The Board of Directors of African Export-Import Bank (Afreximbank) has renewed its approval of a $1billion facility to operate the African Continental Free Trade Agreement (AfCFTA) Adjustment Funds.
Also, at its 134th meeting, the Board approved a $10 million grant as seed funding for the Base Fund of the AfCFTA Adjustment Funds.
Afreximbank and the AfCFTA Secretariat were mandated by the AfCFTA Council of Trade Ministers and the African Union Heads of State and Government to establish and operate the AfCFTA Adjustment Funds, which consists of the Base Fund, the General Fund, and the Credit Fund.
The Base Fund would be used to mobilise grants to address tariff revenue losses and support AfCFTA State Parties to implement the various protocols under the AfCFTA.
The Board also approved a $10 million grant funding as seed funding to kick-start the establishment of the Base Fund.
While the General Fund would be used to mobilise concessional funding, the Credit Fund would be used to mobilise commercial funding to support the public and private sectors, including small and medium enterprises (SMEs), youth and women to adjust to the new trading environment arising from the AfCFTA.
President and Chairman of the Board of Directors of Afreximbank, Benedict Oramah, said the bank was delighted to have appointed the Fund Manager of the AfCFTA Adjustment Funds following the extensive collaborative work done with the AfCFTA Secretariat and the Africa Union Commission during the past few years.
Oramah said the renewal of the $1 billion facility and the $10million grant funding represent a resounding entrustment by the bank’s Board of Directors of these efforts.
These facilities, he said, would again be contributing to making a great idea by the bank become a reality.
He thanked the AfCFTA Secretariat for the partnership with the bank to bring the aspirations of the AfCFTA within reach.
The funding required under the Adjustment Funds is estimated at $8-10 billion. The AfCFTA Adjustment Fund would be managed by Afreximbank, through its subsidiary, the Fund for Export Development in Africa (FEDA), in collaboration with the AfCFTA Secretariat.
With the endorsement by the Afreximbank Board, Oramah said, brings the continent closer to operationalising the AfCFTA Adjustment Funds before the end of 2022.
The Secretary General of the AfCFTA Secretariat, Wamkele Mene, urged other development partners and financial institutions to provide additional resources required under the Adjustment Funds to support the implementation of the AfCFTA.
Afreximbank is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. Afreximbank deploys innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa.
To support the AfCFTA, Afreximbank launched a Pan-African Payment and Settlement System (PAPSS) adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA.
The bank is working with the AU and the AfCFTA Secretariat to develop an Adjustment Facility to support countries in effectively participating in the AfCFTA.
At the end of 2021, the Bank’s total assets and guarantees stood at about $25 billion, and its shareholder funds amounted to $4 billion, while more than $51 billion has so far been disbursed between 2016 and 2021.
The AfCFTA, which is the world’s largest free trade area since the formulation of the World Trade Organisation, aims to bring together all 55 member states of the African Union, covering a market of more than 1.3 billion people, including a growing middle class and a combined gross domestic product of $3.4 trillion.
The Bank works towards several objectives, particularly to create a single market for goods and services, having the potential to boost intra-African trade by 52.3 percent.