As a result of the ongoing conflict in Ukraine, the African Export-Import Bank (Afreximbank) has launched a series of lending facilities totaling $4 billion.
Pan-African multilateralhttps lender, the Ukraine Crisis Adjustment Trade Financing Program for Africa, issued a press release that Business Inside Africa was able to see (UKAFPA). In late March of 2022, the bank’s board of directors authorized the plan.
The following are the specific targets of the loan program:
- It will support import re-order cost adjustment financing for African countries, thus helping them to meet their immediate import price increases, pending domestic demand adjustments.
- The loan will also support African countries’ oil and metals buy-back financing in order for them to refinance over-collateralized loans in the context of the current high oil and metal prices. This would, in turn, enable African countries to release more free cashflow for use in meeting other pressing needs such as food and fertilizer imports as well as servicing debts.
- The loan programme also makes room for commodity export revenue stabilisation in order to enable African countries [and companies] to structure and enter derivative contracts a and stabilise future export earnings.
- There is also a tourism revenue deficit financing aspect of the loan which will be given to the central banks of African countries whose economies are largely dependent on tourism, The goal here is to help cover the foreign exchange revenue shortfalls that have arisen due to decline in tourism arrivals from Russia and Ukraine.
- There is also the national export revenue acceleration facility which will be used to accelerate the completion of impactful export-oriented projects. This will be done by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion.
Afreximbank’s President, Pro. Benedict Oramah, gave further insight into how the loan program will benefit African countries while commenting on the development.
“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,” he said.
Let’s not forget that Russian forces attacked Ukrainian territory in February of 2022. As a result, Ukraine’s infrastructure and economy have been ravaged, and many of its citizens have been forced to emigrate. The war’s impact has been seen around the world, particularly in Africa, where several countries purchase wheat from Ukraine. In addition, rising energy costs have had a severe influence on the cost of life in many African countries as a result of the conflict.