Other Unique Guarantee Products

The other guarantee products offered by Afreximbank are:

Construction Finance Guarantee

The Bank’s Construction Finance Guarantee programme supports the promotion of export services through the development of tourism, medical and export manufacturing projects in Africa through a risk sharing arrangement that leverages Afreximbank’s strong credit standing and its preferred creditor status in its member countries.

The programme deploys two separate but linked instruments to address the financing needs of promoters developing such projects in Africa.

The two instruments are:

  1. A contingent guarantee issued by Afreximbank to construction lender(s) to provide assurance of take-out (payment of the construction loan) upon completion of the project; and
  2. A relay facility aimed at taking over the construction facility. The project completion guarantee’s structure attempts to lay off the construction risks to parties best able to manage them while retaining the operating risks for Afreximbank.

The overall goal of this is to convert project risks into other manageable risks, thereby ensuring speed in the deal closure and reducing the overall financing risks to the parties involved in the project.

Facilities covered under the Project Completion Guarantee include:

  • Construction/Tourism-Linked Relay Facility (“ConTour”);
  • Construction/Medical Tourism-Linked Relay Facility (“ConMed”); and
  • Construction/Export Manufacturing – Linked Relay Facility (“ConEX”).

Trade Contract availability Guarantee

The Trade Contract Availability Guarantee facility is one of the Bank’s sector specific interventions aimed at supporting export processors to secure medium- to long-term financing using their export contracts in a situation where the duration of the exporter’s offtake contract is shorter than the duration of the loan requested. Under the facility, Afreximbank provides a guarantee to cover pre-agreed cash-flow shortfalls arising from the non-availability of export contracts thereby mitigating against market risk. This guarantee gives comfort to the bank to lend to the exporter beyond the current offtake contract duration.

Risks Covered
It covers contract availability risk, where the exporter’s offtake contract duration is shorter than the requested loan duration.

Interstate Transit Guarantee

The Interstate Transit Guarantee is offered as part of Afreximbank’s overall objective of facilitating and promoting intra-African trade by reducing some of the bottlenecks associated with the movement of goods across borders within Africa.

Goods are considered in transit from a custom’s authority perspective when the imported goods destined for another country pass through the borders of the country in transit without the payment of duty. With the Afreximbank Transit Guarantee, importers or exporters will be allowed to move goods in transit without paying customs duties or being subjected to unnecessary delays, on presentation of the transit guarantee to the customs authorities.

When the goods are in transit, they will be under customs control from the Customs office of departure to the Customs office of the final destination. A Transit Guarantee system ensures that the Customs duties and taxes, which are at risk during a transit operation, are covered at all times until the goods are presented to the Customs office of destination.

Risks Covered
The Guarantee covers the risks of non-transit of the imported goods and the non-payment of import duties and taxes. The Guarantee is based on the actual duties and taxes that are supposed to be paid based on the customs value of the goods and the level of risk.