By Grace Khoza and Amadou Labba Sall
The African Continental Free Trade Area (AfCFTA) Secretariat and African Export-Import Bank (Afreximbank), signed an Agreement relating to the management of the Base Fund of the AfCFTA Adjustment Fund on Wednesday, 9 February, in Cairo, Egypt. The Fund will support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA.
The agreement was signed by Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank and H.E Wamkele Mene, Secretary General of the AfCFTA Secretariat, in the presence of Mr Aly Basha, Minister Plenipotentiary (Trade) of the Arab Republic of Egypt as well as African bankers and captains of industry.
The AfCFTA Secretariat and Afreximbank were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade to establish the AfCFTA Adjustment Fund to support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement.
Speaking during the signing ceremony, H.E. Wamkele Mene, Secretary General of the AfCFTA Secretariat, stressed the importance of the Adjustment Fund as one of the instruments designed to support the implementation of the AfCFTA Agreement and assist AfCFTA State Parties to deal with short term tariff revenue losses as they dismantle tariffs and implement the Agreement.
“As we make significant progress in establishing schedules of tariff concessions, the finalisation of the Adjustment Fund will enable us to maintain and even accelerate the momentum. We now have an excellent tool to provide support to our State Parties and their private sector through financing, technical assistance, grants and compensation funding. It will help them mitigate revenue losses and competitive pressures that may result from reduction in tariffs and liberalisation of markets in order to tap into the opportunities of the AfCFTA. This is another important step towards the successful implementation of the continental free trade agreement,” said Mr Mene.
The resources required for the Adjustment Fund over the next 5-10 years are estimated at US$10 billion. Afreximbank has already committed $1 billion towards the AfCFTA Adjustment Fund.
In his remarks, Prof Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, said that the funds will be used to support both the public and private sectors to address short term disruptions, while enabling the private sector to retool, reskill, and develop capabilities to produce value added goods and services that can be traded competitively within the continent and catalyse the emergence of AfCFTA-led regional value chains.
“This Adjustment Fund, which is taking shape, comes on top of the Pan African Payment and Settlement System (PAPSS), which was commercially launched on 13 January 2022 in Accra, and the resoundingly successuful second edition of the Intra-African Trade Fair, which held in November 2021 in Durban. These are some of the initiatives that we are proud to implement in close collaboration with the AfCFTA Secretariat, setting the conditions that will undoubtedly lead to a smooth implementation of the AfCFTA,” said Prof Oramah.
“Today we have launched the Base Fund of the Adjustment Fund to address urgent needs of State Parties relating to tariff revenue losses and the transposition costs to enable them to implement the AfCFTA Agreement. We will be launching the General Fund and Credit Fund very soon to address the needs of the private sector including the small and medium enterprises, women and youth. We look forward to working with all development partners, development financial institutions, commercial banks, export credit agencies and other investors and strategic partners to mobilise resources for the Adjustment Fund to enable the continent to implement the AfCFTA,” he concluded.
About the AfCFTA Secretariat
The African Continental Free Trade Area (AfCFTA) is a flagship project of Agenda 2063 of the African Union – Africa’s own development vision. The immediate implementation of the AfCFTA will provide quick wins that impact on socio-economic development and enhance confidence and the commitment of Africans as the owners and drivers of Agenda 2063. The AfCFTA aims at accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.
For more information: oneafcfta.org
Follow us: AfCFTA Secretariat on Twitter| Facebook | LinkedIn | Instagram
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. The Bank has a rich history of intervening in support of African countries in times of crisis. Through the Pandemic Trade Impact Mitigation Facility (PATIMFA) launched in April 2020, Afreximbank has disbursed more than US$7.5 billion since 2020 to help member countries manage the adverse impact of financial, economic, and health shocks caused by the COVID-19 pandemic. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched the operations of 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. At the end of 2020, the Bank’s total assets and guarantees stood at US$21.5 billion, and its shareholder funds amounted to US$3.4 billion. Afreximbank disbursed more than US$42 billion between 2016 and 2020. The Bank has ratings assigned by GCR (international scale) (A-), Moody’s (Baa1) and Fitch (BBB-). The Bank is headquartered in Cairo, Egypt.
For more information, visit: www.afreximbank.com.