The Afreximbank has announced it will soon domesticate all intra-African payments and extend the same to the CARICOM, where just a few days ago, the Association of CARICOM Central Banks adopted PAPSS as their preferred payment infrastructure for a pilot project.
Speaking at the ongoing 30th anniversary Afrixembank Annual Meetings in Accra, Ghana, the President and Chairman of the Bank, Prof Benedict Oramah said: “By this singular move, we are one step closer to a full integration of African and CARICOM economies. With PAPSS, every African currency will become convertible within Africa. Afreximbank backs the Clearing and Settlements with an amount of $3 billion. With this level of financial commitment to start up the initiative, you can now understand why for 60 years it never saw the light of day; you can now appreciate why we need our own institutions if we hope to attain our development aspirations.”
Prof Oramah said apart from the PAPSS, the Transit Guarantee Scheme, and the intra-Africa Trade Fair, Afreximbank is doing much more to support the AfCFTA implementation.
“For instance, to deal with the considerable intra-Africa trade finance gap, Afreximbank disbursed over $20 billion in five years to 2021 and projects to double this to $40 billion in the five years to 2026. It is Afreximbank that arranged the $2.9 billion bundle of credit and guarantees that made it possible for Egyptian contractors to begin executing the largest Intra-African construction contract for a dam in Tanzania; it was Afreximbank that supported, with hundreds of millions of US dollars, phosphate fertiliser imports from Morocco to Nigeria and Ethiopia. Without an Afreximbank, it would have been harder for Vista Bank, Burkina Faso, to complete the acquisition of some BNP subsidiaries in West Africa,” he said.
He noted that Afreximbank and the AfCFTA Secretariat have established the AfCFTA Adjustment Fund intended to, among others, compensate eligible countries for tariff revenue losses arising from the new trade regime while also supporting the private sector to adjust in an orderly manner to the new arrangement. Prof Oramah also said the Headquarters of the 8-10 billion US dollar Fund is in Kigali, Rwanda.
Afreximbank has committed to contribute $1 billion, with $10 million available in the form of grant funding.
“We are committed to the Adjustment Fund because we believe that without it, some AfCFTA-Participating States may find it difficult to open their borders for trade under the Agreement,” he said.
He added that the bank is also working with the African Regional Standards Organization (ARSO) to harmonise trade standards across Africa.
“Using Afreximbank mobilised grant funding, over 155 standards have been harmonised, covering priority areas of automobile, medical equipment and pharmaceuticals while work on textiles is ongoing. We also recognise that setting standards is one thing but having the infrastructure to implement them is another. So, working with Bureau Veritas of France, we are building testing, inspection, and certification centres across Africa, under the branded Africa Quality Assurance Centres (AQACs). The first project has been completed in West Africa, and others are underway in North and East Africa. In the next 4 years, African Quality Assurance Centres will be dotted across all regions of Africa,” he said.
In his address, the President of Ghana, Nana Akufo-Addo called on African governments to commit to ensuring that Afreximbank is well capitalised beyond its existing size of $6 billion.
“The current $6 billion capital of the Bank is far from sufficient to catalyse the creation of a market on a continent whose combined market GDP is around $3.4 trillion,” he said.
According to the President, the development financing institutions on the continent remain highly undercapitalised, especially when compared to similar organisations in other jurisdictions, such as the Japan Bank for International Cooperation which has about $19 billion in share capital, and the Export-Import Bank of China which has market capital worth about $54 billion.
He also called for the improvement in the levels of engagement of Africa’s financial institutions hinged on better coordination and enhanced accountability.
“It is important to strengthen coordination with these institutions to make sure that they are working consistently for Africa and the African diaspora, supporting the development agenda and the implementation of the national development strategy,” he said.
He further called on the managers of the Bank to work towards the development and implementation of an aggressive strategy to upgrade the Bank’s credit rating from BBB to A.
President Akufo-Addo also urged the African Union Commission (AUC) to expedite the process of admitting the Afreximbank as a specialised agency of the Commission, noting that the “Bank will play a very important role in the implementation of the African Continental Free Trade Area.”
By Emmanuel K Dogbevi
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