Afreximbank to leverage $1bn to support FDI flow into Africa
African Export-Import Bank (Afreximbank) has a vision to leverage $1billion in support of Fund for Export Development in Africa’s (FEDA) mission, the President, Prof Benedict Oramah, has said.
Oramah made the disclosure at a Financing Investment and Trade in Africa conference organised by unisia-Africa Business Council in Tunis, Afreximbank Head of Media, Obi Emekekwue, stated in a released in Abuja on Wednesday.
Oramah said the bank also planned to catalyse four times the amount in Foreign Direct Investment (FDI) in five years.
FEDA is an equity investment fund recently created by Afreximbank to catalyse FDI flows into Africa’s trade and export sectors.
According to Oramah, the kind of equity funding currently available in Africa is not appropriate for turning the continent into the trade hub that would achieve its desired growth.
He said FEDA would ensure that investors’ investments were protected under the immunities and privileges available to Afreximbank and in addition enjoy tax privileges and incentives.
Oramah described development finance institutions as market failure institutions that existed to complement what markets were unable to offer.
He said Afreximbank’s interventions were based on the philosophy of bringing addition, rather than displacing commercial banks.
“Afreximbank is making it possible for financing to come into Africa.
“The Bank has just expanded its guarantee offering to make it more accessible to companies coming into Africa, including through its Intra-African Investment Guarantee Facility.
“It has also introduced Mansa, a customer due diligence platform, to address the challenge of many African countries not being able to access trade finance due to high compliance cost,” Oramah said.
On infrastructure, the Bank president said that if the continent looked inward, it could find the funds to meet its infrastructure needs.
He said, ” With about 700 billion dollars under management by African pension funds and the reserves kept abroad by African central banks already adding up to about one trillion dollars, the funds are already adequate to meet Africa’s need.
“However, because they are outside the continent, and those keeping them deem it too risky to invest in Africa, the funds are not being invested in Africa.
“These are things that need to be fixed.”
He said Afreximbank was developing a platform that would make it possible for cross-border trade to occur in local currencies across Africa.
Oramah said the Bank was discussing with the Association of Africa Stock Exchanges to use the platform to bring liquidity to member exchanges.
He further said there was a need for a regulatory reform that would allow the creation of pan-African solutions in order for liquidity to come to some of the African exchanges.
He said this would enable them to carry infrastructure funds.
Oramah recalled that the Bank recently announced a 500 million dollar Tunisia-Africa Trade and Investment Promotion Programme to support Tunisian businesses trading with the rest of Africa.
He said Afreximbank also approved 300 million dollars for six Tunisian banks under its Afreximbank Trade Facilitation Programme.
“It is also considering reopening its Tunis-based Regional Office for the Maghreb Region in order to revive trade flows between North Africa and the rest of the continent,” he said. (NAN)