Afreximbank launches US$4 billion Ukraine Crisis Adjustment Trade Finance Program for Africa (UKAFPA)
CAIRO, April 6, 2022 /PRNewswire/ — The Board of Directors of the African Export-Import Bank (Afreximbank) on March 31, 2022 approved the launch of the Ukraine Crisis Adjustment Trade Finance Program for Africa (UKAFPA), a program of credit facilities which the Bank has developed to manage the impacts of Ukraine crisis on African economies and businesses. The program amounts to 4 billion US dollars.
the Russia–Ukraine worsening crisis February 24, 2022 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 conflict has wider global repercussions, including negatively affecting African economies, especially those that are heavily dependent on imports of grain, fertilizer and fuel. The UKAFPA program has the following objectives:
- Financing the adjustment of import restocking costs, to help countries cope with immediate increases in import prices pending adjustments in domestic demand
- Oil and Metals Buyout Financing to refinance over-collateralized loans in the current high oil and metal prices, thereby freeing up more free cash flow to meet other urgent needs, e.g. food and fertilizer imports and rising debt service
- Stabilization of commodity export earnings to help countries and companies structure and enter into derivative contracts at current high commodity prices and stabilize future export earnings
- Financing the tourism revenue deficit to extend to central banks of tourism-dependent economies to cover foreign exchange revenue shortfalls resulting from a decline in tourist arrivals from Russia and Ukraine
- National system for accelerating export earnings to be used to accelerate the completion of impactful export-oriented projects by accelerating access to foreign currency to be used to import critical equipment, technology and expertise, for project completion
Since its inception, Afreximbank has earned a reputation and reputation in introducing and implementing various emergency response programs, with strong risk mitigation measures to respond to various crises on a global scale and have an impact on Africa. Recent examples include the Pandemic Trade Impact Mitigation Facility (PATIMFA) through which Afreximbank has disbursed over 7 billion US dollars in support of African economies in their fight against the Covid 19 pandemic. This facility expired in March. Previously, in 2015, the Bank introduced its Countercyclical Commercial Liquidity Facility (COTRALF) which provided a platform for the disbursement of more than 10 billion US dollars to African commercial and central banks to avert large-scale commercial debt defaults at the height of the commodity crisis. Both facilities achieved their respective goals and were considered life-saving and successful interventions.
UKAFPA is a response to an urgent call for emergency intervention by the Bank’s Member States. UKAFPA – compliant funding applications received from across Africa already exceeds 15 billion US dollars. There is an urgent need to respond to these demands to avoid catastrophic social conditions across Africa and reduce the risk of them turning into political challenges.
Afreximbank looks forward to working with partner banks and institutions to urgently meet the needs of African countries in terms of ensuring static and dynamic food security, adequate fuel supply and avoiding fuel shortages. fertilizers and agricultural inputs, in a context of renewed economic nationalism around the world.
Beyond financing, Afreximbank plans to work with the United Nations Economic Commission to 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 objective will be to enable the alignment of production and consumption by ensuring that what is produced in Africa is prioritized to meet African requirements, while reaching out to other entities in other parts of the world to provide support.
Speaking after the meeting of the board of directors held in Abidjan, Ivory CoastProfessor Benoit OramahChairman and Chairman of the Board of Afreximbank said:
“I am delighted that our Board has approved the introduction of UKAFPA, demonstrating once again its responsiveness to the needs of African Member States and their citizens. This initiative will go a long way in avoiding anxiety and disruption social issues that could arise from impending food shortages and high costs of fertilizers and petroleum products.
“Following the endorsement by the African Union, Afreximbank shareholders have approved a US$6.5 billion General capital increase in 2021 to strengthen the Bank’s ability to deliver on its mandate, address the Covid-19 pandemic and support the implementation of the AfCFTA. We must now add the consequences of the prosecution Ukraine crisis in the catalog of emergencies that a strong Afreximbank must face. We are very grateful to Member States and shareholders who have already paid their subscriptions, which gives the Bank the flexibility to respond quickly to current challenges. I call on those who have not acted to do so urgently because we will learn once again that in times of major crisis we can only rely on our own institutions to lead the way before others follow.”
HE Macky HallPresident of the Republic of Senegal and current Chairperson of the African Union expressed his support for the UKAFPA initiative, saying, “I salute the renewed energy of African institutions that have spearheaded our coordinated and successful response to the COVID-19 pandemic. Africa today faces the socio-economic challenges posed by a global context of conflict. Afreximbank has once again shown the way forward in enabling the continent to tackle the impact of the crisis head-on through financing solutions tailored to the specific pressure points faced by our member countries. I hope 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 SongweUnder-Secretary-General of the United Nations and Executive Secretary of the Economic Commission for Africa welcomed this new initiative and added that:
“The new facility is timely and will help countries build resilience as they face another exogenous shock. The facilities approved by Afreximbank are also critical tools needed to continue strengthening the continental financial architecture as countries are seeking to rebuild their economies and take advantage of the African Continental Free Trade Area Agreement (AfCFTA)”.
The 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 provide financing solutions that support the transformation of the structure of africa trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. The Bank has a rich history of intervening in favor of African countries in times of crisis. Thanks to the Pandemic Trade Impact Mitigation Facility (PATIMFA) launched in April 2020Afreximbank has disbursed more than 7 billion US dollars to help member countries manage the negative impact of financial, economic and health shocks caused by the COVID-19 pandemic. A strong supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) which has been adopted by the African Union (AU) as a payment and settlement platform. regulation to support the implementation of the AfCFTA. Afreximbank is working with the AU and the AfCFTA Secretariat to develop an adjustment facility to help countries participate effectively in the AfCFTA. At the end of 2020, the Bank’s total assets and guarantees amounted to US$21.5 billionand its equity amounted to US$3.4 billion. Afreximbank disbursed more than 42 billion US dollars between 2016 and 2020. The Bank is rated by GCR (international scale) (A-), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB-). The Bank is headquartered at Cairo, Egypt.
For more information visit: www.afreximbank.com.
Contact: Amadou Labba Sall, [email protected]
SOURCE African Export-Import Bank (Afreximbank)