Afreximbank announces $1bn facility, other AfCFTA support measures

Afreximbank on Monday said it is instituting a $1-billion African Continental Free Trade Area (AfCFTA) adjustment facility to enable countries adjust in an orderly manner to sudden significant tariff revenue losses as a result of the implementation of the agreement.

Benedict Oramah, President of the African Export-Import Bank (Afreximbank), yesterday in Niamey, announced a series of initiatives to support the implementation of the Agreement, while addressing the 12th Extraordinary Summit of African Union (AU) Heads of State.

This facility will help countries to accelerate the ratification of the AfCFTA,” he said, telling the heads of state that, by starting the operational phase of the AfCFTA, “you have started a movement.”

“You must not look back, this movement is now unstoppable, said Oramah.”

He added that, as part of its support for the implementation of the AfCFTA, the Bank had provided support to aid the work being done by the African Regional Standards Organisation and the AU in implementing the Agreement.

Oramah also informed the Summit of the launch the Pan-African Payment and Settlement System (PAPSS), the first continent-wide payment digital system focused on facilitating payments for goods and services in intra-African trade in African currencies.

“Today we will launch the Africa-wide digital payment infrastructure – the Pan-African Payment and Settlement System (PAPSS) – that we developed in collaboration with the African Union,” he said. “It is a platform that will domesticate, intra-regional payments, save the continent more than $5 billion in payment transaction costs per annum, formalise a significant proportion of the estimated $50 billion of informal intra-African trade, and above all, contribute in boosting intra-African trade.”

Oramah stated that, by making it possible for Africans to pay for intra-regional trade in their local currencies, “the digital platform will deal a fatal blow to the underdevelopment of Africa caused by defragmentation of its economies. Our goal is to reduce, significantly, the foreign currency content of intra-African trade payments.”

Noting that “No people have achieved meaningful development when their economic progress depends on others,” he argued that, in the “renewed focus on industrial and value-chain development across the continent is trying to boost trade and investment, it is imperative that we address the economic costs of effecting so many payments in scarce foreign exchange.”

“Making cross-border payments easier, cheaper and safer is an obvious critical step in creating an Africa we want,” he concluded.

The Organised Private Sector, (OPS) has meanwhile listed the benefits of Nigeria’s commitment to the pact, even as it urged the government to step up efforts on infrastructure development to ensure Nigerian goods compete effectively with other African products in a single African market of about 1.2 billion people.

Tony Ejinkonye the immediate past President of Abuja Chamber of Commerce and Industry told BusinessDay exclusively that Nigeria can ride on its huge population to have larger expansive markets for its goods and products, since there is going to be free movement of goods and people‎.

“Other countries such as Morocco, Egypt and South Africa have relatively better infrastructure than us. We need to step up our efforts to ensure that their being ahead of us in infrastructure don’t rob off on us in terms of quality of products, since there is now a borderless markets for all Africans,” Ejinkonye said.

Chijioke Ekechukwu, the former director of the chamber while reacting to the Federal government’s signing of the pact also raised concern that other African countries who are ahead of Nigeria with regard to infrastructure could target their goods to Nigerian market, which could threaten local industries.

He notes, however that the pact will create opportunities for a few local manufacturing companies to also extend their export base and earn the much desired foreign exchange.

Also, Celestine Okeke, Lead Partner ‎Small and Medium Enterprise Advocacy Initiative told BusinessDay that the federal government needs to step up efforts in supporting over 37 million SMEs in the country since they can easily get markets for their products in key African countries.

The AFCTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030, if all the countries sign up.