The African Export-Import Bank (Afreximbank) has announced a US$3bn facility to help its member countries weather the economic and health impacts of Covid-19.
As part of its new Pandemic Trade Impact Mitigation Facility (PATIMFA), Afreximbank will provide financial support to more than 50 nations through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments.
Speaking about the need for the facility, the bank’s president, Benedict Oramah says: “A rapid and impactful financial response is required to avert a major crisis in Africa.”
According to Oramah: “Africa is exposed on many fronts, including significant declines in tourism earnings, migrant remittances, commodity prices and disruption of manufacturing supply chains.”
He adds: “Besides its worrying effect on human life, the pandemic is projected to cost the global economy up to US$1tn and to result in a significant 0.4% decline in global GDP growth, which is expected to drop from 2.9% in 2019 to 2.5% in 2020.”
One way in which Afreximbank is hoping the facility will offer support is by helping central banks and other financial institutions meet their trade debt payments and avoid trade payments defaults.
It will also seek to help central banks by supporting and stabilising their foreign exchange resources, so they can support critical imports under emergency conditions.
Afreximbank adds: “PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings.”
Meanwhile the facility will also provide emergency trade finance facilities for the import of medical supplies and medical equipment, with the bank saying that “the impact on medical supplies and medical systems in many markets [has] also been unprecedented”.
This is against the backdrop of a rising number of infections in Africa, with the number of confirmed cases of novel coronavirus rising to more than 2,400 on the continent. South Africa has been acutely hit, with around a third of the cases being reported there.
Afreximbank’s facility follows a string of similar announcements by development banks around the world, with the Asian Development Bank (ADB) and the Islamic Development Bank (IsDB) both making hundreds of millions of dollars available through new trade finance facilities to help mitigate the impact of Covid-19 on supply chains across member countries.
Meanwhile the European Bank for Reconstruction and Development (EBRD) announced earlier this month that it would provide an emergency €1bn support package.