The African Export-Import Bank (Afreximbank) has expanded its risk-bearing instruments by launching a new guarantee programme aimed at facilitating much-needed financing into Africa.
The Afreximbank Guarantee Programme (Afgap) will help to derisk African transactions in order to make them more attractive to investors and financiers.
A spokesperson for the bank tells GTR that the programme is directed at both banks and corporates, and also covers sovereign risks. Utilisation has already begun.
The guarantee products are grouped into different categories, ranging from short-term trade guarantee solutions (including a letter of credit confirmation guarantee and a country risk guarantee facility); to working capital and supply chain finance guarantee solutions; and medium and long-term guarantee products. The latter category encompasses export credit guarantees for buyers, suppliers and for project finance; investment guarantees that can be used by foreign direct investors or banks financing FDI inflows into Africa; a so-called ECA-plus guarantee, where Afreximbank works with other export credit agencies (ECAs) to derisk African transactions; and a sovereign obligations guarantee.
Additional categories include bonding facilities, covering bid bonds, advance payment bonds and performance bonds, as well as “unique” guarantee products, namely a construction finance guarantee to support project completion; a trade contract availability guarantee; and an interstate transit guarantee to ease difficulties involved in the movement of goods across borders in Africa.
The programme is part of ‘Exim-plus’, a broad strategy developed by Afreximbank to position itself as a comprehensive trade facilitation and financing solution centre on the continent.
“Under Exim-plus, Afreximbank is offering a wide range of instruments that are often associated with export credit agencies and other more specialised trade and development finance institutions,” the bank says in a statement.
With Exim-plus, the bank is aiming to position itself as Africa’s “trade finance supermarket”, it says in a new 36-page product brochure that outlines all the guarantees available under Afgap.
Speaking during the Afgap launch ceremony in Cape Verde last week, Amr Kamel, Afreximbank’s executive vice-president in charge of business development and corporate banking, said that Afgap would bring “additionality” to Africa, by mobilising financing that would otherwise not have been possible, to support the economic development of the continent.
Kamel called for support for the programme from partners and other relevant stakeholders, saying that although Afreximbank had taken a giant step in launching the programme, it could not achieve the desired results alone. “We are, therefore, calling on partners interested in Africa’s development and all relevant parties to work with Afreximbank to support the promotion of trade and trade-related investments in Africa.”