Afrexim Bank earmarks $3bn to cushion COVID-19 impact on Africa

The African Export-Import Bank (Afreximbank) has announced a $3 billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of COVID-19 pandemic.

PATIMFA, approved by the bank’s board of Directors during its recent meeting  will provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the COVID-19 pandemic, according to information released by the Bank.

The facility will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank.

It will also be available to support and stabilise the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.

In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, among others.

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The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank.

Explaining the rationale for the facility, President of Afreximbank, Professor Benedict Oramah noted that the COVID-19 pandemic brought with it considerable suffering and major economic disruptions.

His words: “Besides its worrying effect on human life, the pandemic is projected to cost the global economy up to $1 trillion and to result in a significant 0.4 percent decline in global GDP growth, which is expected to drop from 2.9 percent in 2019 to 2.5 per cent in 2020.

“A rapid and impactful financial response is required to avert a major crisis in Africa,” he said, pointing out that “Africa is exposed in many fronts, including significant declines in tourism earnings, migrant remittances, commodity prices and disruption of manufacturing supply chains.”

According to Professor Oramah, Afreximbank had already seen sharp pandemic-induced declines in commodity prices, a sudden significant drop in tourism earnings, disruptions in supply chains, and closure of export manufacturing facilities. The impact on medical supplies and medical systems in many markets had also been unprecedented.

He promised that Afreximbank would work with multilateral development banks that had put in place financial assistance programmes in order to secure support to help African countries deal with adverse external shocks and crises arising from the pandemic.

NIGERIAN TRIBUNE