In support of the implementation of the African Continental Free Trade Agreement (AfCFTA), the African Export-Import Bank (Afreximbank) is instituting a $1 billion Adjustment Facility to mitigate the effects of the trade pact. The free trade agreement between African Union (AU) countries, which has as its ultimate goal the creation of a single African market with an easy movement of goods and persons across member states, came into effect on Sunday.
According to the bank’s President, Prof. Benedict Oramah, the facility will enable participating countries to adjust in an orderly manner to sudden significant tariff revenue losses resulting from the implementation of the agreement. “This facility will help countries to accelerate the ratification of the AfCFTA,” Oramah said. The bank is also assisting the African Regional Standards Organization and the AU in implementing the agreement.
Referring to leaders at the 12th Extraordinary Summit of AU Heads of State in Niger, he declared that by starting the operational phase of the AfCFTA, “you have started a movement. You must not look back. This movement is now unstoppable.”
Also among a series of initiatives introduced by the multilateral finance institution to support the trade agreement is the Pan-African Payment and Settlement System (PAPSS) – the first continent-wide payment digital system focused on facilitating payments for goods and services in intra-African trade in African currencies.
Professor Oramah informed the Summit that the payments system had been launched. According to him, the platform which was developed in collaboration with the AU will “domesticate intra-regional payments, save the continent more than $5 billion in payment transaction costs per annum, formalize a significant proportion of the estimated $50 billion of informal intra-African trade, and above all, contribute in boosting intra-African trade.”
By making it possible for Africans to pay for intra-regional trade in their local currencies, the bank’s chief claimed that the digital platform will deal a “fatal blow” to the underdevelopment of Africa caused by defragmentation of its economies.
“Our goal is to reduce, significantly, the foreign currency content of intra-African trade payments … Making cross-border payments easier, cheaper and safer is an obvious critical step in creating an Africa we want,” he concluded.
Nigeria became the 53rd country to formally join the agreement when President Muhammadu Buhari signed the AfCFTA treaty on Sunday.