AfCFTA Secretariat, Afreximbank sign agreement for Fund to support African countries and private sector
The argument has continuously been made that intra-African trade holds some of the keys to Africa’s economic transformation. With a population size of 1.3 billion people, and a combined Gross Domestic Product estimated at $3.4 trillion, Africa can create the world’s largest single market. It’s for that reason that the momentum has been building up towards actualizing the African Continental Free Trade Area (AfCFTA), since the agreement came into force on January 1, 2021.
It’s to that end that the AfCFTA Secretariat and the African Export-Import Bank (Afreximbank), have signed an agreement relating to the management of the Base Fund of the AfCFTA Adjustment Fund.
In a press release copied to Ghana Business News, Afreximbank said the Fund will support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA.
According to the release, the AfCFTA Secretariat and Afreximbank were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade to establish the AfCFTA Adjustment Fund to support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement.
It said the Adjustment Fund consists of a Base Fund, a General Fund and a Credit Fund.
“The Base Fund will consist of contributions from State Parties, grants and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated. It will also support countries to implement various provisions of the AfCFTA Agreement, its Protocols and Annexes. The General Fund will mobilise concessional funding, while the Credit Fund will mobilise commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA,” the release explained.
It also indicated that the resources required for the Adjustment Fund over the next 5-10 years are estimated at $10 billion, and Afreximbank has already committed $1 billion towards the AfCFTA Adjustment Fund.
Speaking during the signing ceremony, Mr Wamkele Mene, Secretary General of the AfCFTA Secretariat, said: “As we make significant progress in establishing schedules of tariff concessions, the finalisation of the Adjustment Fund will enable us to maintain and even accelerate the momentum. We now have an excellent tool to provide support to our State Parties and their private sector through financing, technical assistance, grants and compensation funding. It will help them mitigate revenue losses and competitive pressures that may result from reduction in tariffs and liberalisation of markets in order to tap into the opportunities of the AfCFTA.”
Commenting, Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank said, “This Adjustment Fund, which is taking shape, comes on top of the Pan African Payment and Settlement System (PAPSS), which was commercially launched on January 13, 2022 in Accra, and the resoundingly successuful second edition of the Intra-African Trade Fair, which was held in November 2021 in Durban. These are some of the initiatives that we are proud to implement in close collaboration with the AfCFTA Secretariat, setting the conditions that will undoubtedly lead to a smooth implementation of the AfCFTA.”
There are expectations that as the AfCFTA takes shape, sectors such as road and air transport, as well as freight would also grow.
By Emmanuel K. Dogbevi