The Sunday News
Judith Phiri, Business Reporter
THE AfreximBank has encouraged businesses on the African continent to utilise the US$1 billion adjustment facility put together to implement a regional customs transit guarantee scheme that supports countries under the African Continental Free Trade Area.
Under the African Continental Free Trade Area (AfCFTA), which was operationalised in January, regional member states agreed to ensure that 99 percent of their tariffs are removed to promote intra-African trade.
Speaking through a virtual platform during the Zimbabwe National Chamber of Commerce trade conference held in Bulawayo last Friday, the director of the African Union (AU)/ AfCFTA relations and trade policy, Mr Yusuf Daya said the adjustment facility established by the AfreximBank was meant to support Governments and the private sector.
“The bank established an adjustment facility and committed US$1 billion to support Governments and the private sector must adjust to new trading regime created by the AfCFTA. We have been mandated by the AU Assembly to work with the AfCFTA and ministers to develop statutes and a resource mobilisation plan for an expanded facility that will address adjustment costs including industry that may incur revenue losses,” said Mr Daya.
He said the bank was working on the adjustment facility initiative to establish an upward review of the facility in the value of around US$8 billion to support constant budgets to the AfCFTA. Mr Daya also noted that the finance service company had developed financing and facilitation instruments as AfCFTA was an important step towards rationalising Africa’s regional trade arrangement and to deepen economic integration and draw on economies of scale and development of regional value chains to accelerate the process of structural transformation and diversification of African economies.
“It will contribute significantly towards integrating the continent and removing the last vestiges of colonial divisions. Intra-African trade under the AfCFTA is expected to increase by about 52 percent by 2022, and more than double within the first decade of implementation if the implementation of the AfCFTA is accompanied by robust trade facilitation measures. Preliminary estimates and simulations suggest that intra-African trade in industrial products, which I know are of particular interest to ZNCC members, could increase by US$60 billion annually.”
Mr Daya said some of the key financing instruments included a Global Facility for African Multinational Corporations who they branded Intra-African Trade Champions or ‘Intra-Champs.’ AfreximBank also offered the Intra-African Investment Finance, Intra-African Investment Guarantee, Intra-African Trade Services Support Facility, Intra-African Export Financing Facility and Guarantee in Support of Government Commitments to Project Promoters among others.
He said Governments and private sector players could also access Export Contract Availability Guarantee, Merchant Marine Facility, Contracting Related Guarantees, Packing Credit Finance and Guarantee, Fleet Financing and Trade Information and Advisory Services from AfreximBank.
“The bank is also supporting through digital platforms and initiatives and it established the African Trade Gateway (ATG) which is an effective digital platform for facilitating intra African trade under the AfCFTA. It comprises of the Pan-African Payment and Settlement System (PAPSS), the Africa Customer Due Diligence Repository Platform (MANSA Platform) and the Trade Information Portal, among others.”
With the ongoing PAPSS being piloted at the West African Monetary zone countries with a backing of US$500 million from AfreximBank, he said they were working on expanding it to US$3 billion as they roll it out to the rest of the African continent.
AfCFTA secretary general Mr Wamkele Mene said AfCFTA was a historic agreement since the end of colonialism 60 years ago and potentially the most transformative action that Africa had taken collectively.
With 54 countries out of 55 who had signed the agreement establishing the AfCFTA, 37 countries had ratified their agreements establishing the AfCFTA, which he said made it the fastest instrument to be ratified in the history of the African Union and that signaled the political will and the bigger commitment of the heads of States to make sure that they integrate the African market and create opportunities, as well as meaningful markets.
“The objective and the ambition is that by the end of the 13th year in other words almost 15 years from now Africa will be trading at zero duty on over 97 percent of our products. To boost intra-African trade we have to reduce barriers, be it tariff barriers or barriers to intra-African investment. All of these things create market fragmentation on the African continent, we need to confronted and eliminate all of them.”
He said intra-African trade was very low at 18 percent compared to intra-Asia trade which was at around 35 percent, intra-North America at 65 percent, while, intra-European trade was at 70 percent.
Meanwhile, ZNCC chief executive officer Mr Christopher Mugaga said they were going to offer free trainings for their members on what the AfCFTA encompassed so that they can be able to utilise the trade opportunity that had arisen.
The AfCFTA brings together 55 African countries with a combined population of more than 1.2 billion people and a combined Gross Domestic Product (GDP) exceeding US$2.5 trillion and will make the continent the largest free trade area created since the formation of the World Trade Organisation (WTO). It will create a consumption market in excess of US$ 4 trillion.
