African trade: Afreximbank opens $800m credit lines in 55 banks to facilitate letters of credit

The African Export-Import Bank (Afreximbank) says it has opened credit lines amounting to $800 million in 55 banks across Africa to facilitate the confirmation of letters of credit to support intra-African trade.

This is contained in a statement on Friday by Mr Obi Emekekwue, the bank’s Director and Global Head, Communications and Events Management Department.

The statement quoted the bank’s President, Dr Benedict Oramah, as disclosing the strategy at the signing of African Continental Free Trade Area (AfCFTA) agreement in Kigali.

Oramah said that under the strategy launched in 2016, about $25 billion would be disbursed in support of intra-African trade during the five years ending in 2021.

He said that the bank’s goal was to extend such lines to at least 500 banks in all African countries by 2021 in order to significantly reduce the cost of intra-African trade finance.

According to him, the aim is to counter the constraints posed by country risks associated with the confirmation of such letters of credit.

Oramah said that Afreximbank was also on the verge of launching an intra-African trade platform that would facilitate the clearing and settlement of intra-African trade transactions in African currencies.

He said the platform would significantly reduce the use of hard currencies in the settlement of such trade.

He said that 44 African countries had so far signed the Agreement Establishing the AfCFTA, while 43 countries signed the Kigali Declaration for the Launch of the AfCFTA.

He said 25 countries had also signed the Protocol to the Treaty Establishing the African Economic Community relating to Free Movement of Persons, Right of Residence and Right of Establishment.

Afreximbank is the foremost pan-African multilateral financial institution devoted to financing and promoting intra-and extra-African trade.

The bank was established in October 1993 by African governments, African private and institutional investors and non-African investors.

Since 1994, it has approved more than $51 billion in credit facilities for African businesses, including about $10.3 billion in 2016.

Afreximbank had total assets of $11.7 billion as at Dec. 31, 2016 and it is rated BBB+ (GCR), Baa1 (Moody’s), and BBB- (Fitch).

The bank is headquartered in Cairo.