Afreximbank unveils $90b intra-trade scheme
Africa’s development is set to get a boost with the unveiling of $90 billion strategic plan by the African Export-Import Bank (Afreximbank).
The strategy, made up of four pillars- Intra-African Trade; Industrialisation and Export Development; Trade Finance Leadership; and Financial Soundness and Performance, would unlock development gains inherent in collaborative bilateral deals in the continent.
The move will also open opportunities to financing of intra-trade activities, as well as trade with Africans in Diaspora, while respective economies in the region would receive growth boost.
It would also allow for the expansion of domestic trade value chains, thereby strengthening the capacity of African economies to resist economic shocks.
Afreximbank said the plan, which has already begun, is a new five-year scheme that will see it disburse the $90 billion between 2017 and 2021.
Dubbed “IMPACT 2021: Africa Transformed”, the bank had approved the initiative at its 111th meeting, in realisation of the revolving nature of trade finance business, with $25 billion particularly targeted at intra-African trade
The strategy defines intra-African trade as trade in goods and services between or among African countries and the flow of goods and services between Africa and Africans in the Diaspora.
Intra-Africa trade is currently worth about $170 billion, but the bank said it is currently working with partners to raise the profile to $250 billion by 2021.
Afreximbank President, Dr. Benedict Oramah, said: “The approval of Impact 2021 paves the way for Afreximbank to begin to more directly address the imperatives of its mandate. Africa will be better for it,” he said.
The strategy, he said, will involve expanding existing trading activities among regional economic communities, integrating informal trade into formal frameworks, reducing trade barriers and minimising the foreign exchange costs of intra-African trade.
He said that the strategy for intra-African trade is conceived around three themes identified as Create, Connect and Deliver, with Measure as an ancillary theme, to derive the acronym CCDm.
According to him, the philosophy behind CCDm is that building solid export manufacturing capacities, as well as domestic and continental supply chains would facilitate increased flow of goods and services across borders in Africa.
Therefore, the concept of CCDm, he said, is to bring together, in one whole, key players in intra-African trade, such as the farmer, the processor, the manufacturer, tradable services provider, traders, financiers, logistics providers and policy makers.
He also noted that the Industrialisation and Export Development pillar of the initiative would ensure three themes- Catalyze, Produce and Trade (CPT).
Under CPT framework, the bank intends to act as a catalyst for industrialisation and export development in Africa, directly addressing the constraints to industrialization; facilitating the production of value-added exports and services; while ensuring that the produced goods and services are traded.
The interventions under the Industrialisation and Export Development pillar will focus on supporting the development of the agro-processing, light manufacturing, and tradable service sectors.
The fourth pillar- Trade Finance Leadership, will see Afreximbank extend its leadership in trade finance by expanding intervention in some of the critical trade finance products it already offers and by creating new products and initiatives.
It will expand its trade services offering to fill the gap created as a result of reduced activities by international banks in Africa due to high compliance costs and economic uncertainties.
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