Afreximbank, others launch $1.5 billion COVID-19 response facility
Support under the facility will be available through direct funding, lines of credit, confirmation and refinancing of documentary credits, guarantees, cross-currency swaps and other instruments.
The African Export-Import Bank (Afreximbank) has partnered with the International Islamic Trade Finance Corporation (ITFC) – the trade finance arm of the Islamic Development Bank (IsDB) – and the Arab Bank for Economic Development in Africa (BADEA) to launch a $1.5 billion facility to support African economies in tackling the economic shocks of the COVID-19 pandemic.
According to a statement released on Wednesday, the rapid financial assistance facility is called the Collaborative COVID-19 Pandemic Response Facility (COPREFA). It will be accessed by eligible central banks, commercial banks and businesses to finance the import of medical supplies, agricultural equipment and fertilisers.
The devastating impact of COVID-19 has included a slump in cross-border trade and a significant decrease in access to working capital. COPREFA has been designed to support African economies in terms of trade facilitation and address a myriad of challenges caused by the pandemic, including disruption to supply chains and export manufacturing.
Nigeria is eligible for the facility by virtue of its stakeholding in Afreximbank and IsDB. Last September, the country's Debt Management Office (DMO) said the government was expecting loan disbursements from various multilateral financial institutions, including the World Bank, African Development Bank and the IsDB, to address the severe economic impact of the pandemic and the sharp fall in oil prices.
“Afreximbank’s priority has always been to step-up when markets fall. That is why we are supporting African economies forcefully at the time of great difficulties,” said Benedict Oramah, President of Afreximbank. “COPREFA, a product of a unique international partnership, is a major contribution to the global fight against the pandemic and will work alongside our other programmes to ensure Africa’s future remains bright beyond this economic shock.”
A key attribute of COPREFA, according to the statement released today, is the speed at which financial assistance can be provided through the partner financial institutions. Standard eligibility criteria and credit appraisal process have been developed by the partners in order to fast-track disbursement. Support under the facility will be available through direct funding, lines of credit, confirmation and refinancing of documentary credits, guarantees, cross-currency swaps and other instruments.
“ITFC has worked extensively since the very start of the COVID-19 outbreak to provide comprehensive support to some of the most vulnerable countries,” said Hani Salem Sonbol, CEO of ITFC. “The multilateral arrangement that ITFC is embarking upon with our strategic partners will boost economic activity when and where it is needed most and help many countries maintain food security at a time when global commodity supply chains are being challenged and import activity sharply reduced.”
Apart from the multilateral arrangement announced today, the three financial institutions have provided various support to their member countries since the start of the still-raging pandemic. The Jeddah, Saudi Arabia-based ITFC said it has worked extensively to provide comprehensive support to some of the countries that are most vulnerable to the economic shocks of the pandemic.
In March 2020, Afreximbank announced a $3 billion facility, called Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of COVID-19. The Pan-African multilateral financial institution said over $5 billion of the facility, which will be implemented alongside COPREFA, has been disbursed.
Based in Cairo, Egypt, BADEA is a financial institution owned by eighteen members of the League of Arab States (LAS). The 44-year-old institution aims at promoting economic development in Africa and fostering cooperation between the beneficiary countries and the Arab World through investment and trade.
Commenting on COVID-19 response facility, Sidi Ould TAH, Director General of BADEA, said, “BADEA has joined the fight against the pandemic by allocating a gross amount of more than USD 350 million in the COPREFA and other initiatives. These allocations will be utilitzed to ease the negative impacts of the pandemic on African economies and ensure the flow of essential strategic commodities to the continent.”
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