Promoting intra-African trade
AWONIYI: What are your priorities as the newly elected president?
ORAMAH: My priority is to transform the African export sector. The idea of just saying ‘process raw materials’ is not the solution; starting from the markets, you will find the right solution for transformation. Having done this analysis, I think intra-African trade holds the key for the value added exports we want to promote. I want to focus on promoting intra-African trade because that will give us dynamic comparative advantage in exporting certain kinds of manufactured goods. In a few months, we will organise arrangements to launch a mobile payment platform which we hope will form a basis for intra- regional payment flows and help us remove the constraints that payment poses to intra-regional trade promotion. We will also be using other instruments that will expand the investor base for the support of the import of investment goods. In the area of policy advocacy, we will push very hard through unilateral arrangements, the AU and also talking to the government to make policies that will facilitate inter-regional trade.
AWONIYI: In what ways can AFREXIM bank work with the African Development bank to help boost intra-African trade?
ORAMAH: Our goal is to do what we are doing in the spirit of partnership and collaboration. I believe the African Development Bank can help to support intra-regional infrastructure that will support the carriage of goods.
AWONIYI: In your acceptance speech, you said that the AFREXIM bank will now directly finance LCs in the instances that foreign banks refuse to provide long term credit for projects, tell us how you plan to achieve that?
ORAMAH: The AfDB estimated about 100bilion dollars in trade-finance gap in Africa, the ICC estimated about 200 billion dollars. That gap is in two areas, first in the financing of intra-African trade and secondly in the financing of the import of investment goods into Africa. Many commercial banks are able to support the 90-day finance but AFREXIM bank which was created to promote trade development and given that we want to pursue technology driven in growth, needs to move towards the support of the import of the investment goods that will lead to accumulation of capital but the import of investment goods if financed, will have longer terms for about one year and above. Many international commercial banks will not do that, they will rather be in the 90 days and incidentally some multi- laterals that have trade finance windows also have products that are biased towards the short term.
AWONIYI: Bring us up to speed on AFREXIM bank’s on-going re-capitalisation plans.
ORAMAH: Re-Capitalisation plan is going very well. We launched a capital increase sometime last year and that time we took a two point approach, capital increase by shareholders and also mobilising equity from new shareholders. The shareholders agreed the capital increase of 500 million dollars which they expect will be completed by the end of this month. In seven to eight months, we were more than half-way there which has been very successful, in parallel, we have also made significant progress in bringing in new shareholders and new capital, and we have also launched incentives that attract other sources of capital from the usual sources but within Africa.