Good news for agribusiness and commodity trading in Africa; US$2 billion secured

A trade practitioner and AfCFTA expert, Louis Yaw Afful has called on startups in commodity trading and agribusiness to look into and take up the opportunity a recent US$2-billion-dollar credit facility presents.

This comes on the back of reports that the African Continental Free Trade Area (AfCFTA) Secretariat, Afreximbank and World Food Programme (WFP) have signed a three-year memorandum of understanding (MoU) to disburse US$2 billion in farming loans and credit lines for agro-processors and commodity traders by 2025 through Afreximbank lending instruments and blended finance facilities in support of AfCFTA Agreement and in contribution to addressing food security on the continent.

The MoU seeks to promote the commercial development of smallholder agriculture and facilitate intra-regional agricultural trade initiatives, advance climate change mitigation and adaptation of smallholder agriculture and related value chains.

As part of the financing component, Afreximbank will deploy adequate financing, lines of credit, supply chain financing, and guarantees, among others, to support smallholder productive activities including the development of post-harvest storage facilities, and agro-processing and trade in commodities and value-added products.

Further, Afreximbank will support the development of industrial projects, including export-oriented agricultural hubs and Special Economic Zones (SEZs), to support value addition in smallholder agricultural chains.

According to Louis Yaw Afful, the Director of the AfCFTA Policy Network (APN) Group, this is a good initiative by the AfCFTA Secretariat, as “commodity trading is one of the best routes of becoming wealthy. Agribusiness is what will drive Africa at the moment because our value chains are all concentrated on Agribusiness.”

He said it was wise for the AfCFTA Secretariat to initiate this investment into agribusiness to serve as the linkage to manufacturing industries.

Speaking on the Eye on Port program, the expert reiterated that commodity trading will be an enabler of AfCFTA’s success.

“Commodity traders are those who trade in volumes. One commodity alone can be shipped by three different ships. Without them they will be disruptions in the supply chain,” he expressed.

The Executive Director of the APN Group also revealed that the AfCFTA Secretariat is also trying to secure 1 billion dollars to support Africa’s automotive industry.

He explained that this facility “will focus explicitly on African companies where the shareholder structure is African.”

Mr. Afful noted that this will not only favor vehicle manufacturing but also producers who are part of that value chain.

The AfCFTA said the Secretariat has lined up 5 priority areas to focus on namely agribusiness, pharmaceuticals, automotive industry, ICT, transport and logistics.

He expressed admiration for the work the Secretariat is embarking on to develop structures that will support the Africa Continental Free Trade Agreement.