The African Export-Import Bank (Afreximbank) has unveiled a US$10bn trade-focused support programme for African and Caribbean economies exposed to the Middle East crisis.
Afreximbank’s board of directors has approved a Gulf Crisis Response Programme, designed to sustain imports of essential goods by providing short-term liquidity and foreign currency to corporates and lenders across both regions.
The programme will target fuel, LNG, food, fertiliser and pharmaceutical imports in countries facing supply shocks and price rises as a result of the conflict in the Middle East and the dramatic drop in traffic through the Strait of Hormuz.
It will also support energy and minerals exporters in Africa, providing pre-export finance, working capital and inventory financing to help them capitalise on higher prices and rerouted trade flows.
In the longer term, the programme aims to strengthen the resilience of African and Caribbean economies by scaling production and exports of commodities, including by backing the completion of energy, logistics and infrastructure projects delayed due to the conflict.
The escalation in the Middle East “has sent shockwaves through the global economy, with African and Caribbean economies bearing the largest share of the brunt”, Afreximbank said.
A report published last week by UN Trade and Development said developing economies face the “most severe” threat from the crisis, with governments hindered from tackling rising import costs due to weaker currencies and pre-existing debt vulnerabilities.
Speakers at March’s GTR Africa event in Cape Town warned that countries including the Democratic Republic of Congo, Kenya, Nigeria and Uganda are highly exposed to economic shocks due to their reliance on energy and fertiliser imports.
A drop in supply of sulphur – around half of which typically passes through the Strait of Hormuz – is also forcing industrial slowdowns across Africa’s copper belt, the World Economic Forum has said
In Central America and the Caribbean, countries including Jamaica, the Dominican Republic and Nicaragua rely heavily on the spot market for fuel purchases and so are immediately exposed, Latin America Reports said last month.
The Afreximbank crisis response programme follows similar emergency measures taken during other periods of geopolitical turmoil, including the Covid-19 pandemic and the disruption caused by Russia’s 2022 invasion of Ukraine.
The bank disbursed nearly US$40bn under the latter initiative, helping countries bridge liquidity gaps and maintain access to essential goods.
“We understand how our economies work and the pain points associated with these transitory crises,” said Afreximbank president and board chairman George Elombi.
“The programme will support African countries in adjusting smoothly to the crisis while strengthening their resilience to future shocks through interventions that transform the structure of their economies.”
