The African Export-Import Bank (Afreximbank) says it has launched a $4 billion Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA) to manage the impact of the global crisis on African economies and businesses.
In a statement on Wednesday, the bank said its board of directors approved the credit facility on March 31.
The Russia-Ukraine crisis which escalated on February 24 has had a significant effect on the global economy.
Given the importance of both Russia and Ukraine as sources of crude oil and gas, raw materials, and grains, the outbreak of the conflict has wider repercussions on a global scale, including adversely affecting African economies, especially those that rely heavily on imports.
Prof. Benedict Oramah, president of Afreximbank, after the board meeting held in Cote D’Ivoire, expressed delight at the board’s approval of the introduction of the UKAFPA.
According to him, the board demonstrated its 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 fertiliser and petroleum products,” he said.
He added: “Following African Union’s endorsement, Afreximbank shareholders approved a US$6.5 billion General Capital Increase on 2021 to boost the capacity of the Bank to deliver on its mandate, deal with the Covid-19 pandemic, and support AfCFTA implementation. We must now add the consequences of the ongoing Ukraine crisis to the catalogue of emergencies a strong Afreximbank has to contend with.
“We are very grateful to member states and shareholders who have already paid in their subscriptions giving the Bank the flexibility to respond swiftly to prevailing challenges. I call upon those who have not acted to do so urgently as we will once again learn that in times of major crises we can only count on our institutions to lead the way before others follow.”
Macky Sall, president of the Republic of Senegal and current chairperson of the African Union, said: “I welcome the renewed energy of African institutions that have led our coordinated and successful response to the COVID-19 pandemic.
“Africa now faces the socio-economic challenges posed by a global context of conflict. Afreximbank has once again shown the way forward by enabling the continent to tackle the impact of the crisis head-on through financing solutions tailored to the specific pressure points facing our member countries.
I hope that UKAFPA will play a major role in building resilience in nutrition and food security on the African continent, in line with the theme of the 36th AU Summit.”
According to the pan-African bank, the programme includes re-order cost adjustment financing, to help countries to meet immediate import price increases pending domestic demand adjustments
“Oil and Metals Buy-Back Financing to refinance over-collateralized loans in the context of the current high oil and metal prices, and thereby release more free cashflow for use in meeting other urgent needs, eg. food and fertiliser imports and servicing rising cost of debt,” the bank said.
“Commodity Export Revenue Stabilisation to help countries and companies to structure and enter derivative contracts at today’s high commodity prices and stabilise future export earnings.
“Tourism Revenue Deficit Financing to be extended to Central Banks of tourism-dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine.
“National Export Revenue Acceleration Facility to 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.
“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 exceed US$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.”