Financing investment projects across Africa

11 Views No Comment

Since its inception 25 years ago, Afreximbank has been financing investment projects and programmes aimed at promoting trade across Africa. The Bank’s assistance packages are spread evenly around the sub-regions.

In the West African sub-region, Nigeria and Ghana received assistance to enable some Ghanaian banks meet obligations to Nigerian oil traders when international banks suddenly cut credit lines during the recent financial crisis. The Bank was able to sustain the beneficial trade between the two countries in the spirit of African unity and integration of economies. In March, this year, Afreximbank pledged support for the Ghana Export-Import Bank (GEXIM) to achieve its objective of playing a significant role in driving Ghana’s industrialisation agenda.

Nigeria has also received the support of Afreximbank in its efforts to develop critical sectors.  The Bank approved a total of $17 billion financing for Nigerian entities between its commencement of operations in 1994 and last December.

Dr Oramah says Afreximbank’s facilities had made major impact on critical sectors of the Nigerian economy and that the Bank had loans outstanding of about $3.5 billion in Nigeria as at December 31, 2017. He identifies the sectors benefiting from the Bank’s facilities to include: financial institutions, transport, hospitality, manufacturing, agro-allied, oil and gas, power, and telecommunications.

L-R: Denys Denya, Afreximbank’s Executive Vice President, Finance, Administration and Banking Services; Claver Gatete, former Minister of Finance and Economic Planning of Rwanda; Dr Benedict Oramah, President, Afreximbank; Dr George Elombi, Executive Vice President, Governance, Legal and Corporate Services, Afreximbank; and Amr Kamel, Executive Vice President, Business Development and Corporate Banking, Afreximbank  at  the opening ceremony of Seminars of Afreximbank Advisory Group on Trade Finance and Export Development in Africa at the 24th AGM of the Bank

L-R: Denys Denya, Afreximbank’s Executive Vice President, Finance, Administration and Banking Services; Claver Gatete, former Minister of Finance and Economic Planning of Rwanda; Dr Benedict Oramah, President, Afreximbank; Dr George Elombi, Executive Vice President, Governance, Legal and Corporate Services, Afreximbank; and Amr Kamel, Executive Vice President, Business Development and Corporate Banking, Afreximbank at the opening ceremony of Seminars of Afreximbank Advisory Group on Trade Finance and Export Development in Africa at the 24th AGM of the Bank

“Afreximbank’s support to Nigeria had included provision of liquidity and trade finance lines of more than $800 million during the banking consolidation when many international banks cut credit lines to the country and the provision of $1.8 billion to support the economy during the recent oil price shock in 2015-2016,’’ Oramah says.

Other initiatives in Nigeria include the development of testing and inspection centres across the country in collaboration with the Standards Organization of Nigeria (SON); establishment of a Centre of Excellence for Tertiary Healthcare/Medical Park; potential participation in the Nigeria SEZ Investment Company Ltd being promoted by the government; support for industrial projects through loans to strategic banks; arrangement and disbursal of $750 million to the Bank of Industry (BoI) in June, this year. Other initiatives of the Bank in Nigeria are provision of trade and letter of credit lines to all Nigerian banks, in close coordination with Central Bank of Nigeria (CBN), to ensure access to trade finance; and the development of an Afreximbank Africa Trade Centre in Abuja.

‘‘The Bank is willing to work with the government to arrange financing of up to $1 billion to support the government’s investments in trade enabling infrastructure,’’ Oramah says.

Similarly, Afreximbank has successfully invested in Sierra Leone, with IDEA UK’s Hilton Freetown Cape Sierra Hotel, which received project finance under the Bank’s Contour Africa Facility. The Contour Africa Facility is a risk sharing facility introduced by the Bank to promote tourism. Under the facility, it shares the risk of developing hotels and tourism facilities by transferring construction risks to parties better able to manage the risk.

Guinea has been able to keep importing strategic petroleum products supplies via the Bank’s generous finance terms.

For Chad, too, it is from Afreximbank with love. To mitigate the adverse impact of recent economic shocks and support Chad’s economic growth, Afreximbank intends to arrange at least $500 million in multi-sourced financing to support projects in agro-processing, energy, manufacturing, tourism and logistics sectors in the country under Chad’s National Development Plan.

Afreximbank, and the Development Bank of Central African States (BDEAC) have also entered into a memorandum of understanding (MoU) to harmonize their efforts in the promotion of trade and regional integration.

Dr Oramah says the two institutions would collaborate in the identification, preparation and financing of projects and trade transactions in African states that are members of both entities. He adds that through co-financing, knowledge-sharing and capacity-building work, Afreximbank and BDEAC will join efforts to intensify industrialization, expand exports and promote intra-regional trade across countries of the Economic and Monetary Community of Central Africa (CEMAC).

Fortunato-Ofa Mbo Nchama, President of BDEAC, says that his institution’s decision to partner with Afreximbank was based on the strong alignment that existed between the two entities. According to him, the collaboration would contribute to BDEAC’s work in supporting the structural transformation and diversification of Central African economies through the construction of logistics infrastructure and industrial capacities and through the development of agro-processing and other key economic sectors, noting that those economies were still heavily dependent on commodity exports. The members of BDEAC are Cameroon, Republic of Congo, Chad, Central African Republic, Equatorial Guinea and Gabon.

Up North, an Egyptian power equipment supplier has remained in business and in good trade relations with Angola, its brother African counterpart, largely because the Bank stepped in to supply credit for a facility worth millions of dollars. Afreximbank is also arranging $2 billion in financing support to Angola. The amount includes various trade financing facilities for essential imports. It would equally enable Angolan banks to issue letters of credit, to be confirmed by Afreximbank, for the continued importation of essential commodities, including food items and pharmaceuticals.

In December 2017, Afreximbank entered into an agreement with the Export Development Bank of Egypt (EBE) to collaborate on a $500 million scheme aimed at supporting exports and investments by Egyptian businesses to other African countries. The Bank has equally entered into an agreement  with the Egyptian construction conglomerate, The Arab Contractors (Osman Ahmed Osman & Company) Limited, for a $200-million multi-currency guarantee facility to enable it meet its obligations under construction contracts within Africa and the Middle East.

Down south, Zimbabwe’s economy has been receiving help from Afreximbank to maintain some liquidity in its trade finance sector to cushion the effects of terrible sanctions and boycotts from western financiers.

The Bank recently signed a $1billion programme with the Export Credit Insurance Corporation (ECIC) of South Africa to promote trade between South Africa and the rest of Africa. Under the terms of the programme, Afreximbank and ECIC will collaborate in identifying, preparing and appraising trade transactions and projects while co-financing and sharing risk.

Over the years, Afreximbank has chalked up cumulative facility approvals of $50 billion (with a massive $10 billion, representing 20 percent of total, approved in 2016 alone) due to strong demand for credit to meet the challenges created by the financial crisis.

In East Africa, Afreximbank is using an array of programmes and facilities to support the Ethiopian economy. The Bank has supported projects worth over $100 million in Ethiopia, spanning infrastructure and the financial services sector.

It has pledged to support Ethiopian entrepreneurs seeking to add value to coffee, cotton, textile, leather and other commodities for export.
Dr Oramah says the Bank would also work with businesses involved in the importing or creating of products used to build infrastructure, including renewable energy projects. In addition, the Bank would collaborate with government agencies and commercial banks to expand local involvement in the oil and gas, mining and agriculture sectors.

While trade finance remains Afreximbank’s main area of operation and assistance, the Bank is on the verge of launching a Contingency Food Emergency Trade Finance Facility to assist countries exposed to the ravages of drought and other fallouts of climate change.  It is already established that the Bank’s support for infrastructure, especially transportation in rural areas is also targeted at the food-producing regions to help Africa tackle food shortages and the needless frittering away of resources on food importation.  The Gambia, specifically, is slated to benefit from the facility when it becomes fully operational.

As part of a $1 billion syndicated loan facility for the Democratic Republic of Congo (DRC), Afreximbank has advanced $250 million to help the country meet obligations due for the development of its oil fields.  The facility will enable the country to diversify away from oil, create jobs and improve the people’s living condition.

The Bank hopes to use this Afro-centric approach to raise intra-Africa’s share of Africa’s total trade from the current unacceptable rate of 15 percent to 22 percent by 2021, thereby fulfilling its Boosting Intra-Africa Trade (BIAT) mandate.

By Pita Ochai

 

About the author

Leave a Reply

Your email address will not be published. Required fields are marked (required)

Trending Now
Advertisement
Calendar
August 2018
M T W T F S S
« Jul   Oct »
 12345
6789101112
13141516171819
20212223242526
2728293031  
Channels
Advert