Managing Director of Afreximbank’s Intra Africa Trade Fair (IATF), Kanayo Awani
The African Continental Free Trade Area (AfCFTA) Secretariat and the Africa Import and Export Bank (Afreximbank) have signed an agreement on the management of the base fund of the AfCFTA Adjustment Fund in Cairo, Egypt.
The agreement was signed by Prof. Benedict Oraman, president and chairman of the board of Afreximbank, and Wamkele Mene, Secretary-General of the AfCFTA Secretariat.
The ACFTA Adjustment facility will have a member state-driven process having on board the council of ministers of the AfCFTA at the top of its structure, supported by a board of trustees and with the Secretariat as the implementing body leading the process.
The AfCFTA Secretariat says the fund will support African countries, especially its private sector to actively participate in the new trading environment that has been established under the single continental market.
“We want to make a difference; we want to ensure that the AfCFTA benefits not just our big corporations but also the millions of small and medium enterprises and Africa’s private sector as well.
The benefits are real and therefore the Secretariat is deeply committed and convinced that this partnership is what the continent requires if we are to fundamentally transform the structure of the African economy,” said Wamkele Mene, the AfCFTA Secretary-General.
According to Mene, there can be no real transformation of the continent without trade finance.
“It’ll become just another agreement or diplomatic exercise with no direct benefit to Africans and that’s why this partnership with Afreximbank is so critical,” he added.
The AfCFTA boss highlighted the fact there are still some African nations that do not have any form of export competitiveness and could suffer if they were to reduce their tariffs to zero hence the need for that long-term fiscal support.
The AfCFTA Adjustment Fund consists of a base fund, a general fund, and a credit fund.
The base fund is made of contributions from state parties granting technical assistance capital to advance tariff revenue losses as they are progressively eliminated. It will also support countries to implement various provisions of the AfCFTA agreement, its protocols, and annexes.
The general fund will mobilize concessional funding whilst the credit fund will source commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the single continental market.
Prof. Benedict Oramah of Afreximbank, on his part, indicated that a fund is a necessary tool that will ensure that no country became worse off due to the implementation of the AfCFTA.
“The AfCFTA-led integration will be meaningless unless it results in the economic prosperity of the entire continent, and if it brings prosperity to some countries and businesses and penury and difficulty to others.
PAPSS: Trade experts, business community upbeat about its prospect for Intra-Africa Trade
Trade experts and Africa’s private sector have welcomed the commencement of the continental payments infrastructure, Pan-African Payment and Settlement System (PAPSS) saying it will bring convenience to trading under the AfCFTA and enhance cross-border transactions.
The experts, speaking to the Single African Market unanimously emphasized that the platform will drastically cut transaction costs for businesses and support the development of digital and e-payment systems across the continent.
“Payments for the supply of goods and services is a key element of every trading system and in Africa, that’s a huge challenge we’ve had over the years with the different trading blocks.
Even in West Africa, we have countries that trade with different currencies. Much as we are still able to trade, the inefficient payment systems impact on trading activities,” Seth Twum Akwaboah, Chief Executive Officer of the Association of Ghana Industries (AGI), said.
He further added that having a smoother payment system that makes it easier for people to trade under the AfCFTA is going to be an efficient way of promoting trade within the continent.
Trade expert and Ghana Chapter President of Borderless Alliance, Ziad Hamoui, equally shared in the optimism that the recently launched PAPSS is going to help accelerate economic development and inter-payments across Africa by allowing traders—buyers and sellers—to undertake transactions in their local currencies.
“Traders will no longer need to open foreign currency accounts or deal with multiple currency conversions with huge and unnecessary transaction costs,” he noted.
Considering the fact that efforts to streamline or converge the various currencies across the continent have failed, specifically with the ECO, the only way round was to leapfrog those initiatives to create a continent-wide payment system, according to Emmanuel Doni-Kwame, Executive Director of the International Chamber of Commerce (ICC) Ghana, who adds that the commencement of the payment infrastructure is good news to the business community.
“A payment system solves a lot of problems for those involved in international trade; it reduces transaction cost and forex losses but the key thing is getting access to various markets within the continental free trade area,” he further stated.
Executive Director of the AfCFTA Policy Network, Louis Yaw Afful, sees the PAPSS as a huge relief for payment settlements and transfers among Africa’s traders and investors.
“It’s going to put a lot of competition our payment system and the likes of MasterCard and Visa because this goes beyond cross-border payments and exchanges, it is setting up the pace for a single African currency,” he said.
“Africa is at the cusp of something great”, IATF boss says of AfCFTA
Managing Director of Afreximbank’s Intra Africa Trade Fair (IATF), Kanayo Awani, has lauded the political enthusiasm and leadership that driving the implementation of the continent’s integration agenda.
According to her, the strategic partnerships that is built around the AfCFTA across the public and private sectors suggest that the agenda has come to stay.
She expressed that the various tools and innovations being rolled out by the critical stakeholders of the single market will be better outdoored at the fair and that will grossly propel the actualization of the continental agenda.
Ms. Awani further indicated that the upcoming third edition to be held in Abidjan, Cote d’Ivoire, will be the rallying point for business connectivity and lasting partnerships for efficient trading under the AfCFTA.
“The success of the AfCFTA will be hinged on its effective implementation but how we practicalize it? The main agenda of this agreement is to grow intra-Africa trade and to ensure that Africans are trading amongst themselves.
The trade fair is a platform that gives African businesses and policymakers a snapshot of this huge market. It was conceived to address the challenges that are inhibiting the growth of trade with Africa which is the lack of access to markets and trade information,” she told Single African Market.
