Afreximbank earmarks US$90bn to boost African trade

26Jan 2017
The Guardian Reporter
The Guardian
Afreximbank earmarks US$90bn to boost African trade

The African Export-Import Bank (Afreximbank) will disburse US$90 billion to support trade on the continent under a five-year strategic plan dubbed “Impact 2021: Africa Transformed”.

Afreximbank is the pan-African multilateral financial institution that finances and promotes trade within Africa’s borders and beyond.

The Bank has approved more than US$41 billion in credit facilities for African businesses since 1994, including US$6.2 billion in 2015.

Impact 2021 defines intra-African trade as trade in goods and services between or among African countries; and the flow of goods and services between African and Africans in the Diaspora.

Disbursements in support of intra-African trade are expected to reach US$25 billion between 2017 and 2021. The rest of the funds will go towards Industrialisation and Export Development; Trade Finance Leadership; and Financial Soundness and Performance.

Under these pillars, the Bank will facilitate the production of value-added exports and services while ensuring that the produced goods and services are traded; support the development of the agro-processing, light manufacturing, and tradable service sectors; and expand intervention in some of the critical trade finance products it already offers and by creating new products and initiatives.

The Cairo-based institution had total assets of US$9.4 billion as at April 30 2016 and is rated BBB- by Fitch and Baa2 by Moody’s.

In August last year, the African Development Bank (AfDB) released US$350 million to support cross-border trade in Nigeria. The regional lender gave approval for US$300 million and US$50 million loans to First Bank of Nigeria and FSDH Merchant Bank Nigeria respectively to support import-export activity of local enterprises.

The Bank stated that the two facilities were part of AfDB’s broader efforts to provide counter cyclical support to the Nigerian economy at a time of falling commodity prices.

AfDB said that if fully utilised, counting rollovers, the interventions were expected to facilitate about US$2.5 billion of export-import related activity in intermediate and finished goods, raw materials and equipment.

The bank said this would lend support to economic growth and tax generation over a 3 – 5-year period. It said that the fall had caused shortages in foreign currency supply and led to unmet demand for trade finance instruments to support Nigeria’s on-going economic transitions.

In February 2016, President Paul Kagame of Rwanda said intra-Africa trade could greatly help African countries to reduce donor dependence. According to him, his country does not intend to remain dependent on donor support but rather aims at transitioning to sustainable development by attracting investments and doing business.

The President was speaking at World Government Summit in Dubai, United Arab Emirates, with John Defterios, the CNN emerging markets editor, on a one-on-one discussion.

The global summit was dedicated to shaping the future of governments worldwide by shaping the agenda with a focus on how they can harness innovation and technology to solve universal challenges facing humanity.

Kagame said the national vision is to make sure that Rwanda can stand on its feet, develop, attract investments and do business.

“Donor support is not something we wanted to rely on forever, it was there to help build our foundation, institutions and different fundamentals to be in place so that we can sustain our economy based on what we can do ourselves and also within the region, for example through regional integration,” the President said.

The transition from donor dependence, he said, would be made possible by regional integration and increased intra-Africa trade. He said so far as a result of integration, Rwanda was already experiencing increased trade within the East African Community as well as trade between the community and other regions.

Under the president’s leadership, Rwanda has been pursuing regional integration through multiple ways and is a member of several trading blocs including; East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and Economic Community of Central African States (ECASS).

Sustaining growth with resilience
Kagame noted that, going forward, the country aimed at sustaining economic growth driven by resilience and good partnership. He added that laws and policies necessary to attract internal and external investments were already in place.

“The laws that we need to have in place have been passed. This is building on what we have done since the year 2000,” Kagame said.

“We have seen a lot of progress in building institutions, strengthening them, service delivery has been very significant and involving the Rwandan people in different productive sectors. 2016 is really focused on building on what we have already done in terms of macro-economic stability created.”

Noting that there was nothing holding back African countries from developing regional trade to the level of developed nations, he called on African countries to deepen trade ties with a goal of shared prosperity.

President Kagame also noted the role of citizen involvement in national development, saying nations will fail if Governments and citizens do not work together to fulfil the people’s aspirations.