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Afreximbank Earmarks $1bn For Continental Transit Guarantee Scheme

 

Africa has moved closer to the realisation of its dream of transforming into a single market with the launch of the Afreximbank African Collaborative Transit Guarantee Scheme for which the continental bank has set aside $ 1 billion for its implementation.

“The AACTGS brings us closer to transforming our continent into a single, integrated market,” Benedict Oramah, president of Afreximbank, told participants at the ongoing Intra-African Trade Fair 2023 in Cairo, Egypt on Sunday.

Oramah explained “It is a realisation of the aspirations of our fore leaders, who, about six decades ago at the inaugural meeting of the Organisation of African Unity (OAU), saw the need for strong continental integration through trade.”

Shortly after the launch, the news came that Kanayo Awani, the bank’s executive vice president, Intra-African Trade Bank, had been elected to the executive committee of FCI, the global representative body for the factoring, invoice financing and asset-based lending industry.

Aimed at facilitating the movements of goods across the continent’s borders without hindrance, the AACTGS, promises to enhance Africa’s determination to dismantle the barriers that had long divided it by promoting the seamless movement of goods across multiple national customs borders.

The scheme, according to Oramah, will not only enhance efficiency but also shorten border clearance processes by breaking down the 110 borders that have divided the continent into atomistic countries, thereby fostering an environment conducive to intra-African commerce and paving the way for increased trade, growth, and prosperity for all Africans.

To smoothen the speedy implementation of the scheme, the president said, the bank is collaborating with the African Continental Free Trade Area Secretariat and Regional Economic Communities even as the Directors-General of Customs in Africa met in Cairo under the aegis of the AfCFTA Secretariat in collaboration with the bank to consider the expansion of the scheme to cover the entire continent.

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“This flagship initiative of the AfCFTA is a testament to the power of collaboration between Afreximbank, the AfCFTA Secretariat, and Regional Economic Communities (RECs),” Oramah pointed out.

He explained that the Customs DGs are working on a draft continental regulatory framework and technology platform that will govern and facilitate the continental transit guarantee scheme.

Meanwhile, the bank has earmarked US$1 billion to support the Scheme, which is expected to accelerate cross-border trade in Africa and save the continent about US$300 million annually in transit costs.

It has also issued the first-ever multi-border transit bond in Zambia under a US$10 million facility to a company, Innovate General Insurance (IGI).

“I am also pleased to announce the provision of US$300 million by Afreximbank to ZEP Re to boost the COMESA Regional Customs Transit Guarantee (RCTG) Pool,” the president said.

He explained, “This substantial financial injection underscores our commitment to bolstering the capacity of the COMESA RCTG Pool, which will instil confidence in traders and businesses, thereby paving the way for increased trade volumes in the region and creating a conducive environment for investment, innovation, and economic growth.”

After the launch of the scheme, the bank signed two deals, which demonstrated its commitment to the success of the initiative.

The first was with BSMART System Solutions, which got a US$30 million Container Guarantee Facility that will not only boost its container handling capacity but will also encourage investment and make international trade more accessible and inclusive for businesses of all sizes across the continent.

With the facility, the company will establish 38 Integrated Customs Designated Stop Areas (ICDSA) across the EAC region to offer various services, including secure truck parking, customs documentation verification, logistics hubs, container yards, vehicle inspection centres, and affordable housing estates.

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“The primary objectives of these ICDSAs are to boost economic growth in the countries, enhance socio-economic conditions, and improve cargo security and transit controls,” the bank’s president said.

Under this mandate, he explained, Afreximbank would provide financial support of up to US$ 1.3 billion to BSMART and will act as the financial advisor for the project.

Meanwhile, Awani, the bank’s executive vice-president, Inter-African Trade Bank, was unanimously elected at FCI’s 55th Annual Meeting in Marrakech, Morocco on 2nd of November 2023 to represent FCI’s Affiliate Members.

Awani, whose candidacy was supported by Afreximbank was selected alongside Ms. Doaa Hafez, General Manager and Head of Technical Functions at Egypt Factors, making this the second time two delegates from Africa are voted into the FCI Executive Committee. Their election strengthens Africa’s position in the world’s leading factoring body and is a recognition of the increasingly important African market.

“I’m honoured to contribute to shaping FCI’s strategy for the increasingly important African market; serve as a valuable resource for FCI Members seeking to enter the African market; provide the trust and confidence emerging African Factors require at the early stages of factoring and thereby continue to help boost the overall FCI global influence and membership,” an elated Awani stated.

Her election appears a recognition of Afreximbank’s efforts in promoting factoring in Africa.

“Over the years, the bank has built a strong bond with FCI, supporting the growth of factoring in Africa, nurturing the Africa Chapter and significantly increasing its membership,” the bank said in a statement in Cairo on Sunday.

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According to the statement, “Afreximbank has initiated innovative programmes to promote factoring in Africa, including the development and promotion of a factoring model law, which has now been adopted by six countries and is now being considered by the parliaments of several African countries including Senegal and Nigeria.

“In addition, Afreximbank has supported factoring transactions of up to USD 100 million in the last five years and has leveraged its influences to attract grant capacity from the African Development Bank (AfDB) and other partners towards capacity building of African Factors.

“With more than 400 members in 90 countries, FCI offers various solutions for cross-border receivables finance as well as a unique network for cooperation in international factoring. It helps its members to develop international trade and finance business. Transactions by FCI members represent nearly 90% of the world’s factoring volume.”

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