Zim to tap into Afreximbank’s US$4bn kitty
NDAMU SANDU
Zimbabwe can tap into the US$4bn facility available to African countries and companies impacted by the Russia-Ukraine war, African Export-Import Bank (Afreximbank) president Benedict Oramah has said.
Last month, the Afreximbank’s board of directors approved the US$4bn Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA) to cushion the bank’s members against economic headwinds following Russia’s invasion of Ukraine on February 24 under a “special operation”.
Oramah told journalists on Tuesday that Zimbabwe and local companies could tap into UKAFPA as the facility is provided “as and when requests are made”.
“What I can assure you is that Zimbabwe or entities in Zimbabwe if they make qualifying requests, they will be considered,” Oramah said, adding this would be done under a country’s limit.
Business Times could not establish Zimbabwe’s country limit as central bank chief John Mangudya was unavailable for comment.
The facility comes as countries have made financing requests of over US$15bn.
Russia’s invasion of Ukraine has affected the global economy as the two countries are the sources of crude oil and gas, raw materials and grains.
In Zimbabwe, prices of fuel, bread, gas, fertiliser and cooking oil have gone up in response to global shortages triggered by the war amid fears this would cause imported inflation.
The UKAFPA programme seeks to do Import Re-Order Cost Adjustment Financing to help countries to meet immediate import price increases pending domestic demand adjustments.
It will also cover Oil and Metals Buy-Back Financing to refinance over-collateralised loans in the context of the current high oil and metal prices, and thereby release more free cashflow for use in meeting other urgent needs, for examples food and fertiliser imports and servicing rising cost of debt.
The facility will also provide Commodity Export Revenue Stabilisation to help countries and companies to structure and enter derivative contracts at today’s high commodity prices and stabilise future export earnings
A tourism revenue deficit financing will be extended to Central Banks of tourism dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine
A National Export Revenue Acceleration Facility will be used to accelerate the completion of impactful export-oriented projects by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion.
Oramah said Afreximbank was signing deals with a number of countries and the signed facilities were at US$1.5bn on Tuesday. He could not be drawn into revealing the countries they have signed facilities with saying Afreximbank was complying with confidentiality clause on loan agreements.
Beyond the financing, Afreximbank plans to work with the UN Economic Commission for Africa, the African Union Commission and the AfCFTA Secretariat to launch the Intra-African Supply Chain Coordination Group whose aim will be to enable alignment of production and consumption ensuring that what is produced in Africa is prioritised to meet African requirements, while reaching out to other entities in other parts of the world to lend support.
The partners are working round the clock to have a digital platform which will identify the users of all the key needs.
Oramah said Africa was producing more fertiliser which was being exported outside the continent.
He said pulling demand gives Africa market power to use “what we have on the continent” and to negotiate globally.
“It’s early days but it’s working,” Oramah said.
Asked whether the US$4bn facility was not a drop in the ocean considering the huge demand, Oramah said the bank would work with partners “we normally rely on”.
“The key for an institution such as ours is put its leg forward. When that happens we see others coming in,” he said.
Afreximbank, he said, will also tap into pension fund, Africa Finance Corporation and sovereign wealth funds.
