

The ICERI will provide insurance support for the procurement of two urgent needs:

1. Medical equipment, pharmaceutical products and other related items that are needed for the fight against the COVID-19. Including but not limited to, protective gear, testing kits, sanitizers, ventilators etc.
2. Essential commodity items, including essential food supplies and energy commodities

An implementation team composed of representatives of ISFD and ICIEC was established to set the procedures for the ISFD Grant allocation to eligible transactions. The operational tasks of insuring and monitoring the transactions is being undertaken by ICIEC in its regular course of business. ICIEC is committed to prioritizing the transactions related to combating COVID-19 and is trying to augment the impact of ISFD’s grant as much as possible. Most of the transactions funded through the ICERI are being led by the eligible member countries’ Governors and Ministries of Health, as they have close insight on the most urgent needs for their respective countries.

ICERI is meant to target two of the IsDB Group’s ‘3 R’s’:

• R1: Respond through immediate disbursing actions to assist Member Countries’ in acting quickly to mitigate the adverse impact of COVID-19
• R2: Restore via medium term actions to strengthen health infrastructure and economic systems to overcome the pandemic’s peak.

Projects

A number of strategic projects have already been supported through the ICERI, including ICIEC’s USD 9 million in LC confirmation insurance to BMCE Bank of Africa Morocco to secure urgent imports of strategic commodities to Senegal. The COVID-19 pandemic, combined with flooding, has caused a serious supply chain disturbance and economic distress in the country.

ICIEC extended USD 5.5 million in coverage to the State Bank of India’s Singapore branch through the ICERI for the critical importation of wheat to address food security for the citizens of Bangladesh.

To address Tunisia’s energy security, ICIEC provided USD 4.75 million in cover to European-based bank, CHAABI, and USD 19 million in coverage to BMCE Bank of Africa Morocco through the ICERI. A Bank Master Policy was provided for both of these transactions to support the import of fuel to Tunisia’s state-owned electricity production, transport and distribution centre, Société Tunisienne de l’Electricité et du Gaz (STEG).

Through the ICERI, ICIEC has also extended USD 30 million in cover with a Bank Master Policy with Kuwait Finance House. The financing is being used by Egypt’s Ministry of Finance to import crude oil and refined petroleum.

Since the inception of the Islamic finance industry in the 1970s, there has been steady growth in the demand for Shariah-compliant products and services. The industry’s total assets reached a high of USD 2.5 trillion globally in 2019. But given the challenges posed by the COVID-19 pandemic, the volatility in oil prices and the uncertain macroeconomic environment, the Islamic finance industry faces unprecedented challenge to its development in the coming months and perhaps even expanding over the next few years.

While it is known that the COVID-19 pandemic will have implications across all financial markets, the effects on the Islamic finance market have the potential to be more severe and create deeper impact. This is mainly due to the fact that the current crisis is affecting small and medium enterprises (SMEs) as well as low income and minimum wage individuals particularly hard. In comparison to conventional banking, Islamic finance has much larger exposure to SMEs, microfinance, and retail lending, exposing them to greater risk of client default or increased claims.

However, Islamic finance has proven to be resilient due to the nature of its offerings and instruments. Islamic banks were able to demonstrate this resiliency in surviving the 2008 global financial crisis with minimal impact. The main reason Islamic financial institutions weren’t affected to the same degree as conventional banks is that Islamic banks provide interest free services and prohibit executing unethical and high-risk transactions. The Islamic banking system also encourages transparency between institutions and their customers. In addition, all cash flows are attached to real assets in the economy — this means that it’s very difficult to create unsustainable levels of debt, as can be seen with conventional banking where debt can be created without much of a limit. These principles insulated Islamic finance institutions from the risk of bankruptcy which many conventional banks faced during the last crisis.

With that said, the future of Islamic finance is ultimately unknown. There is ample room for growth and for Islamic banking solutions to become critical in aiding the recovery following the crisis, but there are many challenges that must also be faced to witness this potential growth. The ultimate outlook will depend on the longevity and severity of the COVID-19 pandemic and its resulting effects – particularly in OIC countries.

Responding to COVID-19 through Islamic Finance

As global governments and development institutions respond to the COVID-19 pandemic, a diverse, dynamic and inclusive set of stakeholders must be engaged to address the enormous challenge of providing support. The UN Secretary-General’s Call for Solidarity outlines three components: tackling the health emergency; focusing on social impact in the response and recovery; and helping countries recover more sustainably for the long term. ICIEC and the Islamic Development Bank (IsDB) mirror these components in their commitment to the 3 Rs – Respond, Restore, and Restart.

Solutions like social distancing policies and government enforced lockdowns are flattening the infection curve at the cost of steepening the recession that is leading the financial system into potential crisis. Economic shutdown has created issues for both supply and demand, creating shocks that reverberate through the global economy. Industries across most sectors have had to cut down production, resulting in job losses. Due to this, both business and civilians are facing significant cash flow constraints.

Islamic finance is an interest free system that is responsible, ethical, sustainable and shock-preserving, thus positioning it well to be part of the COVID-19 response. Islamic financial institutions offer a range of financing instruments that can positively impact every group from SMEs in least developed countries to policy makers in highly developed countries. In April of 2020, the United Nations Development Program (UNDP) highlighted several Shariah-compliant financing instruments that could be part of the integrated pandemic response plan to help countries prepare, respond, and recover from the pandemic.

In the short-term recovery, there is potential for Zakat to be an important component of national and NGO emergency support programmes. Donors typically require that Zakat be disbursed within one year of being given. The focus on immediate benefit is well suited for a crisis response and Zakat donors support both the economically insecure and people living in poverty, an area of increased attention in the pandemic. Zakat donors also often give cash transfers, which can be especially important for liquidity in emergencies.

For the response and recovery in the medium or on-going term, the financing of equipment, resources, and other sources of livelihood through trade finance is a key mechanism in which Islamic banks and financial institutions can support recovery. Social Sukuk and impact investing – private investment prioritizing businesses with social impact – can play a central role in the recovery. Aligning financing activities with the SDGs is another significant opportunity for Islamic banks. Takaful trade credit insurance solutions (as provided by ICIEC) are a critical offering to keep trade flowing.

For long-term recovery and resilience, Waqf endowments can be important contributors to long-term resilience. With Waqf, financial or non-financial assets such as land or buildings are permanently dedicated to social purposes. This can be an important way for stakeholders to contribute to social infrastructure that serves the SDGs and recovery over the longer term. SDG-aligned Sukuk can also be an important source of long-term capital for governments and companies. Unlike conventional bonds which are essentially debt, the underlying asset in Sukuk may be an alternative as Sukuk grants partial asset ownership. ICIEC CEO Oussama Kaissi spoke on ICIEC’s role in enhancing new entrants to the Sovereign Sukuk Origination Market.

“By accessing Sukuk, companies can increase their investor base through stronger ratings, raise loan tenors and decrease borrowing costs,” he claims. ICIEC’s Sovereign Sukuk Insurance Policy provides credit enhancement in transactions involving sovereign and sub-sovereign entities. It insures the Sukuk investor against default on Sukuk issued by sovereign entities of member countries.

Looking to the Future

COVID-19 is shifting the dynamics in the industry. The necessary public health measures have created the need for businesses to change their course of action and overall outlook for the future. Beyond the immediate economic implications, COVID-19 is creating new opportunities by forcing the Islamic finance industry to adapt to rapidly evolving market conditions and speeding up the pace of emerging trends in socially responsible investing, sustainability, and digitalization to mitigate the impact of the outbreak.

Even before the COVID-19 pandemic, Islamic banks have been trying to catch up with conventional banking counterparts by stepping up investment in digitalization to reduce operating expenses, boost revenue and automate internal processes. As financial institutions around the globe implement remote work policies and homebound safety measures, there has been a considerable increase in digital banking transactions and activity, which in turn is providing added force to drive the digital transformation push across Islamic banks. This includes increased automation of processes to minimize the need for human contact as well as digital structures for liquidity management.

Against the backdrop of the COVID-19 pandemic, fintech will continue to play a significant role in the industry’s development in the coming years by improving access to financial services and transforming Islamic social finance. Fintech is an area in which IsDB and ICIEC have already made significant strides in developing. The OIC Business Intelligence Center (OBIC, an initiative which aims to provide accessible and affordable business information and credit data on businesses across the OIC) has been approved and is currently underway.

There are other challenges Islamic banking must face in order to boost growth. Islamic finance is still lacking a global set of standards that is accepted by all stakeholders. In an effort to produce a solution, the United Arab Emirates Ministry of Finance, the Islamic Development Bank, and the Dubai Islamic Economy Development Centre (DIEDC) have recently established a partnership to develop an international legislative framework for Islamic finance. The goal of the framework is to accelerate the growth of the Islamic finance industry and reduce discrepancies around the globe. The partnership will hopefully lead to the standardization of Sukuk by factoring in the requirements of regulators, Sukuk issuers, and investors. When Sukuk becomes comparable to conventional instruments, from a cost and effort perspective, Sukuk is believed to find a more prominent place in the global financial ecosystem.

Prior to the pandemic, the Islamic finance market was poised for strong performance in 2020, but COVID-19 and lower oil prices changed the outlook. Despite the challenging conditions, rating agency Standard & Poor’s has projected that the Islamic finance industry will still show low to mid-single-digit growth in 2020-2021 after the 11.4% growth in 2019 led by strong performance in the Sukuk market. The global rating agency also predicts that the volume of issuance will reach $100 billion in 2020 compared with $162 billion in 2019. S&P claims that coordination between different stakeholders and institutions is key to the industry leveraging these opportunities for sustainable growth. In other words, teamwork is essential. As a leader in multilateral Shariah-compliant insurance solutions, ICIEC stands ready to unite with relevant partners and grow the Islamic finance industry.

With 47 Member Countries spread throughout the OIC region, ICIEC works with nations at various levels of development. Despite great general progress in OIC countries, some of the Corporation’s Member Countries are still considered low income and least developed, while others have been experiencing robust economic growth and fulfilling their development agendas. No matter the country’s Human Development ranking, ICIEC is committed to assisting each Member Country in their development goals.

ICIEC’s development role is to provide support and facilitate the achievement of development agendas within our Member Countries, with the ultimate goal of facilitating trade and meeting national objectives. ICIEC works to fulfill this role by offering insurance solutions to mitigate foreign direct investment and trade-related political and commercial risks and protect businesses from the negative impacts these risks can pose.

Measuring the impact of ICIEC’s footprint on development in the real economy is extremely important in determining our level of success in achieving our vision of promoting sustainable economic development within Member Countries. Employing the United Nations Sustainable Development Goals (SDGs) as important signposts to shape strategy, ICIEC has made a commitment to document and assess the impact of our activities and thereby promote transparency with the Corporation’s beneficiaries – namely Member Country citizens.

In order to facilitate this transparency, each year ICIEC releases an Annual Development Effectiveness Report (ADER). The ADER provides a complete overview of the Corporation’s efforts toward development – including ICIEC’s total contribution to individual sectors, presenting case studies to explain the impact of specific projects, and discussing the outlook for the upcoming year. ICIEC is pleased to announce the release of the 2019 ADER, which details last year’s most impactful projects and the contribution to sustainable development that ICIEC has made in member countries last year.

In addition to the annual release of the ADER, the Corporation has recently begun work to develop an impact webpage as an addition to the Corporation’s website. The page will explain how ICIEC measures its development impact and its contribution to the SDGs, as well as provide timely updates on the most impactful projects supported.

To give just one example of ICIEC’s development impact, earlier this year, the Corporation provided EUR 120 million cover against the non-payment of a loan facility provided to the Government of Côte d’Ivoire for the renovation of a school and the construction of 22 additional classrooms. This project is part of a social program that the Ivory Coast’s Government is implementing to fight poverty and illiteracy, addressing SDGs 1 and 4 – zero poverty and quality education. The project will enhance the school’s capacity and enable more children access to education – allowing them a greater chance at employment and prosperity later in their lives.

The COVID-19 pandemic is having profound effects on healthcare systems and economies across the globe. As governments are implementing WHO recommended public health measures, the implications on the global economy are wreaking havoc for financial institutions worldwide as they scramble to provide support, or merely maintain their own balance-sheets. Government backed financial institutions such as Export Credit Agencies (ECAs) or National Development Banks (NDBs) are being called upon like never before to help smooth over the sharp ridges in the market created by the pandemic and its effects.

As a leading multilateral ECA, ICIEC considers supporting its 47 member countries part of the Corporation’s mandate and is one of the key players in the Islamic Development Bank (IsDB) Group’s strategic response. Seeing as the challenges faced by this pandemic are unprecedented, the Corporation has taken an interest into what outlook national ECAs in the OIC have taken and their efforts towards mitigating the effects of the pandemic in their respective countries.

To be best informed on the actions and views of peer ECAs, the Corporation took various approaches to assessing the ECA landscape. On July 13th, 2020, ICIEC CEO, Mr. Oussama Kaissi, participated in a webinar co-hosted by ICIEC and the Islamic Centre for Development of Trade (ICDT). The webinar hosted various ECAs from the OIC region, giving each the chance to give an overview of their institution’s response to the COVID-19 as well as respond to a set of panel questions. A survey was sent to Aman Union members by the committee regarding their response to COVID-19. The survey responses were anonymized and used to inform this article.

The Impact of COVID-19 on credit risk

When asked how the pandemic is affecting credit risk in their particular country, as well as on a global scale, the majority of ECAs surveyed reported a similar outlook on global impact. They reported that amid an already weak growth environment, the global economy has entered into recession driven by supply chain and demand disruption on a global scale. This disruption arises from shutdowns around the world that are a result of the necessary public health measures to stem the COVID-19 pandemic. The economic slowdown is causing fiscal shocks that are having a severe effect on the global economy.

The latest estimates from the WTO predict a fall in merchandise trade between 13% and 32% for 2020 while UNCTAD is predicting a drop of up to 40% in foreign direct investment. GDP is estimated to contract by 4.9% with a cumulative loss of 12 trillion dollars between 2020 and 2021. The GDP for the OIC region specifically, based on IMF estimates, is only estimated to contract by 2%. Despite that optimistic percentage in comparison to the global average, recovery for OIC countries is expected to be prolonged, leading to further growth in government and corporate debts.

The OIC region is also facing a sharp decline in remittances, which typically make up a sizable contribution to GDP in OIC countries. The World Bank predicts remittances will decline by up to 20% – largely due to loss of employment and lower wages for immigrants and migrant workers. Remittances to low income countries is projected to fall by 19.7 percent to $ 445 billion, representing a loss of a crucial financing lifeline for many vulnerable OIC households. COVID-19 is expected to cause the first increase in global poverty since 1998 which highly increases the vulnerability toward defaults and increased claims for ECAs.

Many ECAs are anticipating that the global credit risk conditions will severely deteriorate due to supply chain and demand disruptions arising from shutdowns around the world as a result of the COVID-19 pandemic. The magnitude of the credit risk curve is believed to depend on economy and sector vulnerability, government policy measures and individual capitalization levels. The sharp global recession is expected to continue throughout the rest of 2020, followed by a less drastic U-shaped recovery in 2021.

The ECA Role

ECAs were created to be countercyclical tools, meaning they play an important role in growing and maintaining the economic environment in the regions in which they preside. In times where the private sector generally lacks the appetite for new initiatives and is underserving a significant element of the economy due to perceived risk or low profitability, ECAs step in to fill the market gaps so that the national economy doesn’t suffer. ECAs employ the principles of demonstration effect to help address these market gaps in the long-term. They do this by demonstrating to commercial and private entities that despite risk, there is a profit to be made in traditionally underserved areas. Once the private sector begins to crowd-in to fill the aforementioned gaps on their own and the market normalizes, ECAs begin to phase out their support for the structural market gap.

As counter-cyclical risk-mitigation tools, credit insurance is inherently designed to support trade in risky environments and under challenging conditions – helping to manage risk and liquidity. In that sense, ECAs simply maintaining the availability of these instruments is a positive support to banks financing exporters and even directly to exporters themselves during the current crisis. It would only hurt the market further for ECAs to also minimize their risk-appetite.

Currently, many national ECAs are being called upon and considered a critical element of their government’s immediate response measures. In many countries, the ECAs have stepped in as important policy tools to fill the market gap and meet short term funding needs of the companies. As private credit insurers lower their credit limits or even withdraw coverage for some countries entirely due to commercial concerns, ECAs can play a critical role in filling the gap by expanding the capacity and the scope of their insurance support and attempting to ease the burden on existing policyholders. ECA support is crucial for exporters to continue their export and manufacturing activities through this highly uncertain environment.

The Impact on claims

Though the majority of peer ECAs in the OIC region believe that it’s still a bit too early to make sound and quantifiable predictions, they do expect to feel the impact of the pandemic in their own institutions. It is generally assumed amongst peer ECAs that all credit insurers should anticipate significant increases in payment delays and insolvencies for 2020. The reported outlook is that the decline in commodity prices that result from the supply chain disruptions and decreased demand will lead to a fall in both export and fiscal revenue for commodity exporters – reducing foreign exchange flows, increasing perceived risk, and increasing payment difficulties for both sovereign and corporate clients. In Turkey alone exports have decreased almost 15% as of the end of June. Sectors hit the hardest are the automotive, tourism, and construction industries.

The impact of the COVID-19 pandemic is expected to disproportionately affect small and medium enterprises and companies – especially so in the countries taking the hardest hit from the virus, as well as in countries with high perceived risk. The economy in many OIC countries is heavily reliant on SMEs and many OIC countries fall under one or both of the aforementioned criteria. Turk Eximbank reports that approximately 70% of their client base are SMEs and that volumes have already increased by 18% due to the increased financial pressure on Turkish exporters, but overdue notices also have increased by 200% and claims have increased by 29% already so far in 2020.

OIC ECAs should expect an influx of claims from their Small and Medium sized Enterprise (SME) clients and should place special attention to assisting them through the effects of the crisis. The critical approach reported by OIC ECAs right now is to balance – balance filling market gaps while also maintaining their own portfolios. ECAs should expect to receive a significant increase in claims for the rest of 2020

Projection for ECA Business Growth in 2020/2021

One fundamental and significant implication of the crisis on ECAs business performance is that the systemic risks that emanate from the pandemic have the potential to severely affect ECAs soundness indicators – meaning the economic difficulties and liquidity crunch could create pressures from international rating agencies that may affect the ECAs rating, effecting their perceived credibility. The severity of the effect on rating would depend on economic vulnerability, the government and regulator response to the pandemic, and an individual institution’s performance.

As far as quantitative business performance is concerned, many ECAs, including ICIEC, anticipate negative growth for 2020. While the volume of claims is expected to grow drastically, the number of successful recoveries is expected to decline. It’s predicted across OIC ECAs that there will be an overall drop of 15 to 25% to the total business insured for 2020 in comparison to 2019. It is believed that 25 to 30% of that decline will come from the short-term effects on the trade sector. ECAs are therefore shifting priority towards strategic planning and in some cases, restructuring operations. The outlook for 2021 is that it will be a slow growth year – especially if the pandemic persists through the second half of 2020.

The ECA Focus

In addition to providing support to policyholders and exporters in general, ECAs are needing to address certain areas of particular concern with special consideration and focus. As mentioned earlier, ECAs should have a particular focus on their SME clients during any times of crisis. SMEs are the most vulnerable to the implications of the pandemic as they do not have enough capital to survive the sudden drop in economic activity and demand. Therefore, ECAs increasing the availability of short-term funding will play a critical role in the SMEs ability to continue their operations.

In addition to SMEs, there are certain areas that require more attention from ECAs in times of crisis. For example, ICIEC CEO Mr. Oussama Kaissi, notes that member country ECAs have different needs. “Some entities are more technically advanced and developed than others,” he claims, “while some are still new entities, and others have not evolved as far technically over the years of their operations. “

He went on to say that “commodity dependent economies will also need ECA focus as they face more serious macroeconomic issues due to the drop in prices – specifically oil dependent OIC countries. Risks of the pandemic will also be higher in countries where the lockdown measures are implemented the longest and where little government measures have been taken to support the economy.”

One example of the role an ECA can take is that as member of the Islamic Development Bank Group (IsDBG), ICIEC is engaged in a platform to assess each Member country’s needs in terms of the Group’s support. The IsDB Group pledged USD 2.3 billion toward member country recovery – including ICIEC’s pledge of USD 150 million. The Corporation’s support is being provided through the provision of insurance solutions to supply medical equipment and essential commodities across 47 member countries.

The ECA action plan

When deciding how to strategically respond to the COVID-19 pandemic, ECAs have many paths and elements to consider. National ECAs with government oversight may have been given specific tasks or focus areas by their ministries. Other ECAs may be left to sort out for themselves what areas to focus on. The various responses across the ECA industry are focused on easing the burden on policyholders, supporting the market capacity, boosting liquidity, and minimizing defaults.

According to our surveyed peers, the OIC ECA focus is prioritizing easing the pressure on policyholders through a range of measures, including having an expedited approval process and extended validity period; extended time for notification and claims filling; special claims handling processes; concessions and waivers on premiums and various fees; and discretionary powers for policyholders to extend credit terms to buyers without additional consent. The hope is that if the pressure is lightened for policyholders, the number of defaults can also be minimized.

In addition to supporting policyholders, many OIC ECAs have also moved to bridge market gaps in available insurance cover by expanding their scope, capacity and line limits. At the most basic level, this means maintaining cover policy and country limits at pre-crisis levels, but in most cases, this is accompanied with an overall increase in available capacity, new product lines and a higher % cover – designed for the specific needs following the crisis.

With pressure on cash-flow being one of most pressing challenges seen through the COVID-19 implications, a significant number of ECAs have boosted their programmes to support working capital, inclusive of direct lending and guarantees. Some ECAs have introduced entirely new lines, while others have extended the scope of existing products with, e.g. longer credit periods, relaxed eligibility requirements, increased % cover. Other forms of new or increased support introduced include extended cover for pre-shipment risks, domestic supply cover to exporters and import guarantees for specific industries.

During the webinar hosted by ICIEC and ICDT, all of the participating ECAs shared the sentiment that although COVID-19 is presenting many challenges to the global economy, dynamism and flexibility are key to the ECA response and that organizations can be using this period of crisis as an opportunity.

“COVID can be utilized for change,” claims Mr. Tarig Khalil Osman, Chairman of the United Insurance Company of Sudan. He went on to say, “[our organization has implemented new initiatives that] have changed the dynamics of the company. We’ve become focused on data driven innovative changes – such as a new software and we are aligning ourselves to the UN’s SDGs.”

Mr. Sheikh Khalil Al-Harthy, the Chief Executive Officer of the Export Credit Guarantee Agency of Oman (Credit Oman), echoed this sentiment in his statement that Credit Oman is, “trying to maintain a nimble operation and trying to leverage technology the best we can. Otherwise we are using this COVID time to look inward and reflect and revise on what we can do better to [get through] this lockdown situation.”

In addition to taking the opportunity to change, Mr. Enis Gûltekin, Deputy General Manager of Turk Eximbank discussed the opportunity to engage with clients – stating, “we want to stay connected with Turkish exporters at this time through our branches and listen to their needs especially on the loan side of our business. We’ve also been working on new products and we’ve launched some during this period – for example the letter of credit confirmation insurance has been launched.”

Additional initiatives were also mentioned by peer ECAs – including partnering with peers to increase both institutions’ capacity, and working within the MENA region and with other countries that highly depend on oil exports for GDP to assist in strategically prioritizing and supporting projects that help to diversify their economies.

2020 has been an unforgiving yet transformative year for the healthcare industry. The COVID-19 pandemic has inflicted devastating human costs and has put immense pressure on national healthcare systems across the globe. The unprecedented nature of the pandemic and the rapid speed of contagion has left many countries’ healthcare systems to grapple with overcrowded capacity and insufficient supplies – exposing the fragilities of the sector.

While the short-term demand for testing and the race to find a treatment or vaccine intensifies, governments are having to reallocate budgets to finance the urgent healthcare services. In addition to sourcing critical supplies like PPE, test kits, and ventilators, funding is needed for preventative healthcare initiatives such as assessing the feasibility of immunity passports, facilities for mandatory quarantine periods, the up-scaling of national contact tracing initiatives, and mass vaccinations that can be expected once one becomes approved.

Many OIC countries are facing these supply challenges as well as demand for funding at a heightened scale, as low income and least developed countries who lack the necessary healthcare infrastructure are at greater risk of the pandemic’s implications. In an effort to combat this, the Islamic Development Bank Group devised the ‘Strategic Preparedness and Response Facility’ which provided US$ 2.3 billion to mitigate the negative health and socio-economic impact of the COVID -19 pandemic – including USD 150 million for ICIEC insurance coverage.

ICIEC has been providing credit and political risk insurance to sustain imports of strategic commodities, to protect investments, and to minimize volatility. In prioritizing the most pressing needs of OIC citizens, the Corporation has focused its efforts on addressing the urgent demand for pharmaceuticals, healthcare supplies and agricultural commodities, among other essential products. ICIEC has recently provided support to critical healthcare projects in member countries, helping to ensure that their systems are better able to absorb the negative effects of health crises like COVID-19, saving lives in the process.

For example, ICIEC recently provided EUR 143 million toward the construction of two new hospitals and five new medical units in five additional hospitals in the West African Republic of Côte d’Ivoire. Prior to this project, Cote d’Ivoire was facing significant infrastructure deficiencies in the health sector. Approximately 33% of the population was living more than 5 km away from a healthcare facility while 10% live more than 15 km away. ICIEC’s involvement in the project enables the Ivorian population to access an improved health system, allowing the Ivory Coast to better serve its citizens and achieve its National Development Plan targets in the process. For example, ICIEC recently provided EUR 143 million toward the construction of two new hospitals and five new medical units in five additional hospitals in the West African Republic of Côte d’Ivoire. Prior to this project, Cote d’Ivoire was facing significant infrastructure deficiencies in the health sector. Approximately 33% of the population was living more than 5 km away from a healthcare facility while 10% live more than 15 km away. ICIEC’s involvement in the project enables the Ivorian population to access an improved health system, allowing the Ivory Coast to better serve its citizens and achieve its National Development Plan targets in the process.

The two new hospitals, one located in Adzope and the other in Aboisso, will collectively have a capacity of over 400 beds and will significantly improve the availability of healthcare services in each region using state of the art equipment. In addition, the project will finance five new medical units in five hospitals across the country. This includes a radiotherapy center in Abengourou, an emergency unit each in Daoukro and Seguela, a traumatology center in Toumodi, and a surgery and emergency unit in Bouna.

The construction of hospitals in Côte d’Ivoire was originally part of the government’s National Development Plan for 2016-2020 but has now become a major support for the Republic’s current efforts to contain the COVID-19 pandemic. The two hospitals will employ around 600 local people and will foster the development of a micro-economy in the areas surrounding them. The project also supports the economic recovery by facilitating the intra-OIC trade of services and human capital between Cote d’Ivoire and Morocco, both Member Countries of OIC.

ICIEC also recently extended the non-payment insurance for the supply and installation of state-of-the-art CT scan equipment in Punjab, Pakistan for USD 2.3 million. This project will greatly assist the Pakistani healthcare sector in fighting the pandemic by providing doctors with a more cost effective and accurate method for diagnosing patients. The project was funded as part of an ongoing program with the Government of Punjab to improve the lack of essential medical diagnostic equipment in the province. ICIEC’s involvement in the transaction also directly supports the Punjab Health Reforms Roadmap, initiated in April 2014, to improve the quality of healthcare facilities in Pakistan’s most populous province.

Looking toward continuing this support within member country healthcare sectors for the long-term recovery, financing technology will be an essential response to the crisis. In the macro environment, traditional IT companies such as Microsoft, Optum, Intel, and AWS will almost certainly begin venturing into the healthcare sector looking to develop large AI platforms aimed at predicting pandemics, forecasting patient volume across providers, authenticating reimbursement, and driving general well-being of the insured population through medication management and self-care enablement. ICIEC expects that financing healthcare technology will also be critical in the response to COVID-19, as a defense mechanism against another crisis.