The African Export-Import Bank (Afreximbank) will provide its member countries with a financing programme of more than $3.5bn to enable them to adjust to current adverse economic shocks.
The programme is entitled the ‘Counter-Cyclical Trade Liquidity Program’, and was approved by Afreximbank’s Board of Directors at its quarterly meeting held in Seychelles on Saturday.
The programme is initially set to last for two years, and allows Afreximbank to allocate up to 40% of its approved annual gross commitment limit to provide trade finance liquidity to central banks and selected commercial banks in eligible countries.
Afreximbank said it planned to attract other lenders and financiers to the programme to more than double the available funding.
The programme will provide unfunded facilities, by way of guarantees, letters of credit and similar instruments, to commercial banks in concerned eligible countries.
The programme will also provide funded facilities to allow participants to fulfil due obligations under the trade finance payment rights, which they are unable to pay back due to the unavailability of foreign exchange from their central banks or usual markets.
Benedict Oramah, President of Afreximbank, said this enables the bank to help its member countries bridge the significant trade financing gap, which have come as a result of current economic shocks, until normal funding conditions are restored.
“It is Afreximbank’s response to the exceptional circumstances that demand urgent and decisive large-scale support to ensure that the continent is not thrown into recession due to a sudden drying up of trade flows. It also helps us to minimise the potential impact on normal bank operations,” added Oramah.