The COVID-19 pandemic is estimated to cost the global economy up to US$1 trillion and to result in a significant 0.4 per cent decline in global GDP growth, which is expected to drop from 2.9 per cent in 2019 to 2.5 per cent in 2020.
It is for this reason why the African Export-Import Bank (Afreximbank) intervention to put in place a US$3-billion facility called the Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic impact of COVID-19 comes as a great relief.
PATIMFA, approved by the Bank’s Board of Directors during its sitting recently, will provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the COVID-19 pandemic.
Afreximbank says the facility will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.
Already, the Ghanaian cedi is beginning to lose some of its value as a result of the disruptions caused by the upscale of COVID-19. Additionally, the time-table for the implementation of the continental free trade area-AfCFTA has been postponed because of the pandemic.
A rapid and impactful financial response is required to avert a major crisis in Africa and that is why Afreximbank’s intervention cannot be downplayed. President of Afreximbank, Prof. Benedict Oramah has noted that already one can see a sharp pandemic-induced decline in commodity prices, a sudden significant drop in tourism earnings, disruptions in supply chains, and closure of export manufacturing facilities.
That is why Afreximbank has decided to work with multilateral development banks to put in place financial assistance programmes in order to secure support to help African countries deal with the adverse external shocks and crises arising from the pandemic.
Indeed, it is noteworthy that Afreximbank, a pan-African multilateral trade finance institution created in 1993 under the auspices of the African Development Bank, is coming to the aid of African states overcome the negative economic impact of COVID-19.