The Fund for Export Development in Africa, FEDA, has been established by Afreximbank to facilitate foreign direct investment flows into Africa’s trade and export sectors, and to fill the equity funding gap that amounts to US$110billion per annum in export-related sectors.
FEDA is a new vehicle created to deal with the perennial problem of capital constraints to private sector development and industrialisation in Africa. Afreximbank has already committed over US$350million to the Fund, including commitments for operation of a Credit Fund and investments in the Bank’s strategic initiatives as well as those to be deployed under limited partnership frameworks.
FEDA, which is a development-oriented subsidiary of Afreximbank, aims to provide equity financing to companies operating in key industries and sectors so as to significantly increase their likelihood of success in delivering on Afreximbank’s development priorities, and meeting the Bank’s strategic goals under the main pillars of the intra-African Trade Strategy and the Industrialisation and Export Development Strategy.
These and more came up at the official signing of the Establishment Agreement and Memorandum of Understanding for the key documents related to establishing the Fund and headquarters host agreement. The agreement was signed between African Export-Import Bank (Afreximbank) and the Republic of Rwanda in Cairo last Tuesday, and virtually aired.
The related documents were signed by Alfred Kalisa, Ambassador of the Republic of Rwanda in Egypt, and Afreximbank’s President, Professor Benedict Oramah, in the presence of His Excellency Mahamadou Labarang, Dean of the African Ambassadors in Cairo, and FEDA Chief Executive Officer, Dr. Philip Kamau. The Establishment Agreement creates FEDA while the Headquarters Agreement provides that the Republic of Rwanda will host the headquarters’ office.
According to Ambassador of the Republic of Rwanda in Cairo, His Excellency Alfred Kalisa,
the government of Rwanda is happy to have signed these key agreements with Afreximbank. He emphasised that Rwanda is glad to host FEDA as they work together to achieve the dreams of the African Continental Free Trade Area (ACfTA) on the continent, as well as ensuring that FEDA is successful in driving and achieving its mandate.
Professor Benedict Oramah, President of Afreximbank, on his part was thankful that H.E. Paul Kagame, President of the Republic of Rwanda, and his government embraced the strategic essence of this institution for both Rwanda and Africa.
“To have agreed to host FEDA without any equivocation is a clear and bold statement of visionary leadership and recognition of the economic value of Pan-African institutions,” he stressed.
He added that FEDA will be tasked to provide capital for companies in the financial services, technology consumer and retail goods, tourism, manufacturing, transport, logistics and warehousing; and trade-enabling infrastructure like industrial parks, agribusiness and education sectors in Afreximbank’s member-states.
Professor Oramah finally reiterated that FEDA will invest across all market segments but with greater focus on SMEs, which have substantial funding shortages and represent about 90% of businesses in Africa. It will also invest in mature companies and start-up businesses where there is a gap in the marketplace, and where investments have a high level of value additionality and development impact in Africa.