…Says facility will enable countries adjust to tariff losses
…Sets to launch Pan-African Payment and Settlement System
The African Export-Import Bank (Afreximbank) has announced series of initiatives, including the provision of a whopping $1 billion grant to African countries to support the implementation of the Agreement for the African Continental Free Trade Area (AfCFTA).
The President of the bank, Prof. Benedict Oramah, disclosed this to the African Heads of States at the 12th Extraordinary Summit of African Union (AU).
In a statement by Afreximbank’s spokesman, Mr. Obi Emekekwue, on Monday, stated that the bank’s president told the Heads of States that the facility is to enable countries to adjust to sudden significant tariff revenue losses as a result of the implementation of the agreement.
Oramah said the bank will also provide aid for the work being done by the African Regional Standards Organisation and the AU in implementing the agreement.
Oramah also informed the summit of the launch of the Pan-African Payment and Settlement System (PAPSS).
He described the PAPSS as the first continent-wide payment the digital system focused on facilitating payments for goods and services in intra-African trade in African currencies.
“We launched the Africa-wide digital payment infrastructure, PAPSS, which was developed in collaboration with the African Union.
“It is a platform that will domesticate intra-regional payments, save the continent more than 5 billion dollars in payment transaction costs per annum.
“It will also help to formalise a significant proportion of the estimated 50 billion dollars of informal intra-African trade, and above all, contribute to boosting intra-African trade”, he said.
Oramah said that making it possible for Africans to pay for intra-regional trade in their local currencies will aid in the development of African economies.
“Our goal is to reduce, significantly, the foreign currency content of intra-African trade payments. No people have achieved meaningful development when their economic progress depends on others.
“In trying to boost trade and investment, it is imperative that we address the economic costs of effecting so many payments in scarce foreign exchange.
“Making cross-border payments easier, cheaper and safer is an obvious critical step in creating an Africa we want”, he said.
It would be recalled that President Muhammadu Buhari over the weekend signed the landmark AfCFTA, as Nigeria became the 54 of the 55 AU member countries to have signed onto the deal, making Eritrea the only holdout.
The agreement, which comes after 17 years of tough negotiations, is expected to create the world’s largest free trade area, estimating a 60-per cent boost in trade between the continent’s 1.2 billion people by 2022.
The deal was given a boost when Nigeria, Africa’s most populous country and largest economy, announced last the week that it would join the pact in Niamey, after pulling back from the agreement last year for broad consultation.
The pact was further boosted when Beninois President, Patrice Talon, signed the agreement, making Eritrea the sole African country not to sign on.
An official start date was expected to be agreed by heads of state on Sunday, but the zone should be operational from July 2020.
However, there are still key issues that need to be ironed out, such as setting common criteria to determine rules of origin for traded products.
African countries currently trade only about 16 per cent of their goods and services among one another, compared to 65 per cent with European countries.