Afreximbank launches 4 billion US dollar Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA)
PR95363
CAIRO, April 6, 2022, /PRNewswire=KYODO JBN/ --
The Board of Directors of African Export-Import Bank (Afreximbank) on 31 March
2022 approved the launch of the Ukraine Crisis Adjustment Trade Financing
Programme for Africa (UKAFPA), a programme of credit facilities that the Bank
has developed to manage the impacts of the Ukraine crisis on African economies
and businesses. The programme amounts to US$ 4 billion.
The Russia-Ukraine crisis which escalated on 24 February 2022 has had a
significant effect on the global economy. Given the importance of both Russia
and Ukraine as sources of crude oil and gas, raw materials and grains, the
outbreak of the conflict has wider repercussions on a global scale, including
adversely affecting African economies, especially those that rely heavily on
grain, fertilizer and fuel imports. The UKAFPA programme has the following
objectives:
- Import Re-Order Cost Adjustment Financing, to help countries to meet
immediate import price increases pending domestic demand adjustments
- Oil and Metals Buy-Back Financing to refinance over-collateralized loans in
the context of the current high oil and metal prices, and thereby release more
free cashflow for use in meeting other urgent needs, eg. food and fertilizer
imports and servicing rising cost of debt.
- Commodity Export Revenue Stabilisation to help countries and companies to
structure and enter derivative contracts at today’s high commodity prices and
stabilise future export earnings
- 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
- National Export Revenue Acceleration Facility to 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
Since its establishment, Afreximbank has built a track record and earned a
reputation for introducing and implementing various emergency intervention
programmes, with embedded strong risk mitigations to respond to various crises
on a global scale and impacting Africa. Recent examples include the Pandemic
Trade Impact Mitigation Facility (PATIMFA) through which Afreximbank disbursed
over US$7 billion in support of African economies in their fight against the
Covid 19 pandemic. That facility expired in March. Previously, in 2015, the
Bank introduced its Countercyclical Trade Liquidity Facility (COTRALF) that
provided a platform for the disbursement of over US$10 billion to African
commercial and central banks making it possible to avert large scale trade debt
payment defaults at the height of the commodity crisis. Both facilities
achieved their respective goals and were deemed vitally important and
successful interventions.
UKAFPA is a response to an urgent call for emergency intervention by member
states of the Bank. UKAFPA – compliant financing requests received from across
Africa already exceeds US$15 billion. There is some urgency to meet these
requests to avoid catastrophic social conditions across Africa and reduce the
risk of their morphing into political challenges.
Afreximbank looks forward to working with partner banks and institutions to
urgently meet the need of African countries in terms of ensuring static and
dynamic food security, adequate fuel supplies and averting fertilizer and
agricultural input shortages, against a backdrop of renewed economic
nationalism worldwide.
Beyond the financing, Afreximbank plans to work with the UN Economic Commission
for Africa (UNECA), the African Union Commission (AUC) and the African
Continental Free Trade Area (AfCFTA) Secretariat to launch the Intra-African
Supply Chain Coordination Group whose aim will be to enable alignment of
production and consumption ensuring that what is produced in Africa is
prioritised to meet African requirements, while reaching out to other entities
in other parts of the world to lend support.
Speaking after the board meeting held in Abidjan, Cote D’Ivoire, Professor
Benedict Oramah, President and Chairman of the Board of Directors of
Afreximbank commented:
“I am delighted that our Board has approved the introduction of the UKAFPA,
once again demonstrating their responsiveness to the needs of African member
states and their citizens. This initiative will contribute immensely to
averting social anxiety and upheaval that may arise from looming food shortages
and high costs of fertilizer and petroleum products.
“Following African Union’s endorsement, Afreximbank shareholders approved a
US$6.5 billion General Capital Increase on 2021 to boost the capacity of the
Bank to deliver on its mandate, deal with the Covid-19 pandemic, and support
AfCFTA implementation. We must now add the consequences of the ongoing Ukraine
crisis 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 own institutions to lead the way before others follow.”
H.E. Macky Sall, President of the Republic of Senegal and current Chairperson
of the African Union expressed his support for the UKAFPA initiative, saying: "
I welcome the renewed energy of African institutions that have led our
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."
Dr. Vera Songwe, United Nations Under Secretary-General and Executive Secretary
of the Economic Commission for Africa welcomed this new initiative and added
that:
“The New facility is timely and will support countries build resilience as they
face yet another exogenous shock. The facilities approved by Afreximbank are
also core tools needed to continue strengthing the continental financial
architecture as countries look to rebuild their economies and take advantage of
the African Continental Free Trade Area (AfCFTA) agreement.”
About Afreximbank:
African Export-Import Bank (Afreximbank) is a Pan-African multilateral
financial institution mandated to finance and promote intra-and extra-African
trade. Afreximbank deploys innovative structures to deliver financing solutions
that support the transformation of the structure of Africa’s trade,
accelerating industrialization and intra-regional trade, thereby boosting
economic expansion in Africa. The Bank has a rich history of intervening in
support of African countries in times of crisis. Through the Pandemic Trade
Impact Mitigation Facility (PATIMFA) launched in April 2020, Afreximbank has
disbursed more than US$7 billion to help member countries manage the adverse
impact of the financial, economic, and health shocks caused by the COVID-19
pandemic. A stalwart supporter of the African Continental Free Trade Agreement
(AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System
(PAPSS) that was adopted by the African Union (AU) as the payment and
settlement platform to underpin the implementation of the AfCFTA. Afreximbank
is working with the AU and the AfCFTA Secretariat to develop an Adjustment
Facility to support countries in effectively participating in the AfCFTA. At
the end of 2020, the Bank’s total assets and guarantees stood at US$21.5
billion, and its shareholder funds amounted to US$3.4 billion. Afreximbank
disbursed more than US$42 billion between 2016 and 2020. The Bank has ratings
assigned by GCR (international scale) (A-), Moody’s (Baa1), Japan Credit Rating
Agency (JCR) (A-) and Fitch (BBB-). The Bank is headquartered in Cairo, Egypt.
For more information, visit: www.afreximbank.com.
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Source: African Export-Import Bank (Afreximbank)
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