Dangote Group of companies, owned by Africa’s richest man Aliko Dangote, has acquired equity in the African Export-Import Bank (Afreximbank) in order to promote intra-African trade. This announcement comes seven months after the Afreximbank President, Dr. Benedict Oramah, announced that the bank will partner with the Dangote Group to advance trade within Africa.
“I consider Afreximbank a good vehicle for fostering regional integration in Africa which aligns with our vision and mission for growth and development across the continent,” said Aliko Dangote in a statement released by Afreximbank.
According to Dr. Oramah, the Dangote Group was made a partner of their choice in the delivery of the bank’s Intra-African Trade Strategy because of the massive investments the Group is making across Africa.
“Working with the Dangote Group, we will build supply chain financing across Africa that could reach $1 billion in the short term, promoting intra-regional trade and growth of SMEs and creating much needed jobs.”
This comes few months after Afreximbank launched a new strategy to ramp up trade amongst African countries to $250 billion from its current level of about $170 billion by 2021. The strategy will involve expanding existing trading activities within Africa’s regional economic communities, integrating informal trade into formal frameworks, reducing trade barriers and minimising the foreign exchange costs of intra-African trade.
“Intra-regional trade will drive value addition in Africa and help reduce the continent’s dependence on commodities. It would also allow for the expansion of domestic trade value chains, thereby strengthening the capacity of African economies to resist economic shocks,” said Dr. Benedict Oramah.
According to Dr. Oramah, the fact that about 40 percent of intra-African trade is done in the informal sector shows that there are institutional gaps and Afreximbank intends to play a significant role in filling these voids. The bank will do this by promoting the emergence of export trading companies and by helping to resolve regulatory and policy issues through a deepening of partnerships and bilateral trade arrangements.
What you didn’t know about AFREXIM Bank
Afreximbank is a prominent pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade. It was established in October 1993 by African governments, African private and institutional investors as well as non-African investors. Since 1994, Afreximbank has approved almost $35 billion in credit facilities for African businesses, including about $4.5 billion in 2014.
Afreximbank has four classes of shareholders, which are divided into classes A, B, C and D. They are made up of a mix of African governments, central banks, regional and sub-regional institutions, African private investors, African and non-African financial institutions, export credit agencies and non-African private investors.
Class “A” shareholders are African states, African central banks and African public institutions, including the African Development Bank (AfDB). Class “B” is made up of African financial institutions and African private investors. Class “C” shares are held by non-African investors, mostly international banks and export credit agencies, including Standard Chartered Bank, HSBC, Citibank, China Exim Bank and Exim India. Class “D” shares, a tier approved in December 2012, are fully paid per value shares that can be held by any investor.
Afreximbank currently has 41 African countries as its members.