AfCFTA: How Afreximbank is ‘rising to the moment’ to bolster intra-Africa trade  

By Xolisa Phillip, in Johannesburg
Posted on Thursday, 9 December 2021 14:04

Benedict Okey Oramah
Benedict Okey Oramah, president and chairman of the board of directors at the African Export-Import Bank (Afreximbank), Grigorov/TASS/Sipa USA Host Photo Agency

The second edition of the Intra-African Trade Fair (IATF) 2021 in Durban - organised by Afreximbank, the African Union (AU), and African Continental Free Trade Area (AfCFTA) Secretariat - ended by exceeding its $40bn target, with Egypt, Nigeria and South Africa having concluded the most number of deals.

When it comes to trade fairs, “if we don’t have money, we can’t do much. It costs about $20m to do [a trade fair]”, says Benedict Oramah, the president and chairperson of Afreximbank. For that estimated $20m price tag, the recent IATF generated $42.1bn in trade and investment deals.

In terms of deal numbers, South Africa, Egypt, and Nigeria are the leading countries. South Africa concluded a total of 94 deals at the event. As for values, Nigeria and Egypt are in the lead, followed by South Africa, with the latter garnering a rounded $3bn. Overall, more than 500 business deals contributed to the $42.1bn.

More than 30 sectors were represented at the fair. The top 10 sectors in dealmaking were construction and infrastructure, financial services, energy, agriculture, logistics, mining, youth start-up, ICT, manufacturing, and health, as well as pharmaceuticals, according to Kanayo Awani, the MD of the Intra-African Trade Initiative at Afreximbank.

Last Friday 3 December, Awani gave a virtual update on the latest IATF 2021 figures, but noted that the data is still being sorted to enable Afreximbank to track the deals.

No matter what we say. If we don’t have money, we can’t do so much…

“Afreximbank is rising to the moment,” said Oramah at the conclusion of the event two weeks ago. “The bank was created in 1993 in anticipation of what happened in 2018. The benefit of it taking that long is that it made the bank stronger.”

In March 2018, the agreement establishing the AfCFTA agreement was signed in Kigali, Rwanda. Ironically, Kigali was the original host for the 2021 edition of the fair, but its failure to complete construction of a suitable exhibition centre on time resulted in Durban taking over. The inaugural fair was held in Cairo, Egypt, where $32bn worth of trade and investment deals were concluded.

“No matter what we say, if we don’t have money, we can’t do so much. Even today, it costs about $20m to do [a trade fair]. If we didn’t have Afreximbank, if … [our] leaders didn’t create an Afreximbank, we probably wouldn’t have that [money]. We would remain divided and not have … information,” said Oramah.

Three essentials for better trade

He cautioned against complacency, noting that the business of trade is akin to running a competitive race globally. Essential ingredients required include strong institutions, harmonising Africa’s fragmented payments infrastructure, which he describes as a “huge problem” and strategic partnerships.

“We need to strengthen our institutions. We should not be looking up to anybody. We are in a global competition. Trade is a competition. It’s like we are running a race with somebody else,” said Oramah, adding, “We can’t ask the person we are running against to give us a subsidy to run against them. It’s not possible.”

We know how big it can be in changing trade, in integrating trade on our continent. If we didn’t have an Afreximbank, who would have done it?

It is for those pragmatic reasons that the Afreximbank president says “our support for the AfCFTA will remain strong”.

Africa’s fragmented payment infrastructure incentivises people to trade for the sake of earning foreign currency “rather than trading across to expand their market.” To address this huge problem, “Afreximbank had … to do a partnership with the AU and the AfCFTA”, he said.

“It’s piloted [Pan-African Payment and Settlement System] now. We know how big it can be in changing trade, in integrating trade on our continent. If we didn’t have an Afreximbank, who would have done it?” said Oramah.

He also highlighted the fact that “financing intra-African trade has become a business. We can’t do it alone; we just need to catalyse it.”

The continent has a massive infrastructure deficit, and this is seen as a possible hindrance in achieving the region’s trade integration. In this area, too, partnerships are key.

Although infrastructure is the domain of the African Development Bank, “we are focusing on a narrow area of it; enabling infrastructure [such as] logistics,” Oramah told The Africa Report at the closing of IATF 2021.

“Of course, we work with sister DFIs [development finance institutions] on the continent. There are also others that support us strongly from outside: the Islamic Development Bank Group, the Japanese, the Chinese, the Germans, the French. These are very big supports from long-term developmental financing,” said Oramah.

Upon the release of the latest IATF 2021 trade and investment deals figures, Oramah said: “We thank the AU Commission and the AfCFTA Secretariat, the government of South Africa and the KwaZulu-Natal provincial government, as well as our other partner institutions, donors, exhibitors, buyers and performers for their strong collaboration.”

The next instalment of the IATF is scheduled to take place in Abidjan in 2023. Online registrations are now open.

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