The African Export-Import Bank (Afreximbank) has agreed to provide an initial amount of US$500 million to support the African Continental Free Trade Area (AfCFTA) for liquidity settlement and payment as it officially becomes operational this year.
The Secretary General of the African Continental Free Trade Area Secretariat, Mr Wamekele Mene made these submissions when commenting on the status of AfCFTA.
Mr. Wamekele Mene also disclosed that AfCTA and Afreximbank is transacting on a Pan-African Payment and Settlement Platform which was introduced for supporting intra-african trade under the AfCFTA agreement.
Professor Benedict Oramah, Afreximbank President, revealed that the Bank designed the platform in partnership with AU to allow payments for goods and services, and intended as the first digital payment system across the entire Continent.
“It is a platform that will domesticate intra-regional payments, save the Continent more than five billion dollars in payment transaction costs per annum, formalise a significant proportion of the estimated US$50 billion of informal intra-African trade, and above all, contribute in boosting intra-African trade”.
The Secretary General further asserted that the digital platform is to make sure there was interconnectivity on the African Continent for business expansion, particularly for Small and Medium-scale Entities (SMEs) across the Continent to reach out to their goals of reducing barriers to trade and investments in Africa.
This platform would go a long way to facilitate the clearing and settlement of intra-African trade transactions in African currencies and significantly reduce the use of hard currencies in the settlement of such trade, hence enabling a trader under the agreement to transact business with counterparts in other parts of Africa by exporting in local currencies, Mr. Mene added.
“We want to reduce the cost associated with converting local currency into the dollar for easy business transactions”.
Explaining further, Mr. Mene said with AfCFTA’s partnership with the Bank, the platform would take the continent a step closer to finding solutions to the multi-currency trading on the continent.
The Secretary General also said AfCFTA and Afreximbank are working with Commercial Banks on the African Continent to raise a minimum of one billion dollars for trade financing facility to support SMEs, so that they benefit from the agreement in the area of market access.
To ensure that not only the big multinationals take advantage of the agreement but young Africans and women also benefit, AfCFTA would announce modalities for accessing the trade financing facility.
Trading under the AfCFTA commenced officially on January 1, 2021, following a five- and half-year period since negotiations were launched on June 15, 2015. These negotiations were followed by the signing of the agreement on March 21, 2018 with an entry into force on May 30, 2019.
Speaking during a special luncheon for heads of states and delegates attending the signing of the agreement for the launch of the AfCFTA, Dr. Oramah said that the Strategy drew inspiration from the African Union’s Action Plan for Boosting Intra-African Trade and the Action Plan for Accelerated Industrial Development in Africa.
A total of 54 Member States of the African Union have signed the agreement, with some 34 countries depositing instruments of ratification with the Chairperson of the African Union Commission.
The main objectives of the AfCFTA include to create a single market for goods and services, facilitate the movement of persons, promote industrial development and sustainable and inclusive socio-economic growth, and resolve the issue of multiple memberships in accordance with agenda 2063.
