The African Export-Import Bank, Afreximbank, is putting strategies in place within the next four years to remove all intra-African trade financial bottlenecks – basically to bridge the intra-African trade financing gap of about US$25 billion.
Within this four-year period of strategising to deepen and enhance effective trade finance within the African trade boarders, the Bank targets growing its total loans and advances portfolio by 12% and growing its intra-African trade portfolio to US$4billion as well as achieving a US$53.5billion capitalisation within the same period.
Other key targets within this four-year period is to contribute toward increasing Africa’s share of global manufactured exports as well as creating 3,000 hectares of industrial parks & special economic zones across the continent – with the Africa-sourced component of the Bank’s total liability hitting not less than 60% within the same period.
The key initiatives of this strategy are to fully implement the intra-African Trade and African Customer Due Diligence Repository platforms. The strategy also seeks to facilitate the emergence and expansion of Export Trading companies across Africa, and create a fund for export development that will be available for investment partners and other financial institutions interested in investing in Africa.
Addressing participants at the just-ended Advanced Structured Trade Finance Seminar held in Sal Island, Cape Verde, the President and Chairman of the Board of Directors of Afreximbank, Dr. Benedict Oramah, has indicated that there has been a growing realisation among Africans of the urgent need for the continent to become more integrated, trade more with itself, and create the necessary environment to drive intra-regional investments as a means to accelerating development of the continent.
It is also generally accepted that intra-African trade can only expand if Africa produces more diversified products – if risks associated with financing the trade can be adequately mitigated.
According to him, industrialisation and export manufacturing have become critical components of the efforts to expand intra-African trade. Creating the export manufacturing capacity that the continent needs requires billions of dollars for financing the enabling infrastructure, as well as acquisition of equipment the factories will need. Thus, he said, Afreximbank also estimates that the annual amount of the intra-African trade financing gap is about US$25billion.
In the past, international banks had not supported intra-African trade for various reasons: those banks had traditionally favoured commodity financing, which lent itself to the use of classical structured trade financing techniques to mitigate perceived risks in the continent.
Dr. Oramah stressed that the just-ended Structured Trade Finance Seminar, which was the seventieth in the series, was not only meant to equip participants with skills to structure bankable trade and supply chain finance deals of varying levels of complexity, but also to prepare each and every one of the participants as agents for driving intra-African trade and the structural transformation of Africa.
The seminar was also intended to bring to the fore the rapid changes that are affecting trade financing, and what they mean for the way transactions are originated and structured.
It will also help bankers to create networking opportunities that would enable them to jointly build useful banking partnerships and share ideas on innovation. “It is such cross-fertilisation of ideas that will keep us all abreast of developments in the increasingly technology-driven world,” he stressed.