Banks get behind new African free trade zone

Two of Africa’s leading development banks have both backed the new African free trade zone, agreed in Rwanda last week. The African Development Bank (AfDB) has pledged its full support to achieve the success of the continental free trade area, as part of its strategy to help integrate Africa, while Dr Benedict Oramah, president of the African Export-Import Bank (Afreximbank), said the African Continental Free Trade Area (AfCFTA) will lead to Africa’s economic development and bring about a better future for the continent. Through AfCTA, many African countries are committing to removing barriers to trade, such as tariffs and import quotas, allowing the free flow of goods and services between its members. Contributing to a panel discussion on ‘Financing Intra-African Trade’ during the business forum held in Kigali to mark the launch of the AfCFTA, Dr Oramah said as part of its drive to promote intra-African trade and regional integration, Afreximbank had identified several countries that served as hubs for trade among African countries Those hubs are already playing significant roles in their subregions in supporting cross-border trading and are critical to AfCFTA implementation, he said. They include South Africa in southern Africa, Nigeria and Ivory Coast in west Africa, Kenya in east Africa and Egypt in north Africa. Dr Oramah said Afreximbank is working on the establishment of export-trading companies, which would aggregate products from small traders for export across the continent and beyond. The operation of such companies would remove the need for individual small traders, who are not equipped for such trade, to try to export the products by themselves. He added that the bank had signed a $1bn memorandum of understanding with the Export Credit Insurance Corporation of South Africa for a South Africa-Africa Trade Promotion Programme aimed at expanding trade between South Africa and other African countries. A similar programme, which the bank signed with Egypt, for the amount of $500m, was quickly exhausted and had to be replenished, he stated. Afreximbank had also introduced an African Guarantee Programme to enhance the ability of African businesses to obtain trade financing. Cyril Ramaphosa, South Africa’s President, said that although the AfCFTA had been long in coming, it offered a lot of hope for the African continent. He urged all Africans to rally around the effort, saying it would benefit both big and small countries. Meanwhile, to accelerate trade facilitation, the AfDB has invested more than $20m in the past five years in trade agreement support, cross-border transport and energy soft infrastructure. “The Continental Free Trade area will stimulate intra-African trade by up to $35bn per year, creating a 52% increase in trade by 2022; and a vital $10bn decrease in imports from outside Africa,” said Akinwumi Adesina, AfDB president. He added: “Free trade will bring collective benefits and shared wealth for all African nations, especially the landlocked countries. So, we must accelerate investments in regional and national infrastructure, especially, to boost connectivity, reduce costs and raise competitiveness. “This is Africa’s time and Africa can no longer be ignored. Africa’s food and agriculture market will hit $1trn by 2030. Household consumption will hit $2.5trn, with business-to-business expenditure at $3.5trn by 2025. There’s no doubt, Africa is where to invest,” President Adesina stressed. “Africa is open for business. The days of aid are over. We are now on a highway to boosting Africa's prosperity through greater trade and investments ‘without borders’ among our nations,” he added.

Banks get behind new African free trade zone

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