Cairo, 15 December 2015 – A financing programme by the African Export-Import Bank (Afreximbank) to provide more than $3.5 billion to its member countries to enable them adjust to current adverse economic shocks, especially commodity price and terrorism-induced ones, has received the blessings of the Bank’s Board of Directors.
The Counter-Cyclical Trade Liquidity Programme, approved by the Board of Directors at its quarterly meeting held in Seychelles on 12 December, has an initial life of two years and allows Afreximbank to deploy up to 40 per cent of its approved annual gross commitment limit to providing trade finance liquidity to central banks and selected commercial banks in eligible countries, with the available funding for 2016 totaling some $3.5 billion.
In information released after the approval, Afreximbank said that it planned to attract other lenders and financiers to the programme in order to more than double the available funding.
The programme will provide unfunded facilities, by way of guarantees, letters of credit and similar instruments, to commercial banks in eligible concerned countries. It will also make funded facilities available to them to enable them meet obligations under trade finance payment rights that fall due but which they are unable to meet due to non-availability of foreign exchange from their central banks or usual markets.
“This facility enables us to help our member countries bridge the significant trade financing gap confronting them as a result of current economic shocks until normal funding conditions are restored,” said Dr. Benedict Oramah, President of Afreximbank. “It is Afreximbank’s response to the exceptional circumstances that demand urgent and decisive large-scale support to ensure that the continent is not thrown into recession due to a sudden drying up of trade flows. It also helps us to minimise the potential impact on normal bank operations.”
“We expect to learn valuable lessons from the implementation of this programme as we prepare to deal with future market disruptions,” continued the President, who noted that the programme gave Afreximbank additional flexibility in its lending through fast disbursement facilities which would help in making its interventions more effective in minimizing the risk of country trade payment defaults.
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; restored confidence of the international market and commodity suppliers in the countries’ banking systems; stabilisation of inflation rates and local currency exchange rates against foreign currencies; and access to finance from the international market under favourable terms.
With the approval, the Bank expects to process requests totaling about $2 billion within the next few weeks as a result of requests received from a number of central and commercial banks.
Media Contact: Obi Emekekwue (oemekekwue@afreximbank.com; Tel. +202-2456-4238)
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About Afreximbank:
The African Export-Import Bank (Afreximbank) is the foremost Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade. The Bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors. Its two basic constitutive documents are the Establishment Agreement, which gives it the status of an international organization, and the Charter, which governs its corporate structure and operations. Since 1994, Afreximbank has approved almost $35 billion in credit facilities for African businesses, including about $4.5 billion in 2014. Afreximbank is headquartered in Cairo. For more information, visit: www.afreximbank.com