Africa needs strong financial institutions for growth: Ghana's Akufo-Addo at Afreximbank

Marwa Tawfik from Accra, Tuesday 20 Jun 2023

President Nana Addo Dankwa Akufo-Addo of Ghana emphasized that robust development financial institutions are necessary to achieve growth on the African continent.

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Akufo-Addo’s comments came during his inauguration of the 30th Annual Meetings of the African Export-Import Bank (Afreximbank), held in Accra 18-21 June.

This year’s Afreximbank Annual Meetings (AAM2023), which ends on Wednesday, is being attended by political and business leaders from across Africa and beyond.

AAM2023 marks the 30th anniversary of the Afreximbank, which was founded in 1993 with its headquarters in Cairo.

President Akufo-Addo noted the need for effective coordination between financial institutions and the African Union (AU) to ensure their effectiveness in driving Africa's development.

He highlighted the disparity in capital between African institutions like Afreximbank, with $6 billion in available capital, and counterparts like China Exim Bank, with $54 billion in available capital.

Therefore, he urged African nations and individuals to contribute to Afreximbank's capital initiative.

President Akufo-Addo also praised Afreximbank for its significant contributions to Africa's development, calling on the bank to improve its credit rating and promising to secure a special status for Afreximbank within the AU.

Welcome and appreciation
 

The Ghanian president also welcomed the newest members of Afreximbank – a group of countries from the Caribbean Community (CARICOM) – which marked the bank's expansion beyond the African continent.

He hailed the bank’s support for Ghana, recalling its first-ever transaction with the Ghana Cocoa Board.

He also hailed the bank's timely support to Ghana through its Counter-Cyclical Liquidity Facility (COTRAFL) during a period when global financial institutions were withdrawing from Africa.

“When dealing with powerful global financial institutions, it is important to have your own powerful financial institutions,” said President Akufo-Addo.

 Afreximbank: Goals for Africa
 

Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, also discussed the bank's historic and recent achievements.

According to Oramah, Afreximbank is delivering on the blueprint laid out by the founders of the Organisation of African Unity for the continent's socio-economic transformation.

"The pioneers had set priority key goals to establish a free trade area among the various African countries; to establish a Pan-African payments and clearing union; and to establish a common external tariff to protect emergent industries and set up a raw material price stabilization fund,” he said.

“They also set goals to develop trade among African countries by the organization and participation in African trade fairs and exhibitions and by granting transport and transit facilities; and to progressively free national currencies from all non-technical external attachments and the establishment of a Pan-African monetary zone," he added.

“For sixty years, this well-articulated road map remained a map and gathered dust,” said Oramah.

“But thanks to the vision of African leaders who founded Afreximbank 30 years ago, one by one, they are being delivered within the framework of ‘Team Africa’, comprising the African Union and its agencies, the AfCFTA Secretariat and Afreximbank as the underpinning banker.”

Free trade in Africa
 

“Today, the Pan-African Payment and Settlement System (PAPSS) is up and running, which will save the continent $5 billion in intra-African transfer changes. It will also expedite and enable payments for intra-African trade in African currencies,” said the Afreximbank president.

 “Very soon, we will domesticate all intra-African payments and extend the same to the CARICOM, where just a few days ago, the Association of CARICOM Central Banks adopted PAPSS as their preferred payment infrastructure for a pilot project. By this singular move, we are one step closer to a full integration of African and CARICOM economies.”

Oramah added that, in fulfillment of the founding fathers’ aspiration to develop trade within Africa through international trade fairs, Afreximbank partnered with the African Union in 2018 to introduce biennial Intra-African Trade Fairs (IATF).

These fairs, held twice so far in Cairo and Durban, South Africa, have attracted an aggregate of about 40,000 visitors and about $75 billion in deals, he said.

Since partnering with the African Continental Free Trade Agreement (AfCFTA) Secretariat, the IATF, now branded the AfCFTA Marketplace, has become the world's largest gathering of African businesses and traders, Oramah continued.

The third fair will be held in Cairo from 9 to 15 November, 2023.

The Afrimexbank president also noted the importance of Afrimexbank as the financial backbone of the AfCFTA, signed in 2018.

“Afreximbank’s existence will give the AfCFTA the best chance of success,” he said.

Afreximbank: Big feats
 

He announced that, to deal with the considerable intra-African trade finance gap, Afreximbank had disbursed over $20 billion in the five years prior to 2021, and is projected to double those disbursements to $40 billion from 2021 to 2026.

Oramah noted that it was Afreximbank that arranged the $2.9 billion bundle of credit and guarantees that allowed Egyptian contractors to begin executing the largest-ever intra-African construction contract, for a dam in Tanzania.

It was also Afreximbank that supported phosphate fertilizer exports from Morocco to Nigeria and Ethiopia with hundreds of millions of US dollars; and that enabled Burkina Faso's Vista Bank to complete the acquisition of BNP subsidiaries in West Africa, he added.

Afreximbank and the AfCFTA Secretariat have also established the AfCFTA Adjustment Fund, which compensates eligible countries for tariff revenue losses arising from the new trade regime, while also supporting the private sector to adjust in an orderly manner to the new arrangement under the AfCFTA, he continued.

Oramah added that Afreximbank was working with the African Regional Standards Organization to harmonize trade standards across the continent, and had used Afreximbank-mobilized grant funding to harmonize over 155 standards, notably in automotive, medical equipment and pharmaceutical industries.

The bank was also working with Bureau Veritas of France to build testing, inspection, and certification sites across the continent branded as Africa Quality Assurance Centres, he said. The first of these was completed in West Africa and others were underway in North and East Africa.

Expanding to the Caribbean
 

AAM2023 marks Afreximbank's intercontinental expansion, welcoming as new members several Caribbean countries that have recently joined the Bank via partnership agreements.

Philip Davis, the Prime Minister of The Bahamas and Chairman of CARICOM, noted in his speech that the countries of Africa and the Caribbean shared similar challenges, and had not been maximizing the hands dealt them by geography.

Prime Minister Davis expressed appreciation for the warm welcome extended to the Caribbean delegation to AAM2023, noting that many people in the Caribbean traced their ancestral ties to Africa.

He added that the new linkages between Afreximbank and the Caribbean are a strong testament to the shared goal of pan-African prosperity,

He also highlighted the risks posed to Caribbean states by climate change.

Relaunching our economies
 

Assoumany Aboudou Salam, Special Adviser to the President and former Minister of Finance of Comoros, said that it was time to think about relaunching Africa’s economies.

Speaking on behalf of President of Comoros and Chairman of the African Union Azali Assoumni, Salam said that Africa needed strong visionary leaders that were committed to working for the welfare of all Africans, adding that there should be an emphasis on technology investment to stimulate economic development and job creation for the continent’s youth.

Meanwhile, Albert Muchanga, the AU Commissioner for Economic Development, Trade, Industry and Mining, congratulated Afreximbank on its 30th anniversary on behalf of AU Commission Chairman Musa Faki Mahamat, and said that the AU was a great friend and supporter of all African financial institutions.

Muchanga commended Afreximbank for its role in pioneering a relationship with Caribbean countries and said that Africa could go even further in its integration with the Caribbean.

Earlier, Ken Ofori-Atta, Minister of Finance of Ghana, welcomed participants to AAM2023 and noted that in its 30 years, Afreximbank had made significant contributions in building prosperity for all Africans.

Ofori-Atta commended the Bank and its President for the decisive role it played in supporting African countries during the COVID-19 pandemic, including making available $7 billion to address COVID-19 related challenges and setting up the African Vaccine Acquisition Trust.

The opening ceremony of AAM2023 featured a poem delivered by South African artist Lebo Mashile, a reenactment of the life of famed Mali Empire ruler Mansa Musa, and a hologram featuring the words of Kwame Nkrumah.

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