Afreximbank approves $4bn Ukraine crisis trade financing program for Africa
The African Export-Import Bank (Afreximbank) has approved a $4 billion Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).
The programme is a credit facility that the Bank has developed to assist African economies and businesses that have been badly affected by the war.
According to the bank, the facility is to cushion African countries to meet the current import price increases pending domestic demand adjustments, to refinance over-collateralised loans in the context of the current high oil and metal prices.
Given the importance of both Russia and Ukraine as sources of crude oil and gas, raw materials, the outbreak of the conflict has wider repercussions on a global scale, including adversely affecting African economies, especially those that rely heavily on grain, fertilizer and fuel imports.
To this end, the credit facility will release cash flow for use in meeting other urgent needs, example food and fertilizer imports and servicing rising cost of debt.
According to the bank, the Russia-Ukraine crisis which escalated on 24th February 2022 has had a significant effect on the global economy which many African Countries are not left out.
It is expected to among others be used to accelerate the completion of impactful export-oriented projects by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion.
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UKAFPA is a response to an urgent call for emergency intervention by member states of the Bank. UKAFPA–compliant financing requests received from across Africa already exceeds $15 billion. There is some urgency to meet these requests to avoid catastrophic social conditions across Africa and reduce the risk of their morphing into political challenges.
Speaking after the board meeting held in Abidjan, Cote D’Ivoire, Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank commented: “I am delighted that our Board has approved the introduction of the UKAFPA, once again demonstrating their responsiveness to the needs of African member states and their citizens. This initiative will contribute immensely to averting social anxiety and upheaval that may arise from looming food shortages and high costs of fertilizer and petroleum products.”
Since its establishment, Afreximbank has built a track record and earned a reputation for introducing and implementing various emergency intervention programmes, with embedded strong risk mitigations to respond to various crises on a global scale and impacting Africa.
Recent examples include the Pandemic Trade Impact Mitigation Facility (PATIMFA) through which Afreximbank disbursed over $7 billion in support of African economies in their fight against the Covid 19 pandemic. That facility expired in March 2022.
Previously, in 2015, the Bank introduced its Countercyclical Trade Liquidity Facility (COTRALF) that provided a platform for the disbursement of over $10 billion to African commercial and central banks making it possible to avert large scale trade debt payment defaults at the height of the commodity crisis. Both facilities achieved their respective goals and were deemed vitally important and successful interventions.
