The Board of Directors of the African Export-Import Bank (Afreximbank) has approved the launch of the Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA), a credit facility developed by the Bank to manage the effects of the Ukraine crisis on African economies and businesses. The total cost of the initiative is $4 billion.
The world economy has been significantly impacted by the Russia-Ukraine crisis, which erupted on February 24, 2022. Given the importance of both Russia and Ukraine as providers of crude oil and gas, raw materials, and cereals, the conflict’s escalation has worldwide ramifications, including harming African economies, particularly those that rely largely on grain, fertilizer, and fuel imports.
Since its inception, Afreximbank has established a track record and developed a reputation for proposing and implementing a variety of emergency intervention programs, all of which include strong risk mitigation measures, in order to respond to global crises that have an impact on Africa.
Afreximbank recently disbursed approximately US$7 billion to boost African economies in their fight against the Covid 19 pandemic through the Pandemic Trade Impact Mitigation Facility (PATIMFA). In March, that facility came to an end.
Previously, in 2015, the Bank launched its Countercyclical Trade Liquidity Facility (COTRALF), which provided a platform for the disbursement of over US$10 billion to African commercial and central banks, allowing large-scale trade debt payment defaults to be avoided at the height of the commodity crisis. Both facilities met their objectives and were regarded as critical and successful interventions.
UKAFPA is a response to an urgent call for emergency intervention by member states of the Bank. UKAFPA – compliant financing requests received from across Africa already exceed US$15 billion. There is some urgency to meet these requests to avoid catastrophic social conditions across Africa and reduce the risk of their morphing into political challenges.
Afreximbank looks forward to working with partner banks and institutions to urgently meet the need of African countries in terms of ensuring static and dynamic food security, adequate fuel supplies, and averting fertilizer and agricultural input shortages, against a backdrop of renewed economic nationalism worldwide.
Beyond the financing, Afreximbank plans to work with the UN Economic Commission for Africa (UNECA), the African Union Commission (AUC), and the African Continental Free Trade Area (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 prioritized to meet African requirements while reaching out to other entities in other parts of the world to lend support.
Speaking after the board meeting held in Abidjan, Cote D’Ivoire, Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank commented:
“I am delighted that our Board has approved the introduction of the UKAFPA, once again demonstrating their responsiveness to the needs of African member states and their citizens. This initiative will contribute immensely to averting social anxiety and upheaval that may arise from looming food shortages and high costs of fertilizer and petroleum products.
“Following African Union’s endorsement, Afreximbank shareholders approved a US$6.5 billion, General Capital Increase, on 2021 to boost the capacity of the Bank to deliver on its mandate, deal with the Covid-19 pandemic, and support AfCFTA implementation. We must now add the consequences of the ongoing Ukraine crisis to the catalogue of emergencies a strong Afreximbank has to contend with”.
“We are very grateful to member states and shareholders who have already paid in their subscriptions giving the Bank the flexibility to respond swiftly to prevailing challenges. I call upon those who have not acted to do so urgently as we will once again learn that in times of major crises we can only count on our own institutions to lead the way before others follow.”
H.E. Macky Sall, President of the Republic of Senegal and current Chairperson of the African Union expressed his support for the UKAFPA initiative, saying: ” I welcome the renewed energy of African institutions that have led our coordinated and successful response to the COVID-19 pandemic. Africa now faces the socio-economic challenges posed by a global context of conflict.
Afreximbank has once again shown the way forward by enabling the continent to tackle the impact of the crisis head-on through financing solutions tailored to the specific pressure points facing our member countries. I hope that UKAFPA will play a major role in building resilience in nutrition and food security on the African continent, in line with the theme of the 36th AU Summit.”
Dr. Vera Songwe, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa welcomed this new initiative and added that:
“The New facility is timely and will support countries build resilience as they face yet another exogenous shock. The facilities approved by Afreximbank are also core tools needed to continue strengthing the continental financial architecture as countries look to rebuild their economies and take advantage of the African Continental Free Trade Area (AfCFTA) agreement”