Nigeria to play key role in Afreximbank $250bn intra-African trade strategy

Nigeria, Africa’s largest economy by GDP value is expected to play a significant role in driving African Export-Import Bank (Afreximbank)’s new strategy to increase intra-African trade to $250 billion by 2021.

The Afreximbank is to implement the new strategy aimed at driving industrialization across Africa and increasing intra-African trade by at least 50 per cent in the next five years.

Only last week, the China Export-Import Bank (China Eximbank), working with Afreximbank, has promised to invest $1 billion in Africa industrialization project, which would industrialize African countries, as China would increase its involvement in African trade.

A statement by Fleur Tchibota, of Afreximbank’s external communications, said, the Afreximbank Intra-African Trade Strategy, which was approved by the Bank’s board of directors at its quarterly meeting in Johannesburg, South Africa, on recently, would see the Bank work with partners to ramp up trade among African countries to $250 billion by 2021, up from its current level of about $170 billion.

The strategy would involve expanding existing trading activities within Africa’s regional economic communities (RECs), such as ECOWAS for West Africa; SADEC for Southern Africa and EAC for East Africa.

Other aspects of the strategy would be, integrating informal trade into formal frameworks, reducing trade barriers and minimizing the foreign exchange costs of intra-African trade.

According to Benedict Oramah, president of Afreximbank, “Intra-regional trade will drive value addition in Africa and help reduce the continent’s dependence on commodities.”

He said, “It would also allow for the expansion of domestic trade value chains, thereby strengthening the capacity of African economies to resist economic shocks.”

The Afreximbank president continued that “The fact that about 40 per cent of intra-African trade is done in the informal sector shows that there are institutional gaps.”

He said Afreximbank intends to play a significant role in reducing these barriers, by promoting the emergence of export trading companies, and by helping to resolve regulatory and policy issues through a deepening of partnerships and bilateral trade arrangements.

Information released by Afreximbank after the approval of the strategy showed that it will be centered on three core pillars, namely, Create, Connect and Deliver.

Under the Create pillar, the Bank would support the expansion of the production, processing and export capabilities of African economies with trade finance instruments for import of investment goods, project finance, lines of credit, export development finance and guarantees, and will provide project financing to construct infrastructure for the services sectors, and for the development of industrial parks.

The Connect pillar would consist of initiatives to provide a facilitative environment to increase the flow of goods and services, including facilitation of linkages with public and private entities, institutions, agents and entrepreneurs along the trade value chain.

It would also involve support for export trading companies, the launch of an intra-African trade payment platform using a clearing arrangement operated by the Bank that would reduce foreign currency costs of the trade.