Afreximbank entered the COVID-19 crisis in a position of strength, with a solid capital base, high operating efficiency, good financial ratios, a diversified and quality loan portfolio, and strong liquidity.
This report provides an update to Afreximbank’s stakeholders on how the Bank is responding to the COVID-19 pandemic.
Business Continuity Management
This update is a follow-up to our communication on the Business Continuity initiatives of the Bank provided in May 2020. Regular Business Continuity Management testing, simulation drills, work from home rehearsals enabled the Bank to respond swiftly and effectively to the impact of the COVID-19 pandemic. With staff safety at the forefront, the Bank took the early decision to activate work from home (WFH) in March, with medical briefings, knowledge sharing sessions, and circulars to staff and their families. The Bank established a detailed Case Management Plan, engaging additional Medical Consultants at its various office locations. Travel by all staff and their families outside their duty stations was suspended until further notice. The Bank instituted weekly oversight by Executive Management of all the protocols and workstreams activated/instituted in response to the pandemic. As at date, no Bank Staff has been lost or hospitalized, business has continued normally, Board and Management Committees meet, and all operations continue to be undertaken normally.
The Bank entered the crisis with cash balances of $3.1 billion and has since the Pandemic maintained a healthy cash position with Liquidity Coverage Ratio (LCR) far in excess of its minimum threshold of 110% and Net Stable Funding Ratio (NSFR) far above its minimum of 100%. Management is confident that the Bank will maintain sufficient liquidity to fund its business in the wake of COVID-19 while continuing to meet its prudential ratios. The Bank is funding its asset requirements through internal and other sources. These include loan repayments, as well as new borrowings through syndicated loans, drawings on committed lines from DFIs/ECAs and commercial banks, and expanded access to African resources through the activities of the African Resource Mobilization Unit. The Bank has raised an aggregate amount of US$ $5.9 billion between March and June 30, 2020.
Loan Quality Management
Loan Quality Management remains satisfactory in line with the Bank’s expectation at the onset of the Pandemic. It is expected that the Bank’s financial performance will remain sound, with the NPL ratio expected to remain within the 2% to 4% risk appetite range.
The Bank has launched a $3 billion (net), Pandemic Trade Impact Mitigation Facility (“PATIMFA”) to assist member countries in managing the adverse impact of financial, economic, and health shocks caused by the COVID-19 pandemic. The Bank has set aside an amount of $200 million to finance the production of COVID-19 equipment and supplies within Africa.
On 20 April 2020, the Bank’s Board approved an amount of US$3 million grant financing to be contributed to Africa Centre for Disease Control and Prevention (Africa CDC), Africa Union COVID-19 Response Fund, and others towards ameliorating the adverse effects of the pandemic. The President of the Bank serves on the Board of Trustees of Africa Union COVID-19 Response Fund.
The Bank conducted its Annual General Meeting by correspondence on 13th June 2020 and decided to cancel the series of events that were set around its 27th Annual General Meeting of Shareholders. Prof Benedict O. Oramah was re-appointed President for a new 5-year term from that date.
In sum, the Bank has experience in managing crises and has demonstrated resilience over the years. While the COVID-19 situation is still unfolding, Management is confident in the measures in place to mitigate the risks posed by the Pandemic to its staff, customers, and business operations, particularly asset quality, liquidity, business continuity, and business development. The Bank will continue to monitor the situation, assess the impact, review the attendant response actions where appropriate, and provide updates where necessary.