South Africa has joined the African Export-Import Bank (Afreximbank) as a shareholder, in what proves to be a boost to the bank’s objective of promoting intra-African trade and regional economic integration.
Represented by the Export Credit Insurance Corporation of South Africa (ECIC) as its designated investor, the country becomes the 47th shareholding and/or participating African state in the multilateral trade finance institution.
Having South Africa as an investor in the pan-African Bank is a “significant vote of confidence” and its membership is relevant to the improvement of intraregional trade, Afreximbank President, Dr Benedict Oramah said.
This, he explained, is because South Africa “accounts for about 30 to 35 percent of total intra-African trade, making its membership critical for the attainment of the Bank’s strategic goal of moving intra-African trade share of Africa’s total trade from about 15 percent currently to 22 percent by 2021 and raising its annual value to more than $250 billion by that year.”
Part of Afreximbank’s strategy to achieve that goal as well as formalise Africa’s informal trade sector (valued at $40 billion), is the planned launch of its new Pan-African Payment and Settlement (PAPS) Platform. Being one of the several new initiatives that the Bank is currently implementing, the unveiling will be done at the African Union (AU) Extraordinary Summit on July 7, 2019, in Niger Republic.
Apart from the supposed positive implications of South Africa’s membership on trade across the continent, the development also has potential benefits on a national level, particularly for the country’s exporters.
According to the CEO of ECIC, Kutoane Kutoane, the membership in Afreximbank means South African exporters, especially small and medium-sized exporters, will now have access to the expanded pool of structured trade finance facilities offered by the Bank.
More so, ECIC intends to make the partnership mutually beneficial. Kutoane added that it “marks a watershed moment defining the era of more inclusive intra-continental trade facilitation on a grand scale.” The appointment of ECIC to represent the government in the continental institution is in line with the terms of the provisions of the Charter of the Bank.
The African Export-Import Bank (Afreximbank) was created in 1993 under the auspices of the African Development Bank (AfDB). However, South Africa was unable to join at the time since the country was still under apartheid rule.
The Bank’s shareholders comprise public and private entities divided into four classes including African governments, central banks, regional and sub-regional institutions, private investors and financial institutions, as well as non-African financial institutions, export credit agencies and private investors.