By Kelechi Deca
The African Export and Import Bank (Afreximbank) is a child of circumstance.
Bank President Professor Benedict Okey Oramah puts most poignantly in well publicized message to stakeholders and the general public: “It was conceived at a time of great difficulty for the continent”, he says as he takes stock of the great strides and achievements of Africa’s award-winning trade and investment institution.
Before its establishment back in 1993, the mere sight of African countries trading amongst themselves seemed hard to behold. Like pawns on the global economic chessboard, African states were bit players sacrificed for bigger scores by the major trading nations. They themselves could not harness the strength that comes with a unified position on issues affecting them, leaving them as vulnerable single players whose weaknesses the developed economies took advantage of.
Three decades of working on its mandate of focused expansion, diversification and development of African trade, while operating as a first class, profit-oriented, socially responsible financial institution and a center of excellence in African trade matters, Afreximbank now stands tall among its peers in the multilateral financial institutions sphere to the approval of African leaders.
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Early October, this year, in recognition of the Bank’s assistance to his country’s trade and economy in general, President Denis Sassou Nguesso of Congo Brazzaville honoured Bank President Oramah and Dr George Elombi, Afreximbank’s Executive Vice President, Corporate Governance and Legal Services, with the highest Presidential award of Officer of the Order of Merit. It was a clear testimony (shared by several other leaders as well) to Afreximbank’s far-reaching impact as the continent’s pillar of support in matters of trade and investment even to the most vulnerable economies.
Over the years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A key driver of the African Continental Free Trade Agreement (AfCFTA), working with the AfCFTA Secretariat and the African Union (AU), the Bank is setting up a US$10 billion Adjustment Fund to support countries to effectively participate in the AfCFTA.
The Bank’s growth has been nothing but momentous. At the end of 2022, its total assets and guarantees stood at over US$31 billion, and its shareholder funds amounted to US$5.2 billion. It disbursed more than US$86 billion between 2016 and 2022 and has investment grade ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure.
Afreximbank Group’s total balance sheet assets grew by 8% from US$27.9 billion as of 31 December 2022 (FY-2022) to approximately US$30.1 billion as of 30 June 30 2023. The growth was driven by the increase in loans and advances to customers, which grew by 13% to close the period at US$26 billion. The liquidity position remained strong at US$3 billion, representing 11% of total assets and achieving a Liquidity Coverage ratio of 310%.
Due to increased volume of interest-earning assets, particularly loans and advances and higher interest rates, total interest income recorded a strong growth of 107.1% to reach $1.1 billion for the half-year (H1-2023) period compared to $540.8 million for the same period in 2022.
Net interest income amounted to $663.6 million, up 76% from the prior year, mainly due to continuous effective management of interest expenses. Net Interest Margin as a result increased to 4.77%, compared to 3.47% last year.
The Group’s shareholders’ funds rose by 7.63% to US$5.6 billion as of 30 June 2023 compared to FY-2022. The growth was largely attributable to the $261 million fresh equity contributions from existing and new shareholders who have supported the ongoing General Capital Increase exercise which aims to raise US$2.6 billion paid-in equity by 2026. In addition, the growth in shareholders’ funds was also underpinned by $125.5 million internally generated net earnings after taking into account the approved dividend and other appropriations which amounted to US$209 million.
Speaking on the results achieved so far, Mr. Denys Denya, Afreximbank’s Executive Vice President, Finance, Administration and Banking Services, said that the strong set of results is driven largely by a focused execution of the Bank’s mandate as a countercyclical lender which generated increased volume of interest-earning assets, particularly loans and advances and benefited from a rising interest rate environment.
The Bank has been playing pioneering roles in different facets of both financial and development intermediation across Africa such as;
- Promoting regional value chains: Afreximbank is supporting the development of regional value chains in Africa. This involves financing projects that link businesses in different African countries, and providing technical assistance to help businesses participate in regional value chains.
- Developing trade infrastructure: Afreximbank is investing in trade infrastructure, such as roads, ports, and airports, to make it easier and cheaper to move goods around Africa.
- Providing trade information and services: Afreximbank provides trade information and services to African businesses, such as market research, trade finance, and risk mitigation services.
In 2022, Afreximbank launched the Pan-African Payment and Settlement System (PAPSS), which is a digital payment platform that allows businesses to make payments across Africa without having to go through a third currency. PAPSS is expected to reduce the cost of cross-border payments in Africa by up to 40%.
In 2023, Afreximbank launched the Africa Trade Gateway (ATG), which is a suite of digital platforms that provides businesses with access to trade finance, trade information, and other trade-related services. The ATG is designed to make it easier and more efficient for businesses to trade with each other across Africa.
Afreximbank is also working to develop a number of other initiatives to support the AfCFTA, such as the Afreximbank Adjustment Facility, which will provide financial support to countries that are negatively impacted by the AfCFTA, and the Afreximbank Trade Insurance Programme, which will provide insurance against trade risks.
By supporting intra-African trade, the AfCFTA, and regional value chains, Afreximbank is helping to create a single Africa trade bloc. This will boost economic growth and development across the continent, and create jobs and opportunities for Africans.
Like President Nguesso, other African leaders are acknowledging and applauding the important role Afreximbank is playing in Africa. President William Ruto of Kenya says that “Afreximbank is our organisation. It supports our development, financing and implementation of identified projects.” President Bola Tinubu of Nigeria has assured the Bank of Nigeria’s support, saying that Africa’s largest economy is open for foreign direct investment and ready to make use of opportunities provided by the Bank.
Commending the leadership of Afreximbank for efforts aimed at linking Africans in the diaspora, the Prime Minister of Bahamas Mr. Philip Davis said that “Afreximbank’s growing presence in the Caribbean, underpinned by a physical presence, is a testament to our shared goal of a joint vision of pan-African prosperity”.
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The Prime Minister of Barbados, Mia Amor Motley described the regional headquarters established by Afreximbank in the Caribbean as “one of the most outstanding Pan-African achievements of our era.” It is an outcome of the first African- Caribbean Trade and Investment Forum (ACTIF) initiated by Afreximbank in Bridgestone last September, after 500 years of deleterious relations between Africa and the Caribbean.
Excited with the huge potential of the continental bank on their continent, Prime Minister Motley said “the Caribbean Community eagerly anticipates the effective linking of a fully constructed CARICOM Single Market and Economy to a fully integrated and operational African Continental Free Trade Area undergirded by air, maritime and telecommunications connectivity between the Caribbean and Africa.” He added: “We, in the Caribbean Community, are determined to reclaim our Atlantic destiny, to reconnect with our African “heartland” and to realize the dreams and aspirations of the Hon. Marcus Mosiah Garvey and so many others of our outstanding Pan-Africanists, on both sides of the Atlantic Ocean, and Afreximbank are simply playing a role in helping us to accomplish this.”
Speaking on the need for an institution of Afreximbank’s stature, President Nana Akufo-Addo of Ghana said that the African continent would be unable to achieve its growth objectives unless it had strong development financial institutions.
Akufo-Addo called on African countries to support Afreximbank so it could expand its catalytic role in Africa, enhance its operations and be able to work consistently for Africa and the African Diaspora.
Speaking on the Bank’s agenda on climate finance recently, Prof Oramah disclosed that “Afreximbank is working to co-ordinate and support programmes which mobilise finance for climate-related initiatives, optimise nature-based solutions on the continent, and promote African food security and sustainable water supply, as well as investing in improvements to systems which manage and contain disasters when they occur.”
He announced that, to deal with the considerable intra-African trade finance gap, Afreximbank disbursed over $20 billion in the five years to 2021 and projected to double those disbursements to $40 billion in the five years to 2026.
In recognition of its extensive and impactful intermediation in trade and development, the African Banker recently bestowed on Afreximbank, the 2023 African Bank of the Year and the DFI of the Year awards.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry