The Continental facility worth $10 billion, aimed at boosting intra-African trade, will start operations in the second quarter of 2024, benefiting countries, public institutions, and the private sector.
This was announced on September 29, during the first meeting of the Board of the AfCFTA Adjustment Fund, a facility established by the African Continental Free Trade Area (AfCFTA) Secretariat and Afreximbank, headquartered in Rwanda.
The fund is managed by the Fund for Export Development in Africa (FEDA) – an impact investment arm of Afreximbank.
It consists of three sub-funds: the Base Fund, the General Fund, and the Credit Fund. The Base Fund will use contributions from AfCFTA state parties as well as grants and technical assistance to address tariff revenue losses, infrastructure deficits to facilitate trade growth, and possible supply chain disruptions that would result from the implementation of the AfCFTA Agreement.
Officials during the first meeting of the Board of the AfCFTA Adjustment Fund on September 29 in Kigali. Courtesy
The General Fund will finance the development of trade-enabling infrastructure, while the Credit Fund will be used to mobilise commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.
Jean-Louis Ekra, Chairman of the Board of the AfCFTA Adjustment Fund, said: “The reason why Afreximbank supported this fund is to start its operations quickly. Today, we approved laws and regulations governing this fund. It is expected to be fully operational in the second quarter of 2024.”
Sebahizi Prudence, Director for Institutional Matters and Programmes Coordination at AfCFTA, noted that Rwanda being the host country of the fund brings numerous benefits in terms of investments channelled through the Rwandan banking sector.
“This fund is unique, it will not only benefit the country but also investors once it starts. Rwandan investors, just like foreigners, will be able to get capital just like from any other financing institutions.”
The First Vice President of Afreximbank, Dr. George Elombi, said that in order for this fund to work effectively in the next five years, $10 billion is needed to support countries.
Delegates during the first meeting of the Board of the AfCFTA Adjustment Fund on September 29 in Kigali. Courtesy
At the official launch of the Adjustment Fund, in March, Wamkele Mene, the Secretary General of the AfCFTA, emphasized that the fund should not be viewed solely as a tool for overcoming short-term revenue losses of state parties, but rather as a crucial initiative aimed at enhancing the capabilities of the private sector to produce value-added goods and services that can be traded competitively throughout the AfCFTA market.
The landmark free trade agreement, signed in Kigali in March 2018, envisions a continental market of 1.3 billion people with a combined Gross Domestic Product of more than $3.4 trillion.
