Lusaka, 11 June 2015 – The African Export-Import Bank (Afreximbank) is to introduce a special guarantee facility to enable African processing plants secure long-term export contracts with bank financing, Jean-Louis Ekra, President of the Bank, announced today in Lusaka.
In a keynote address to the meeting of Afreximbank’s Advisory Group on Trade Finance and Export Development in Africa, being held in the run-up to the 22nd Annual General Meeting of Shareholders of the Bank, Mr. Ekra said that the “Contract Availability Guarantee” facility would incentivise international banks to support the financing of African processing plants.
The facility would cover the risk associated with situations where the contract against which financing had been provided became unavailable after an agreed period, he explained.
He added that in order to reduce the cost of compliance for banks financing African trade, Afreximbank had led the creation of a customer due diligence platform, the Afreximbank Customer Due Diligence Repository, which aimed to provide a single source of primary data for the conduct due diligence checks on bank counterparties in Africa.
The Bank was aggressively promoting factoring as an instrument of choice in dealing with new markets and non-commodities trade as well as supporting indirect exporters in supply chains, continued Mr. Ekra. “Africorrbanking has been introduced to enable Afreximbank share, partially or fully, the credit risk of African banks opening letters of credit to be confirmed by international banks”.
The President said that it was imperative for African governments to expand investments in the development of infrastructure that directly supported productive sectors, particularly utility, and the expansion of ports and harbours.
Furthermore, he went on, there was an urgent need to strengthen Africa’s financial sectors to mobilize domestic savings and expand access to affordable credit for agro processing and manufacturing industries as that would reduce countries’ exposure to high volatility in capital markets and mitigate capital flight and other illicit outflows.
Mr. Ekra urged governments to actively invest in the training and development of technical skills as part of capacity building to strengthen operations and implementation of projects in technical ministries in order to fast-track industrial development. Africa should also encourage cross-border transfer of skills, knowledge and technology to enable countries tap into skills available in other nations.
Also speaking, Pamela Kabamba, Permanent Secretary, Ministry of Finance of Zambia, who stood in for her minister, said that Zambia had embarked on a vigorous diversification agenda in order to create a resilient and robust economy with the capacity to withstand economic turbulence.
According to her, Africa can only sustain its growth momentum through well-designed diversification programmes supported by appropriate policy mix and the creation of conducive business environment.
“The continent’s growth prospects cannot be achieved without the proactive support from regional development finance institutions and regional economic communities,” she said, adding that Afreximbank should deepen its engagements with such commissions in the promotion and financing of intra- and extra-African trade, especially in the face of the concerted effort towards the establishment of a continental free trade area.
In a plenary session afterwards, Justin Lin, professor of economics at the China Center for Economic Research and the National School of Development, Peking University, Beijing, and Kola Karim, Chief Executive Officer of Shoreline Group, United Kingdom, made presentations on the theme, “Contending with headwinds: Impact of recent adverse shocks on Africa’s growth prospects”. Their presentations were followed by three other panel sessions.
The Afreximbank Annual General Meeting of Shareholders, which will take place on 13 June, is being preceded by seminars and meeting of the Advisory Group, an investment forum and a trade exhibition.
Media Contact: Obi Emekekwue (oemekekwue@afreximbank.com; Tel. +202-2456-4238)
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About Afreximbank:
The African Export-Import Bank (Afreximbank) is the foremost Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade. The Bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors. Its two basic constitutive documents are the Establishment Agreement, which gives it the status of an international organization, and the Charter, which governs its corporate structure and operations. Since 1994, Afreximbank has approved almost $35 billion in credit facilities for African businesses, including about $4.5 billion in 2014. Afreximbank is headquartered in Cairo. For more information, visit: www.afreximbank.com