Leaders League. How does Afreximbank
help countries and businesses to tackle the
challenges of a negative economic climate?
Benedict Oramah. The coming into existence
of the African Export-Import Bank in October
1993 was driven primarily by economic and fi-
nancial challenges characterized by commodity
price shocks, high debt levels, macroeconomic
imbalances, and withdrawal of some internatio-
nal financial institutions from the African trade
financing space thereby worsening the existing
gap, that had engulfed the continent during the
period as a result of preceding global economic
and financial crises occurring in the 1980s. In
essence, the bank was created to ensure that
Africa would not be adversely impacted by glo-
bal economic and financial shocks. Over the
past two decades, Afreximbank has provided
trade and trade-related project finance in sup-
port of African entities.
Since then, the bank has consistently developed
innovative products and special initiatives with
a view to providing comfortable and reliable
sources of funding for the continent. Some of
the most relevant initiatives include the Country
Programme (CP) which was a key intervention
instrument in Zimbabwe during the country’s
economic hardships, and in the Cote d’Ivoire
during the post-conflict reconstruction. In De-
cember 2015, informed by the macroeconomic
challenges precipitated by plummeting commo-
dity prices, the synchronized slowdown in ma-
jor developing market economies, and global
demand shocks exacerbated by deceleration in
the Chinese economy resulting in short-term li-
quidity constraints (including trade finance faci-
lities especially for intra-African trade), the Bank
introduced the Counter-Cyclical Trade Liquidity
Facility (COTRALF).
Up to March 2016, about $3.5 billion has been
utilized under this facility to support a number
of countries on the continent with the view to
bridging the significant trade financing gap in
those countries as a result of the negative im-
pact of the ongoing shocks, and smoothening
the effects of global volatility until normal fun-
ding conditions are restored. This represents
the bank’s response to exceptional circums-tances which demand urgent and decisive
large-scale support to ensure that the continent
is not dragged into recession as a result of a sud-
den drying up of trade finance. The facility is
currently being deployed.
Furthermore, this facility is expected to mi-
nimize risk of trade payment default, ensure
continued supply of raw materials, capital
goods for manufacturing and export develop-
ment and essential goods into the markets.
Moreover, it will restore confidence of the in-
ternational market and commodity suppliers
in those countries’ banking systems, enhance
price stability, including interest rates and lo-
cal currency exchange rates against foreign
currencies, among others, so as to reduce the
risk of derailing the continent’s growth and
economic development.Leaders League. What is the most impor-
tant issue African trade is facing?
B.O. The main issue is the trade concentration
both by sector/product and by geography. At
the sector/product level, African trade is highly
concentrated in primary commodities which,
for some African countries, account for more
than 90% of export revenues and government
budget. At the geographic level, African trade,
which was initially concentrated within few
trading partners, mainly the USA and Europe,
has been undergoing geographical diversifica-
tion.This has been driven by the impressive
and sustained economic growth achieved by
Asian developing economies, especially China,
which became the driver of global growth and
trade and Africa’s main trading partner. Howe-
ver, in a context where a shift in the geographi-
cal destination of trade has not necessarily
been accompanied by structural transforma-
tion, trade concentration by product and sec-
tor has remained a major source of vulnerabi-
lity to external shocks. More recently, this has
been illustrated by the adverse effects of the
slowdown of the Chinese economy on Africa’s
growth, largely through trade and global de-
mand channels.
Read the complete interview on
http://www.leadersleague.comCreated in 1993, Afreximbank is a financial institution with a pan African vision.
Established by African, but also foreign, governments and institutions, its aim is to
increase intra-regional and international trade. Benedict Oramah, head of Afreximbank
since 2015, tells us about his ambitions for the continent.I SEE FINANCING
AS ONE OF THE MOST
IMPORTANT NEEDS FOR
BOTH COUNTRIES AND
BUSINESSES IN THE
REGION
“Afreximbank was created to ensure that
Africa would not be adversely impacted
by global economic and financial shocks”
BENEDICT ORAMAH
President, AFREXIMBANK