Afreximbank’s $1b adjustment facility for AfCFTA debuts
Following the official take off of the African Continental Free Trade Area (AfCFTA) last weekend, the region’s largest trade bank – African Export-Import Bank (Afreximbank), has unveiled a $1billion financing tagged: “AfCFTA Adjustment Facility”.
The stabilisation facility is coming as a further boost for the implementation of the world’s largest free trade zone, to be made available to member countries to sustain efforts in achieving the more than $3trillion trade value on the continent.
Specifically, AfCFTA Adjustment Facility, as the name implies, would comes as a support to any initial fiscal imbalance arising from the implementations and firm up arrangements to raise the capacity of the participating countries and contribute to the regional trade integration process.
Afreximbank President, Prof. Benedict Oramah, at the weekend, told delegates at the just-concluded 12th Extraordinary Summit of African Union (AU) Heads of State, in Niamey, Niger, that there are series of initiatives to support the implementation of AfCFTA, which he had hinted at the recently-concluded yearly meetings of the bank in Moscow, Russia .
Oramah reiterated that the $1billion facility will enable countries adjust in an orderly manner to sudden significant tariff revenue losses as a result of the implementation of the agreement.“This facility will help countries to accelerate the ratification of the AfCFTA. You have started a movement. You must not look back. This movement is now unstoppable,” he said.
Besides, the bank also launched 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.”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,” he said.
Oramah noted 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. No people have achieved meaningful development when their economic progress depends on others.
“Renewed focus on industrial and value-chain development across the continent in 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 added