African Export–Import Bank, Afreximbank, is set to enhance its investments in Intra-African Trade over the five upcoming years, said the Managing Director, Intra-African Trade Initiative in Afreximbank, Mrs Kanayo Awani.
According to her, through this Intra-African Trade Group, Afreximbank has paid out some $20 billion in the past five years.
In a conference in Cairo, Awani stated about 500 out of the 600 regulated African banks have taken part in the “Intra-African letter of credit scheme.”
She also said the bank created its Intra-African Trade Division in 2017 to realize the potentials of Intra-African Trade and came up with the formation of the African Continental Free Trade Area (AfCFTA), founded in 2018.
The bank found out that the execution of AfCFTA pact might bring about more competition, she added.
According to her, African market liberalization would make it possible for new competitors who didn’t have any chance to get into the market at little expense. The bank will cope with this challange, putting AfCFTA Adjustment Facility into use, said Awani.
The facility will allow the Member States to access monetary resources to carry out the Agreement and reduce short-term impacts and related expenses, she emphasized. Afreximbank Board has committed $1 billion on its first investment, she continued.
The Afreximbank African Collaborative Transit Guarantee Scheme has also been founded through the bank, providing “a continent-wide single-technology enabled transit guarantee” to make it easy to transport goods across Africa and support AfCFTA, she said.
If the scheme is put into operation, it is anticipated to dramatically cut border delays and annual savings (over $300 million dollars each year).
Another important initiative, she said, is the Pan African Payments and Settlement System (PAPSS) developed in January 2022. She added cross-border payments in African currencies will be facilitated, enhancing Intra-African Trade by reducing use of hard currencies. Accordingly, cross-border payments will be cheaper and flawless.
Presently, PAPSS has planned to dramatically cut the costs of currency convertibility in Africa to annually save over $5 billion in transaction expenditure. This will help a large number of Small and Medium Enterprises (SMEs) and teenpreneurs in Africa.