The African Export-Import Bank (Afreximbank) intends to introduce a special guarantee facility that will enable processing plants in Africa to secure long-term export contracts with banks, a statement released here on Friday said. 
Jean-Louis Ekra, the bank’s president said the facility would incentivize international banks to support the financing of African processing plants.
In remarks delivered during a meeting of the bank’s advisory group on trade finance and export development in Africa ahead of the bank’s annual general meeting on June 13, the official said the facility would cover the risk associated with situations where the contract against which financing had been provided became unavailable after an agreed period.
In order to reduce the cost of compliance for banks financing African trade, Afreximbank had led the creation of a customer due diligence platform, the Afreximbank Customer Due Diligence Repository, which is aimed at providing a single source of primary date for the conduct due diligence checks on bank counterparts in Africa, he added.
The bank, he said, was aggressively promoting factoring as an instrument of choice in dealing with new markets and non- commodities trade as well as supporting indirect exports in supply chains.
“African banking has been introduced to enable Afreximbank share, partially or fully, the credit risk of African banks opening letters of credit to be confirmed by international banks,” he said.
According to him, there was an urgent need to strengthen Africa’ s financial sectors to mobilize domestic savings and expand access to affordable credit for agro-processing and manufacturing industries as that would reduce countries’ exposure to high volatility in capital markets and mitigate capital flight and other illicit outflows.
Afreximbank, headquartered in Cairo, Egypt, was established in 1993 as a pan-African export-import bank with a mandate to finance and promote intra-African trade. It has 40 shareholders, including 34 African governments and central banks, and five regional and sub-regional institutions among them the African Development Bank. Enditem
-Xinhua
