Afreximbank operationalises US$1 bln AfCFTA Adjustment Facility
The African Export-Import Bank (Afreximbank) has put in place measures and programmes that are meant to protect African markets from new competitors that they get exposed to as a result of implementation of the African Continental Free Trade Area (AfCFTA).
Zimbabwe has been engaging the private sector to better prepare and brace themselves for the AfCFTA, which is a potential game changer for local firms.
Zimbabwean companies will benefit immensely from the trade pact, which will present immense opportunities for local businesses to diversify exports as well as open better access to raw materials from the rest of Africa,” according to Industry and Commerce Minister Dr Sekai Nzenza.
The World Bank has estimated that the successful implementation of the AfCFTA has the potential to add US$450 billion to Africa’s GDP by 2030.
In November 2021, Zimbabwe submitted the draft of its proposed African Continental Free Trade Area (ACFTA) tariff market access offer to the African Union Commission (AUC) for consideration.
Experts say it is crucial that the local industry is aware of the most important dictates of the agreement that includes its modalities, products categorisation, rules of origin, potential benefits, threats and migratory measures at its disposal.
Giving her opening remarks at the 29th Afreximbank Annual Meetings ahead of the Egypt-Africa Roundtable, Kanayo Awani, Managing Director of the intra-African Trade Initiative at Afreximbank said, AfCFTA’s implementation comes with new competitors who could not previously compete entering the market at low cost.
Such developments will see other markets, with high operating costs struggling to compete.
However, Afreximbank is addressing this challenge through the operationalisation of an AfCFTA Adjustment Facility which will provide a mechanism for Member States to access financial and technical resources to implement the Agreement and mitigate the shortterm disruptions and associated costs, according to Mrs Awani.
She said Afreximbank Board has already committed US$1 billion as the Bank’s initial investment.
Further, according to Mrs Awani the Bank has also developed the Afreximbank African Collaborative Transit Guarantee Scheme, “which will provide a single technologyenabled transit guarantee that will facilitate movement of goods throughout the continent in support of the AfCFTA”.
“When fully operational, the scheme is expected to lead to a significant reduction in border delays and annual savings of more than US$300 million dollars annually,” she said.
Under the Intra African Trade Initiative, Afreximbank have also been promoting Country-Africa and Regional Economic Community (REC)-Africa trade and investment through a programme called Country-Africa and REC Business Councils (CARBC) programme.
The objective of this initiative is to promote African trade and investment through supporting the emergence and institutionalisation of Country Africa and REC-Africa Business Councils.
Our event today (Friday) is part of this initiative as it aims to promote trade and investment between Egypt and the rest of Africa, Mrs Awani said.
“It is my hope that other African countries present in this roundtable today can engage us about supporting a similar initiative in their countries.”
Mrs Awani said other products promoted by Afreximbank include, How to Export Under the AfCFTA in partnership with the International Trade Center (ITC) and the Border Posts and Border Markets Franchising strategy in partnership with AUDA-NEPAD.
Among other initiatives, the Africa-focused multilateral lender has expanded its riskbearing instruments and launched a comprehensive guarantee programme aimed at facilitating much-needed investment financing into Africa.
This is aimed at supporting investments in infrastructure development in markets experiencing challenges, according to Mrs Awani.
Further, the Afreximbank Guarantee Programme (AFGAP) has also been put in place to “help to de-risk African transactions to make them more attractive to investors and financiers”.
Closely related to this, our intra-African Engineer, Procure and Construct (EPC) Contract Promotion Initiative seeks to unlock the market and promote broad-based African participation in large-scale African infrastructure projects.
This, according to Mrs Awani, ensures that African EPC contractors have opportunities to tap into Africa’s US$60 billion infrastructure market.
Mrs Awani also spoke about the lack of bankable projects, which she said is one of “the key constraints to the expansion of investment, especially infrastructure investment”.
“Afreximbank has therefore launched a “Project Preparation Facility” to assist African governments and corporates prepare bankable investment-ready projects that will crowd in private sector investment and financial institutions.”
The aim, according to Mrs Awani, is to bridge the infrastructure gap on the continent and drive the process of industrialization and diversification of exports.-eBusiness Weekly
