By Grace Khoza
The AfCFTA Secretariat and African Export-Import Bank (Afreximbank) on Friday, 10 March 2023, in Kigali, signed the Host Country Agreement for the AfCFTA Adjustment Fund with the Republic of Rwanda, paving the way for the operationalisation of the Fund.
The Agreement was signed by H.E. Wamkele Mene, Secretary-General of the AfCFTA Secretariat, Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank and Dr. Vincent Biruta, Minister of Foreign Affairs and International Cooperation of the Republic of Rwanda.
The Fund, now headquartered in Kigali, Rwanda, will support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement. It was established by the AfCFTA Secretariat and Afreximbank following a mandate from the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade.
Critical instrument in the realisation of the African Continental Free Trade Area, the Adjustment Fund addresses among other things, potential tariff revenue losses, infrastructure deficits to facilitate trade growth and possible supply chain disruptions that States Parties may face in the implementation of the African Continental Free Trade Agreement.
The AfCFTA Adjustment Fund consists of three sub-Funds namely, the Base Fund, the General Fund, and the Credit Fund. The Base Fund will utilise contributions from AfCFTA State Parties as well as grants and technical assistance to address tariff revenue losses that would result from the implementation of the AfCFTA Agreement. The General Fund will finance the development of trade enabling infrastructure while the Credit Fund will be used to mobilise commercial funding to support both the public and private sectors enabling them to adjust and take advantage of the opportunities created by the AfCFTA.
The Fund for Export Development in Africa (FEDA), the impact investment arm of Afreximbank, has been selected as the Fund Manager of the AfCFTA Adjustment Fund.
Dr. Vincent Biruta, Rwanda’s Minister of Foreign Affairs and International Cooperation, said: “As we sign this Host Country Agreement for the AfCFTA Adjustment Fund, we reaffirm our commitment to the African Continental Free Trade Area and its potential to transform the continent’s economy. This Fund will play a critical role in supporting African countries to adjust to the new realities of the free trade area and seize the opportunities it presents. We look forward to working closely with the AfCFTA Secretariat and Afreximbank to ensure its success.”
H.E. Wamkele Mene, Secretary-General of the AfCFTA Secretariat, said: “The AfCFTA Adjustment Fund is a critical instrument in the realisation of the African Continental Free Trade Area. The Fund addresses among other things, potential tariff revenue losses, infrastructure deficits to facilitate trade growth and possible supply chain disruptions that States Parties may face in the implementation of the African Continental Free Trade Agreement.”
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commented: “The signing of this Host Country Agreement is critical to the operationalization of the Adjustment Fund, as it facilitates the establishment of the Fund and the requisite structures in Rwanda. With the signing of this Agreement, the incorporation of the fund’s legal entities will be completed as well as the establishment of the necessary governance structures that will facilitate its day-to-day operations. It breathes new life into the AfCFTA Agreement and empower the AfCFTA Secretariat to deliver on the promise of the Agreement.”
About the Africa Continental Free Trade Area (AfCFTA)
The Africa Continental Free Trade Area (AfCFTA) is one of the flagship projects of Agenda 2063: “The Africa We Want” and entered into force on 30 May 2019. It is a high ambition trade Agreement, which aims to bring together all 55 Member States of the African Union, covering a market of more than 1.3 billion people, with a comprehensive scope that includes critical areas of Africa’s economy, such as digital trade and investment protection, amongst other areas. By eliminating barriers to trade in Africa, the objective of the AfCFTA is to significantly boost intra- Africa trade, particularly trade in value-added production and trade across all services sectors of Africa’s economy, at a potential of 52.3 percent.
For more info: https://au-afcfta.org
Grace Khoza | Principal Communications Advisor| +233 551606606 | Grace.Khoza@au-afcfta.org Elydora Matubanzila | Communications Officer +233 207323201 | Elydora.Matubanzila@au-
African Export-Import Bank (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. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Afreximbank 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 US$25 billion, and its shareholder funds amounted to US$4 billion. Afreximbank disbursed more than US$51 billion between 2016 and 2021. The Bank has ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). The Bank is headquartered in Cairo, Egypt.
The Fund for Export Development in Africa (FEDA) is an impact investing subsidiary of the African Export-Import Bank (Afreximbank) set up to provide equity, quasi-equity, and debt capital to finance the multi-billion-dollar funding gap (particularly in equity) needed to transform the Trade sector in Africa.
FEDA pursues a multi-sector investment strategy along the intra-African trade, value-added export development, and manufacturing value chain which includes financial services, technology, consumer and retail goods, manufacturing, transport & logistics, agribusiness, as well as ancillary trade enabling infrastructure such as industrial parks.