BY JOHNMARK UKOKO
Efforts to boost intra-Africa trade has received another boost, as the African Continental Free Trade Area (AfCFTA) Secretariat and the African Export-Import Bank (Afrexim Bank) signed an agreement on the management of the Base Fund of the AfCFTA Adjustment Fund.
This is coming barely one month after the Pan-African Payment and Settlement System (PAPSS) was launched in Accra, Ghana and three months after the second edition of the Durban, South Africa, intra-African Trade Fair, both facilitated by Afrexim Bank.
A statement made available to The Trumpet, revealed that the fund would support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA.
President and Chairman of the Board of Directors of Afrexim Bank, Prof. Benedict Oramah and Wame Kelemene of the AfCFTA Secretariat signed the agreement in Cairo, Egypt in the company of Minister Plenipotentiary (Trade) of Egypt, Aly Basha, as well as African bankers and captains of industry.
The AfCFTA Secretariat and Afrexim Bank were mandated by the African Union (AU) summit of Heads of State and Governments and the AfCFTA Adjustment Fund to support AtCFTA state parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA agreement.
The Adjustment Fund comprises a Base Fund, General Fund and Credit Fund.
The Base Find will consist of contributions from state parties, grants and technical assistance funds to address tariff revenue, losses as tariffs are progressively eliminated.
It will also support countries to implement various provisions of the AfCFTA.
Agreement, it’s protocols and annexes.
The General Fund will mobilise concessional funding, while the credit Fund will mobilise commercial funding to support both the public and private sector enabling them to adjust and take advantage of the Opportunity created by the AfCFTA.
The resources required for the adjustment Fund over the next five to 10 years have been estimated at over $10 billion.
Already, Afrexim Bank has committed $1 billion towards the AfCFTA Adjustment Fund.
Speaking during the signing ceremony Kelemene stressed the importance of the Adjustment designed to support the implementation of the AfCFTA state parties to address short-term tariff revenue losses, as they dismantle tariffs and implement the agreement.
“As we make significant progress in establishing schedules of tariff concessions, the finalisation of the Adjustment Fund will enable us to maintain and even accelerate the momentum.
“We now have an excellent tool to provide support for our state parties and their private sector through financing technical assistance, grants and competition funding.
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“It will help them mitigate revenue losses and competitive pressures that may result from reduction in tariff and liberalisation of markets in order top into the opportunities of the AfCFTA. This is another impossible step towards the successful implementation of the continental free trade agreement,” Kelemene stressed.
In his reaction, Oramah noted that the funds would be used to supply the public and private sectors, to address short-term disruption, while enabling the private sector to retool and develop capacity to produce value added goods and services that could be traded competitively within the continent and catalyse the convergence of AfCFTA-led regional value chains.
“The Adjustment Fund, which is already taking shape, comes on top of the PAPSS, which was launched on January 13, 2022 in Accra and the successful second edition of the Intra-African Trade Fair which held in November 2021 in Durban, South Africa,” Oramah said.
Continuing, he said: “These are some of the initiatives that we are proud to implement in close collaboration with the AfCFTA Secretariat, setting the conditions that will undoubtedly lead to a smooth implementation of the AfCFTA.
“Today, we have launched the Base Fund of the Adjustment Fund to address urgent needs of state parties relating to tariff revenue losses and the transposition costs to enable them to implement AfCFTA.
“We will be launching the General Fund and Credit Fund soon to address the needs of the private sector including the small and medium enterprises, women and youths,” he concluded.
