The Central Bank of West Africa’s CFA-franc zone (BCEAO) has signed an agreement with the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), to help finance Small and Medium-sized Enterprises (SMEs) through a $100 million Islamic fund.

The Memorandum of Understanding (MoU) signed by Tiémoko Meyliet Kone, Governor of the Central Bank of West African States (BCEAO) and Khaled Al-Aboodi, CEO & General Manager of the ICD, reads, “the ICD will commit an initial $30 million for the SME fund and would help seek additional investors to increase the amount to $100 million while the implementation monitoring was entrusted to the BCEAO.”

This new move by the BCEAO to promote SMEs is a significant step towards the eradication of poverty and improved economic transformation within West African states. For most countries in the region, this would foster economic growth and create jobs for young people.

The decision of Saudi Arabia to boost SME’s in West Africa presents an ample opportunity for the ICD to further expand its activities across the region, which lags behind the Middle East and South-east Asia in Islamic finance, despite West Africa being the home to a quarter of the world’s Muslims.

The Central Bank also committed to supporting SMEs by providing incentives to credit institutions, as well as developing complementary leasing and venture capital instruments.

Both institutions acknowledged the importance of SMEs/SMIs in economic growth in general and the private sector development, particularly in member countries of the West African Economic and Monetary Union (WAEMU). They emphasized their common will to work towards strengthening their cooperation, including financing of the economies of the Union while providing knowledge and mobilizing resources to support SMEs/SMIs.

Al-Aboodi also noted that the MoU will strengthen the ICD’s support towards the regional economies of the WAEMU while providing knowledge and mobilizing resources to support SMEs.