Afreximbank secures $150 million to boost African trade
Factoring, credit insurance key for SMEs’ growth
The African Export-Import Bank (Afreximbank) has successfully secured another facility, but its first ever Samurai Syndicated Term Loan Facility, with equivalent of $150 million.
It has an all-pricing of 1.8 per cent per annum for the dollar tranche and 0.80 per cent for the tranche denominated in Japanese Yen.
The facility comprises two tranches of 6.2 billion Japanese Yen and $100 million, which Bank of Tokyo Mitsubishi UFJ (MUFG) acted as sole Coordinator, Bookrunner, Facility and Documentation Agent Bank, while Bank of Taiwan, Gunma Bank, Shikoku Bank and Mitsubishi UFJ Trust and Banking all joined the Facility in the primary phase.
The move is strategic to African development as the Asian country has one of the lowest cost of funds presently, which Afreximbank is taking advantage of in making fund available for trade and projects for economic integration in the continent.
The Facility had initially been for the equivalent of $100 million, with the two tranches at four billion Japanese Yen and $70 million, but had incorporated an accordion feature in order to accommodate further regional investors.
Afreximbank’s Executive Vice President for Finance, Administration and Banking Services, Denys Denya, welcomed the high participation in the facility as a reflection of the willingness of those institutions to support the cause of development in Africa.
Denya affirmed that the proceeds of the facility would be used towards general corporate and trade related purposes. The all-pricing for the Facility is 1.8 per cent per annum for the USD tranche and 0.80 per cent for the JPY tranche.
Meanwhile, Afreximbank’s has reiterated that innovative financial solutions like factoring and credit insurance offer keys to the growth of small and medium-sized enterprises (SMEs) in Africa andenhance regional integration.
The Managing Director of Afreximbank’s Intra-African Trade Initiative and Chairman of the Africa Chapter of FCI, Kanayo Awani, said that despite new market opportunities opened up by the process of globalisation and increased regional integration, SMEs continue to be constrained due to their lack of resources, their difficulties in achieving economies of scale and the higher transaction costs they face compared to large firms.
Making the assertions on the heels of the just concluded Structured Trade Finance Seminar organized by the bank in Cape Verde, Awani said: We are persuaded, though, that the solution to these challenges exist in rolling out effective and innovative financial products such as factoring,” she said.
She noted that Africa currently accounted for less than one per cent of the global factoring turnover, saying that the industry was largely dominated, at 60 per cent, by European factors whose turnover represented 10.4 per cent of the European Union’s GDP in 2016, at 1.5 trillion Euros.
But to promote the emergence and growth of factors across Africa, Afreximbank has provided dedicated lines of credit and offers technical assistance to players in the financial industry, as well as legal advice to regulators using the Model Law on Factoring, which it developed.
Ms. Awani added that Afreximbank had forged strong partnerships with leading institutions, such as FCI and ACBF, as part of its education and training activities.
In his contribution, the Executive Director at the Central Bank of Cape Verde, Carlos Furtado, who stood in for the bank’s Governor, said that by providing immediate liquidity to SMEs, factoring gave them the financial boost to allow them to integrate into regional and global value chains of growth sectors.
He said that, given the challenging and highly competitive global and African trading environments and the ever evolving nature of international trade finance, African bankers and factors needed to update their knowledge and skills in order to make better use of opportunities presented by the expected growth in the retail, agriculture, telecommunications, oil and gas and many other sectors.
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