THE African Export-Import Bank (Afreximbank) and two other financial institutions are co-financing a US$1.5bn facility to support African economies with rapid financial assistance to reduce the impact of the Covid-19 pandemic.
The facility—the Collaborative Covid-19 Pandemic Response Facility (COPREFA)—is co-financed by Afreximbank, the International Islamic Trade Finance Corporation (ITFC), the Trade Finance Arm of the Islamic Development Bank group and the Arab Bank For Economic Development in Africa (BADEA).
It will be accessed by eligible central banks, commercial banks and businesses to finance the import of medical supplies, as well as agricultural equipment and fertilisers essential for addressing the pressing food production deficit.
COPREFA is also designed to support African economies to commodity price shocks, a significant drop in tourism, and disruption to supply chains and export manufacturing. It will also address the sudden declines in financial flows, including a drop off in trade and project finance, migrant remittances, portfolio investment and foreign direct investments.
The co-financed facility, led by Afreximbank leverages strategic partnerships with other multilateral financial institutions and other international financial institutions in co-financing, risk sharing of transactions and promoting integrated trade solutions, to support African economies on navigating the impact of Covid-19.
Afreximbank president Benedict Oramah said Africa has not been spared by the pandemic and the bank’s priority has “always been to step-up when markets fall”.
“That is why we are supporting African economies forcefully at the time of great difficulties. COPREFA, a product of a unique international partnership, is a major contribution to the global fight against the pandemic and will work alongside our other programs to ensure Africa’s future remains bright beyond this economic shock. We thank our partners for the confidence.” Oramah said.
Afreximbank has a strong track record of supporting African economies during financial crises.
In 2015, the bank disbursed more than US$10bn through a Counter-Cyclical Trade Liquidity Facility to help member countries manage the adverse economic fallout of commodity price shocks.
In March 2020, a financial package, the Pandemic Trade Impact Mitigation Facility was launched by Afreximbank to support economies through the pandemic. Over US$5bn has been disbursed under the facility.
ITFC chief executive officer Hani Salem Sonbol said “providing fiscal bandwidth and practical support to SMEs and medical communities in African countries will deliver immediate relief from the supply side restraints on personal protective equipment caused by the pandemic.
“ITFC has worked extensively since the very start of the Covid-19 outbreak to provide comprehensive support to some of the most vulnerable countries.
The multilateral arrangement that ITFC is embarking upon with our strategic partners will boost economic activity when and where it is needed most and help many countries maintain food security at a time when global commodity supply chains are being challenged and import activity sharply reduced.” Sonbol said.
BADEA director general Sidi Ould Tah said the bank has joined the fight against the pandemic by allocating a gross amount of more than US$500m in the COPREFA and other initiatives.
“These allocations will be utilised to ease the negative impacts of the pandemic on African economies and ensure the flow of essential strategic commodities to the continent,” Tah said.