African Export-Import Bank (Afreximbank) aims to double its assets and guarantee book to $60bn by 2029 as it seeks to expand its support of intra-Africa trade.
This week Benedict Oramah, Afreximbank president, said: “It took the bank 30 years to reach $30bn in total assets and guarantee. I look ahead with confidence and declare that the bank will double its size to $60bn in less than six years.
“I make this projection with faith in your trust and confidence, and also because we commence the journey into the next 30 years on a platform of a ‘mother’ that has birthed many offspring, offering services from project preparation to market access services, operating in our new larger continent of Afro-Caribbean,” said Oramah at the bank's 13th AGM in Accra, Ghana.
The bank, which provides trade finance, announced the establishment of new subsidiaries and solutions to help realise the vision of the African Continental Free Trade Agreement (AfCFTA).
The AfCFTA seeks to turn Africa into the largest regional free-trade area in history and lift 50-million Africans out of poverty, with mostly tariff-free trade between African countries, where there is a consumer base of 1.3-billion people and an estimated $31.1bn (R565bn) in export potential.
Oramah said the bank understood the need for institutional reforms related to the funding of projects on the African continent if its efforts were to realise the AfCFTA’s vision.
“Afreximbank is clear proof that we can develop in the direction we choose only by having well-resourced and professionally run institutional arrangements that we own and control,” Oramah said.
He announced that an African payment system is expected to save African businesses $5bn in intra-Africa trade charges by allowing African consumers and businesses to purchase goods across the continent using African currencies, as opposed to globally traded currencies such as the US dollar.
It took the bank 30 years to reach $30bn in total assets and guarantees. I look ahead with confidence and declare that the bank will double its size to $60bn in less than six years
— Benedict Oramah, Afreximbank president
“It is now possible for a Gambian to buy Nigerian urea fertilisers using Gambian dalasi to purchase naira; for a young Ghanaian to pay for holidays in Seychelles in Ghanaian cedi; and for a small farmer in rural Zambia to stream a Nollywood movie paying in Zambian kwacha,” he said.
Oramah said Afreximbank disbursed more than $20bn in the five years up to 2021 to deal with the considerable intra-Africa trade finance gap. He said the bank expects to double this to $40bn in the lead-up to 2026.
He said between the advent of the Covid-19 pandemic in 2020 and the Russian invasion of Ukraine in 2022, Afreximbank had disbursed more than $45bn into the continent, helping African governments and businesses weather the crises and honour maturing trade debt obligations.
The Afreximbank annual meeting saw the bank’s subsidiary, the Fund for Export Development in Africa (Feda), report its first profit. Feda is an equity fund created to provide long-term funding for export manufacturing, intra-Africa trade and value-added services.
The event was also saw the launch of AfrexInsure, which was established to provide insurance for infrastructure projects and export cargo around the African continent at accessible and affordable prices.
Speaking to reporters on the sidelines, minister in the Presidency Nkosazana Dlamini-Zuma said the skills and knowledge exchange among African countries would be a critical catalyst to the continent becoming a producer of finished goods rather than an exporter of raw materials.
“If we don’t trade with ourselves, when you trade in raw materials, you are a price taker, not a price caller. Second, you export high-level jobs and you export revenue because, by the time your wood comes back as furniture, it’s a hundred times more expensive,” said Dlamini-Zuma.
She said some countries believe they can be prosperous in a sea of poverty, but that every country in Africa has a crucial role to play in the holistic prosperity of the continent, its economies and its people.
“We must think beyond our borders. We must think continental. For instance, there is no reason we can’t have a [completely African-owned and produced] car and have a number of countries producing different parts,” Dlamini- Zuma said.
Ghana's President Nana Addo Dankwa Akufo-Addo slammed the actions of sovereign credit ratings agencies, saying their conduct turned a liquidity crisis for the country into a solvency crisis.
“The $10bn adjustment fund being established by the bank to support countries to perform effectively and the Pan African Payment Settlement System (PAPSS) will make sure that proper steps are in place for our rapid growth and development,” said Akufo-Addo.
PAPSS is a system that allows Africans to trade goods and send money in their local currencies, rather than in globally traded currencies, thereby minimising conversion costs.
Akufo-Addo said Africa’s financial institutions must remain independent and highly capitalised. The Bank of Ghana must support the regional plan of Afreximbank, as it hinges on enhanced capacity, he added.
Ghanaian finance minister Ken Ofori-Atta congratulated Oramah and Afreximbank for unlocking $500m during the Covid pandemic.
“In a sense, our ambition must be to ensure that we position our bank such that our people have a greater sense of urgency over the course of our lives. Now is a moment of extreme urgency for our bank to realise its vision,” said Ofori-Atta.
The secretary-general of the AfCFTA secretariat, Wamkele Mene, said the secretariat would collaborate with the United Bank of Africa (UBA) to allow small, micro and medium enterprises on the continent to exploit the agreement and access African markets beyond their borders.
Mene said Africa could benefit from integrated agro-processing as the continent now imports $54bn worth of food but has agriculture products and agro-processing potential. SMMEs supported by UBA will have access to global markets, technology and capital, he said.
The agreement between the AfCFTA and UBA outlined four priority sectors — agro-processing, pharmaceuticals, transport logistics and the automotive industry — as these were the sectors that the AfCFTA’s studies showed would accelerate import substitution.
The annual Afreximbank meeting saw the bank sign several agreements, including one with Arise Integrate Industrial Platforms for $400m under a proposed $1bn global credit facility to develop industrial parks and special economic zones in multiple African countries.
• Magubane was a guest of Afreximbank at the institution's 30th annual meeting in Accra, Ghana
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