AfCFTA Secretariat and Afreximbank Sign Fund Management Agreement

Wamkele Mene, Secretary General of the African Continental Free Trade Area

The African Continental Free Trade Area (AfCFTA) Secretariat and the African Export-Import Bank (Afreximbank) have signed a fund management agreement to raise financial support to States Parties and commercial entities in the area of trade.

As indicated by the secretariat, the estimated need for funds for the uninterrupted implementation of the AfCFTA agreement and to eliminate the cost of adjustment is approximately US$10 billion over the next six years, and this agreement should help raise funds for this.

Speaking at the signing ceremony of the agreement, AfCFTA Secretary General Wamkele Mene said the secretariat will not approach the World Bank or the International Monetary Fund (IMF) for a financial support, but will depend solely on local finance companies to raise the necessary funds. amount to successfully implement the AfCFTA.

“As Africans, we cannot continue to look to the World Bank, IMF and others to finance our own trade as a continent. So I will rather go cup in hand to Afreximbank, Trade and Development Bank and then go to others in Europe and other parts of the world for help. We are not going to get this trade deal in place without Afreximbank.

This adjustment fund is introduced because we know that as member countries implement tariff adjustment mechanisms, there would be short-term revenue losses and we want to ensure that their interests are taken care of. account. This is where Afreximbank comes in as a pillar for the implementation of the AfCFTA by providing this $1 billion facility, to ensure that we implement the AfCFTA as we wish,” said he declared.

In addition to this, he said that the agreement being signed between the two parties is the right tool to ensure that the AfCFTA is successfully implemented as it will make trade finance accessible to businesses in the commercial area.

The financial instrument called the AfCFTA Adjustment Fund, has three components, namely the Basic Fund, the General Fund and the Loan Fund. However, the agreement signing exercise that took place was for the Core Fund only, with the other two due to take place in the coming weeks.

The Basic Fund is only accessible to States Parties and the qualification criterion for this particular instrument is that any State wishing to access it must demonstrate that it has suffered losses as a result of the implementation of the AfCFTA and has need support in this regard.

Second, the General Fund is accessible to both State Parties and member state companies that have acquired rule of origin certificates and are operating in the region.

Finally, the Credit Fund will only provide loans to commercial enterprises and other financial institutions that will need funds to expand their operations or develop their business.

Funding streams for this purpose will include grants, donors from States Parties, as well as other financial institutions.

For his part, Afreximbank Chairman and Chairman, Prof. Benedict O. Oramah said the bank is advancing US$1 billion specifically for the base fund, adding that it is committed to ensure that the AfCFTA is a real trade agreement and not another political discussion.

“Indeed, the implementation of the AfCFTA would be meaningless if it did not lead to the economic liberation of all members of the continent. It is also meaningless if it does not bring wealth and business to a few communities and countries while impoverishing others, and this is not the Africa we want.

We want to protect the vulnerable from suffering from the implementation of the AfCFTA tariff reduction and its subsequent removal. Therefore, the board of Afreximbank has advanced US$1 billion to support this fund. We want to assure the secretariat that we will support the AfCFTA because we are Africans and this project belongs to all of us,” he said.

Adding to this, he pointed out that no one who is serious about development is going to beg others for that development.

He added that the launch of the Pan African Payments and Settlement System (PAPSS) not long ago complements this agreement as it has domesticated payment on the continent and enabled trade in any currency across the continent. .

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