AFREXIMBANK earmarks $3.5bn to address Africa’s current adverse economic shocks

The African Export-Import Bank (AFREXIMBANK) has said it would spend more than $3.5 billion (about N689.5 billion) on loans to member countries to enable them adjust to current adverse economic shocks in their economies.

The review of requests by prospective beneficiaries, totalling about $2 billion, begins in the next few weeks.

AFREXIMBANK said the financing, tagged “Counter-Cyclical Trade Liquidity Programme”, would enable eligible countries tackle low commodity prices and terrorism-induced costs.

The programme, the bank explained, was approved by the bank’s board of directors at its quarterly meeting held in Seychelles on Dec. 12.

AFREXIMBANK said it planned to attract other lenders and financiers to the programme in order to more than double the available funding.

AFREXIMBANK expects the positive impact of the programme in the eligible countries to include continued supply of raw materials, capital goods and essential goods into the markets.

Besides, it said “the programme will restore the confidence of the international market and commodity suppliers in the countries’ banking systems”.

“It will stabilise inflation rates and local currency exchange rates against foreign currencies and access to finance from the international market under favourable terms,” the bank explained.

President of AFREXIMBANK, Benedict Oramah, said the programme would provide unfunded facilities by way of guarantees, letters of credit and similar instruments to commercial banks in eligible countries.

“It will also make funded facilities available to enable the countries meet obligations under trade finance payment right due to non-availability of foreign exchange from their central banks or usual markets.

The facility, Mr. Oramah explained, would enable the bank to help member Countries Bridge the significant trade financing gap confronting them as a result of current economic shocks until normal funding conditions were restored.

According to Mr. Oramah, it was AFREXIMBANK’s response to the exceptional circumstances that demanded urgent and decisive large-scale support, adding that the programme was to ensure that the continent was not thrown into recession due to a sudden drying up of trade flows.

Apart from helping to minimise the potential impact on normal bank operations, he said valuable lessons were expected to be learned from the implementation of the programme as the bank prepares to deal with future market disruptions.

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