After 25 years of operations that kicked off in Abuja, the African Export-Import Bank (Afreximbank) said it has mobilised no fewer than $65 billion worth of loan syndications for trade financing and the development of the continent’s economies.
Nigeria, as a major stakeholder and contributor to the pan-African largest multilateral lender, has received about 40 per cent of the bank’s interventions, covering public investments and private sector working capital, particularly, the banks.
Today, while Nigeria and the rest of the African economies are still battling with financing challenges, the question of what it would have been like for the continent, without the emergence of the bank remains at large.
Meanwhile, the bank noted that there is as much as $120 billion in trade finance gap that needs to be closed; yearly $93 billion trade infrastructure gap; and a global trade share at three per cent, that needs to be raised; while Intra-African trade is still far below aspirations.At the weekend, during the yearly meetings of Afreximbank, part of the $65 billion syndications was injected further into Nigeria’s economy, as the Bank of Industry signed for a $750 million facility for on lending to small businesses.
Also, Aliko Dangote, signed a $650 million loan facility with the for an oil refinery project in Lekki, Nigeria, on a seven-year term loan, with five years moratorium.The government received a provision of $1.8 billion to support the economy during the recent oil price shock between 2015 and 2016, while a provision of liquidity and trade finance lines of more than $800 million was made during the banking consolidation when many international banks cut credit lines to the country.
Currently, Afreximbank’s initiatives in Nigeria include the development of testing and inspection centres across the country in collaboration with the Standards Organization of Nigeria; and establishment of a Centre of Excellence for Tertiary Healthcare/Medical Park.There is ongoing talks to participate in the Nigeria SEZ Investment Company Limited being promoted by the government; the support for industrial projects through loans to strategic banks; provision of trade and letter of credit lines to all Nigerian banks, in close coordination with Central Bank of Nigeria; and development of an Afreximbank Africa Trade Centre in Abuja.
The bank’s President, Dr. Benedict Oramah, told The Guardian that the emergence of the bank was in reaction to challenge by an unprecedented debt crisis that ravaged the continent like a plague those days and as a child of necessity, was conceived for Africa and by Africans and now effectively delivered by Africans.So far, the bank has provided over $50 billion, granted in support of trade and project activities across Africa, supported the emergence of world class hotels across the continent, including upscaling facilities in Island economies like Cape Verde and Seychelles.
The bank prevented the implosion of Zimbabwe by providing an aggregate of about $4 billion to avert hunger and support critical businesses when virtually all international banks cut off the country.“Who would today have stepped in to provide trade services lines in excess of 4 billion to about 500 banks across Africa so that no country can be denied access to trade finance as a result of high compliance cost?
“Who would have supported connectivity among African markets by leveraging close to $3 billion in support of African airline operations?“How would some indigenous Nigerian entities have been able to acquire oil production acreages if the Bank had not stand by them?“Who would have financed the creation of at least 130 thousand metric tonnes of cocoa processing capacity in Cote d’Ivoire and revived processing plants in other major producing countries, namely Ghana and Nigeria?“Who would have provided $9 billion to a number of African central banks and commercial banks at the height of the commodity price induced crises of 2014-16?” he queried.Oramah said Afreximbank is powering the Collective Will of the Continent to boost intra-regional trade and export manufacturing and now about to launch a pan-African payment and settlement platform in support of intra-African trade.
Already, there are SMEs operating in export supply chains with hopes of improved access to finance as a result of the bank’s efforts to promote factoring, such that from almost nothing, Africa can today boast of 32 factoring companies sharing in near trillion dollar global market.President Muhammadu Buhari, while declaring open the bank’s yearly meetings, in Abuja, at the weekend, commended Afreximbank’s strategy in the continent through its dynamism and tenacious leadership, saying the lender had proved that Africans could come together to build something meaningful.
While delivering his keynote address, he said that those attributes had enabled the bank to record the successes so far since its establishment 25 years ago.He noted that the bank’s efforts to integrate Africa through its African Continental Free Trade Area (AfCFTA), is already undergoing a careful review, with several consultations to get the inputs of the nation’s diversed professionals, entrepreneurs and investors.South African President, Cyril Ramaphosa, who attested to the portents of AfCFTA, being driven by Afreximbank, when adopted, would provide the integrated and diversified markets that will unlock Africa’s full productive capacity.He lamented that “intra-African trade is only 15 per cent of Africa’s total trade, compared to Europe’s 67 per cent and we need a sustained strategic shift to industrialisation, increased Intra-African trade, and de-commoditisation through increased value addition and export diversification.”
Afreximbank’s Chief Economist, Dr. Hippolyte Fofack, said: “The AFCFTA must emphasise policies promoting export diversification for each member country. In addition, efforts must be increased to motivate more technology-intensive manufactured goods.“Given the current average technology and skill content in Intra-African trade, the AFCFTA seems to be well positioned to help achieve and deliver more technology-intensive manufactured goods.”
The Minister of Finance, Kemi Adeosun, said that continued infrastructure improvements and a focus on trade, particularly regional trade, would drive sustainable growth.Adeosun commended Afreximbank for its role during the last global recession when it supported many African countries with trade support and lines of credit at a time when others were withdrawing from Africa.
Credit: The Guardian
The African Development Bank has signed a loan agreement for a soft commodity finance facility (SCFF) with the Export Trading Group (ETC). The Bank said the facility is structured in two successive loans of US $100 million, each with a tenor of up to 2 years to promote agriculture in Africa.
According to a statement released on Thursday, April 12, 2018, the Development Bank said the Soft Commodity Finance Facility (SCFF) is one of the core Trade Finance instruments in the Bank that will provide pre- and post-shipment finance along various stages of ETC’s commodity value chain operations in the 17 countries expected to benefit from the initiative. The intervention will help local farmers and soft commodity suppliers grow their revenues and produce quality crops for export.
Josephine Ngure, African Development Bank Director General for the Southern Africa Region, while speaking at the signing ceremony, said, “This facility will significantly contribute not only in improving food productivity in Africa but most importantly in value addition and the wide distribution of food across the continent using ETC’s broad distribution networks.”
“The facility would also contribute to smallholder farmers’ access to inputs (seeds and fertilizers), mechanization and access to international markets thereby ensuring significant revenues to farmers; integration of poorer sections of the population into a sustainable process of economic growth and development; regional integration by developing sustainable platforms to supply local and regional markets; and lastly it also has strong gender and youth impact as agriculture employs significant numbers of mostly youths and women,” Ngure said.
AfDB said the facility will be used to finance the procurement of identified agricultural commodities from over 600,000 farmers. Upon purchase of the soft commodities, the SCFF will provide working capital to ETC thus enabling the company engage in value addition/processing of the soft commodities such as cashew nuts prior to export, and provide funding to procure farm inputs (mainly fertilizer components for blending) to be supplied to farmers so as to ensure consistency and quality of the commodities being supplied to ETC.
Also, the Trade Finance intervention along the agricultural value chain will enable the Bank to reach many small-scale farmers indirectly through ETC, a pan African aggregator that has deep knowledge of the market in which it has accumulated a 50-year track record; understands the agricultural sector operational risks and is able to mitigate and manage them.
AfDB agreement with Commerzbank
Last week, the African Development Bank, AfDB, approved a US $50 million unfunded Risk Participation Agreement for Commerzbank AG (Commerzbank) to support African banks on trade finance operations.
The Risk Participation, which was approved by the AfDB's Board of Directors, on Tuesday, March 27, 2018, is expected to leverage Commerzbank support to African issuing banks seeking to expand their trade finance operations.