11:30 am EDT (5:30 pm EAT)
The economic disruption stemming from COVID-19 is anticipated to devastate African economies, particularly those reliant on manufacturing, mining, industrials, and tourism industries, with secondary effects on food security and social development. To avoid the first African recession in 25 years, the African Export-Import Bank (Afreximbank) has launched a $3 billion Pandemic Trade Impact Mitigation Facility (PATIMFA) to assist African countries in managing economic shock in 2020-2021. Concordia hosted Afreximbank’s Global Head of Client Relations, Mr. Rene Awambeng, in a virtual discussion moderated by UNESCO Youth Representative and Concordia Advisor Ms. Vivian Onano to discuss the aims and implementation to date of PATIMFA, and how financial institutions, national banks, and corporations can take advantage of the facility for enhanced economic resilience.
While the number of COVID-19 cases on the African continent may currently be one of the lowest in the world, Awambeng highlighted the disproportionate effect of this pandemic on the poorest and most vulnerable, leading to devastating prognostics for both regional and national economies across Africa. In addition to their own domestic challenges and as a result of a global economic downturn, African economies will be exposed to reduced foreign aid assistance and foreign direct investment for infrastructure and natural resource extractions, as well as decreased government revenues and trade incomes, and a weakening of currencies.
PATIMFA is designed to assist central banks and financial institutions in Afreximbank Member Countries to meet trade debt payments—some of which include, but are not limited to, a significant drop in tourism revenue, a sudden decline in export demand, or a reduction in financial flows, such as trade finance, project finance, migrant remittances, and tourism foreign currency inflows. This facility, structured as a commercial loan with a final maturity of three years, draws on Afreximbank’s experience in times of financial crisis to rapidly deploy capital to key markets, in addition to adopting special measures to adapt to the unique situation stemming from COVID-related economic shocks. Eligible beneficiaries include governments, central banks, commercial banks, national & sub-regional development banks, and corporations. According to Awambeng, the Facility has already been accessed by 40 countries and 30+ corporations or financial institutions across the continent, with the amount of financing sought outpacing available funds by nearly four times. Awambeng expects more groups to access the Facility in the coming weeks. The availability period is through 21 March, 2022.
Awambeng reflected that this crisis requires a different partnering strategy and approach than previous financial crises, as it stems from a global pandemic rather than an economic collapse. He cited the global lockdown and immobility as one of the biggest differentiators to working with partners, but stressed that Afreximbank’s strategy remains inclusive of regional and national actors (like the African Center for Disease Control and Prevention (CDC) and the United Nations Economic Commission for Africa (UNECA)), which are adept in policy, logistics, and rapid action. Indeed, without these qualifications and traits, partnerships won’t be able to “resolve the issue of COVID-19 across the continent”.
Given the breadth of the challenge and the interconnected nature of Africa’s economy under the African Continental Free Trade Area (AfCFTA), Afreximbank aims to support all Member Countries rather than focusing on just a small number, evaluating loan allocations based on existing relationships and the requirements of the particular industry and country. Next steps for the continued expansion of fund access include increased engagement with national and central banks on their financing needs and priorities, and cross-currency partnerships with central banks to support continued procurement of necessary COVID-19 products.
Interested parties can learn more about PATIMFA here.