Afreximbank moves to ease Ukraine war impact on African economy with $4bn finance

BY ONOME AMUGE

The African Export-Import Bank (Afreximbank) is moving to ease the impact of the geopolitical crisis in Ukraine on African businesses and economy with the activation of a $4 billion Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).

The pan-African multilateral trade finance institution disclosed that the credit facility was approved on March 31, following the escalation of the Russia-Ukraine crisis and its consequential effect on the global economy.

The UKAFPA programme, according to Afreximbank, would be implemented under various components including:

Import Re-order Cost Adjustment Financing to help countries meet immediate import price increases pending domestic demand adjustments

Oil and Metals Buy-back Financing to refinance over-collateralised loans in the context of the current high oil and metal prices, thereby releasing more free cash flow for use in meeting other urgent needs, such as food and fertiliser imports and servicing rising cost of debt.

Commodity Export Revenue Stabilisation to help countries and companies to structure and enter derivative contracts at the current high commodity prices and stabilise future export earnings.

National Export Revenue Acceleration Facility which would be used to accelerate the completion of impactful export-oriented projects by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion.

Tourism Revenue Deficit Financing to be extended to Central Banks of tourism-dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine.

Benedict Oramah, president of Afreximbank, commenting on the initiative after the board meeting held in Cote D’Ivoire, expressed confidence that it will contribute immensely to averting social anxiety and upheaval that may arise from looming food shortages and high costs of fertiliser and petroleum products.

Oramah recalled that Afreximbank shareholders approved a $6.5 billion general capital increase in 2021 to boost the capacity of the bank to deliver on its mandate, deal with the Covid-19 pandemic, and support AfCFTA implementation following the African Union’s endorsement.

He noted further that the ongoing Ukraine crisis and its consequences, have added to the catalogue of emergencies a strong Afreximbank has to contend with.

“We are very grateful to member states and shareholders who have already paid in their subscriptions giving the bank the flexibility to respond swiftly to prevailing challenges. I call upon those who have not acted to do so urgently as we will once again learn that in times of major crises we can only count on our institutions to lead the way before others follow,” Oramah stated.

Expressing support for the UKAFPA initiative, Macky Sall, president of Senegal and chairperson of the African Union, commended the renewed energy of African institutions that have led to coordinated and successful response to the COVID-19 pandemic.

“Africa now faces the socio-economic challenges posed by a global context of conflict. Afreximbank has once again shown the way forward by enabling the continent to tackle the impact of the crisis head-on through financing solutions tailored to the specific pressure points facing our member countries.

“I hope that UKAFPA will play a major role in building resilience in nutrition and food security on the African continent, in line with the theme of the 36th AU Summit,” President Sall said.