The Board of Directors of African Export-Import Bank (Afreximbank) has approved the launch of a four billion dollar Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).
The Communication and External Relations Department of the bank said this in a statement it issued on Wednesday in Cairo, Egypt.
It said that the programme had credit facilities that the bank had developed to manage the impacts of the Ukraine crisis on African economies and businesses.
The Russia-Ukraine crisis which escalated on Feb. 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.
“This includes adversely affecting African economies, especially those that rely heavily on grain, fertiliser and fuel imports.”
The bank said that the programme’s objectives include import re-order cost adjustment financing, to help countries meet immediate import price increases pending domestic demand adjustments.
Others are oil and metals buy-back financing to refinance over-collateralised loans in the context of the current high oil and metal prices.
This, it said would release more free cashflow for use in meeting other urgent needs such as food and fertiliser imports and servicing rising cost of debt.
“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”, it said.
This will be by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion.
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commended the introduction of the UKAFPA.
He said that it was demonstrating their responsiveness to the needs of African member states and their citizens.
Oramah said that Afreximbank looks forward to working with partner banks and institutions to urgently meet the need of African countries.
This is in terms of ensuring static and dynamic food security, adequate fuel supplies and averting fertilizer and agricultural input shortages, against a backdrop of renewed economic nationalism worldwide.
Macky Sall, President of the Republic of Senegal and chairperson of the African Union expressed his support for the UKAFPA initiative.
“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.” Sall said.
Also, Dr Vera Songwe, United Nations under Secretary-General and Executive Secretary of the Economic Commission for Africa also welcomed the new initiative.
She said that the new facility was timely and would support countries build resilience as they faced yet another exogenous shock.
“The facilities approved by Afreximbank are also core tools needed to continue strengthing the continental financial architecture as countries look to rebuild their economies and take advantage of the African Continental Free Trade Area (AfCFTA) agreement.”
