Société Burkinabé des Fibers Textiles (SOFITEX), is a state controlled agro-industrial and commercial entity, involved in the entire cotton production cycle, including planting, ginning of seed cotton and export of cotton fiber. It was set up in 1979 as a public sector limited liability company by the main shareholders, namely the Government of Burkina Faso and the former Compagnie Française pour le Développement du Textiles (CFDT). Today, it is one of the largest cotton companies in Africa and the leader in Sub-Saharan Africa.
Until September 2004, SOFITEX had the monopoly over the cotton sector in Burkina Faso. The company was responsible not only for undertaking the full industrial and commercial activities related to cotton export, but also for ensuring the social development of the rural population. Despite structural changes in the sector, SOFITEX covers an area of over 550,000 ha under cotton cultivation and transacts with a rural population of 3.0 million, representing 25 % of the total population of Burkina Faso.
SOFITEX is one of the best run cotton companies in Africa and is well-known for its high quality products due to its strict quality control procedures over the whole production cycle with a complete follow up at farmers level up to the final production in the mills and storage facilities at the seaports. SOFITEX is the only company in the region to have seed producing facility (delinting units) in order to improve quality of cotton seed for better yield and more resistant varieties.
In a context of low world cotton prices and at the early stages of the sub-prime crisis, SOFITEX requested the assistance of ITFC in providing working capital financing to compliment its financing requirements.
In its role as a trade facilitating and promoting corporation, ITFC responded to the request positively. The corporation provided of a mix of commercial and developmental- oriented solutions without competing with local Financial Institutions in an attemptto assist SOFITEX in its endeavors.
As a lead arranger in this Shari’ah-compliant structured commodity trade finance transaction, ITFC approved a € 70 million syndicated Murabaha supply chain financing in favor of SOFITEX which included agricultural inputs and post harvest financing. The financing covered the first phase of agricultural inputs financing of € 20 million and a second phase of post harvest financing of € 50 million.
ITFC’s participation in an operation for an emerging market that is a perceived high risk country was undertaken in order to help reduce poverty through trade, thus helping support million of people in Burkina Faso, which is a member country of the IDB Group. Furthermore, this trade finance operation contributes to the accomplishment of ITFC's developmental objectives in Burkina Faso by: contributing to job creation through facilitating financing operations, alleviating risk factors which prevent trade, building investment confidence in least developed markets and enhancing the export capabilities of member countries. ITFC is consistently at the service of its member countries as an organization mandated to “Advancing Trade and Improving Lives.”