President of Ghana Nana Addo Dankwa Akufo-Addo has said that Africa will be unable to achieve its growth objectives unless it had strong development financial institutions.
He was speaking at the Afreximbank Annual Meetings (AAM2023) in Ghana’s capital city Accra. It is also being held to celebrate the 30th anniversary of the establishment of the bank, which was founded in 1993.
President Akufo-Addo told participants that Africa’s financial development institutions had remained highly undercapitalised, saying those institutions needed to be properly capitalised and to have effective coordination with the Africa Union (AU) in order to be able to deliver effectively for the continent.
Noting that a bank like the China Exim Bank had a capital of US$54 billion while Afreximbank had only US$6 billion, he urged African countries and Africans to contribute to Afreximbank’s general capital initiative by subscribing to their allotted shares.
The Ghanaian leader commended Afreximbank for its catalytic role in Africa and urged it to strive to further improve its rating with the credit rating agencies in order to enhance its operations and be able to work consistently for Africa and the Afrocan Diaspora.
He pledged to work for Afreximbank to be admitted to a special status at the AU in recognition of its role and contributions to the continent and described AAM2023 as a truly intercontinental event with the participation of several Caribbean countries that had become full members of the Bank following the signing of partnerships agreements with the institution.
Akufo-Addo welcomed the bank’s support for Ghana, noting that its first transaction was with the Ghana Cocoa Board and that, beyond that, Afreximbank had provided timely support to Ghana through its Counter-Cyclical Liquidity Facility (COTRAFL) which it had put together at a time when global financial institutions were exiting Africa.
“When dealing with powerful global financial institutions, it is important to have your own powerful financial institutions,” said Akufo-Addo.
Earlier, Prof Benedict Oramah, president and chairman of the board of directors of Afreximbank, said that the bank was delivering on the blueprint laid out by the pioneers of the OAU for Africa’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; to establish a common external tariff to protect the emergent industries and set up a raw material price stabilisation fund; to develop trade among African countries by the organisation 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 said.
“For 60 years, this well-articulated road map remained a map and gathered dust,” said President 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”.
“Today, the Pan-African Payment and Settlement System (PAPSS) is up and running, which will save the continent 5 billion US dollars in intra-African transfer changes. It will also expedite and enable payments for intra-African trade in African currencies,” he said. “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”.
He added that, in response to the founding fathers’ aspiration to develop trade among African States by organising and participating in African trade fairs, Afreximbank, in 2018, worked in partnership with the African Union to introduce biennial Intra-African Trade Fairs (IATF). Afreximbank pre-funded the organisation of the trade fairs, of which two had been held in Cairo and Durban, South Africa, attracting an aggregate of about 40,000 visitors and about 75 billion US dollars in deals.
With the AfCFTA Secretariat joining the partnership following its establishment, the IATF, branded the AfCFTA Marketplace, had become the largest gathering of African businesses and traders, he continued. The third edition would hold in Cairo from 9 to 15 November 2023.
It was also because Africa had Afreximbank that an integrated regional transit guarantee scheme for the continent had been birthed to ease the movement of goods across the 110 borders that divide Africa, said Prof. Oramah. Under the Scheme, goods could move across multiple African borders under one transit bond, significantly reducing border delays and transit costs.
Prof. Oramah also noted that the signing of the African Continental Free Trade Agreement (AfCFTA) in 2018, and its entry into force a year later, fulfilled another key aspiration of the continent’s founding leaders, saying that to make that Agreement work for Africa, a financial backbone was necessary. “Afreximbank’s existence will give the AfCFTA the best chance of success”.
He announced that, to deal with the considerable intra-African trade finance gap, Afreximbank disbursed over 20 billion US dollars in the five years to 2021 and projected to double those disbursements to 40 billion US dollars in the five years to 2026.
Prof Oramah added that it was Afreximbank: that arranged the US$2.9 billion bundle of credit and guarantees that made it possible for Egyptian contractors to begin executing the largest intra-African construction contract for a dam in Tanzania; that supported, phosphate fertiliser imports from Morocco to Nigeria and Ethiopia with hundreds of millions of US dollars; and that enabled Vista Bank, Burkina Faso, to complete the acquisition of some BNP subsidiaries in West Africa.
Afreximbank and the AfCFTA Secretariat had also established the AfCFTA Adjustment Fund to, among others, compensate 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.
Prof Oramah added that Afreximbank was working with the African Regional Standards Organization to harmonise trade standards across Africa and had used Afreximbank mobilised grant funding to harmonise over 155 standards covering priority areas of automobile, medical equipment and pharmaceuticals.
The bank was working with Bureau Veritas of France to build testing, inspection, and certification centres across Africa under the branded Africa Quality Assurance Centres, he said. The first project had been completed in West Africa and others were underway in North and East Africa.
For his part, Philip Davis, Prime Minister of The Bahamas and Chairman of CARICOM, noted that the countries of Africa and the Caribbean shared similar challenges but had not been maximising 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 Ghana and Africa.
He added that the new linkages between Afreximbank and the Caribbean represented a strong testament to the shared goal of pan-African prosperity.
He highlighted the risks posed to Caribbean states by climate change and said that those countries were on the frontlines of the of the threat of climate change.
Relaunching of Africa’s economies
Speaking on behalf of Azali Assoumni, President of Comoros and Chairman of the African Union, Assoumany Aboudou Salam, Special Adviser to the President and former Minister of Finance of Comoros, said that it was time to think about relaunching of Africa’s economies.
He 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 in investing in technology in order to stimulate economic development and job creation for the continent’s youth.
Albert Muchanga, the AU Commissioner for Economic Development, Trade, Industry and Mining, speaking on behalf of Musa Faki Mahamat, Chairman of the African Union Commission, congratulated Afreximbank on its 30th anniversary and said that the AU was a great friend and supporter of all African financial institutions.
He commended Afreximbank for its role in pioneering a relationship with the Caribbean countries and said that Africa would still have to go deeper in its integration with the Caribbean.
Earlier, Ken Ofori-Atta, Minister of Finance of Ghana, had welcomed participants to AAM2023 and noted that in its 30 years, Afreximbank had made significant contributions in building prosperity for all Africans.
He commended the Bank and its President for the decisive role it had played in supporting African countries during the COVID-19 pandemic, including making available $7 billion to help address COVID-19 related challenges and setting up the African Vaccine Acquisition Trust.
The opening ceremony also featured a poem delivery by South African artiste Lebo Mashile, an enactment of the life of famed Mali Empire ruler Mansa Musa, and a hologram featuring the words of Kwame Nkrumah.
AAM2023, which ends on 21 June, is being attended by political and business leaders, bankers and other trade and trade finance practitioners from across Africa and beyond, including leaders of several member countries of the Caribbean Community.