The African Export-Import Bank (Afreximbank) has announced a new multi-billion-dollar initiative to help member countries battle soaring import costs and foreign currency challenges stemming from the Ukraine conflict.

Afreximbank’s board has approved additional financing of US$4bn for the Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA), a package comprised of several types of credit facilities.

“UKAFPA is a response to an urgent call for emergency intervention by member states of the bank,” Afreximbank says.

“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,” the bank adds, while noting financing requests have already exceeded US$15bn.

The programme includes financing to help member countries deal with an immediate hike in import prices for commodities produced in Ukraine and Russia, including oil, gas and wheat.

UKAFPA also ringfences funding for an oil and metals buy-back facility, allowing African entities to refinance over-collateralised loans in order to free up cash for food, fertiliser and the servicing of debt.

At the same time, the initiative establishes a facility enabling governments and companies to “structure and enter derivative contracts at today’s high commodity prices and [so] stabilise future export earnings”.

Afreximbank says further support will be available for export-orientated projects to procure equipment and technology from abroad, and to cushion the economic blow for governments reliant on Russian and Ukrainian tourists.

The funding comes in the wake of warnings from the UN the conflict could cause food scarcity issues in developing countries.

Russia and Ukraine supply a vast amount of the world’s wheat, but physical supply disruptions caused by the war and a move by western companies to cut ties with Moscow have disrupted these trade flows.

Last month, the price for wheat skyrocketed to highs not seen since 2008, data from Trading Economics show. While this has since dropped slightly, wheat’s value was 61% higher than a year before, at the time of writing.

According to business intelligence firm Dun & Bradstreet, there are 25 nations that import at least half of their wheat from Russia or Ukraine, including Egypt in North Africa.

The Ukraine crisis programme follows Afreximbank’s Pandemic Trade Impact Mitigation Facility (PATIMFA), which launched in early 2020 and disbursed US$7bn in funding until it was brought to a close last month.

In March, another public finance institution, the European Bank for Reconstruction and Development (EBRD), pledged extra trade finance support for Ukrainian businesses and those impacted in neighbouring countries.