The head of the African Export-Import Bank (Afreximbank) is reporting “many ground-breaking achievements” just months after the multilateral lender set up a CARICOM office in Barbados.
Chief Executive Officer and President of Afreximbank Professor Benedict Oramah listed a rapid succession of developments as he addressed the second AfriCaribbean Trade and Investment Forum 2023 (ACTIF23).
He said a partnership treaty involving 12 of 15 CARICOM governments, of which eight have ratified the deal, paved the way for the lending.
Professor Oramah said: “The board of directors of Afreximbank approved a lending limit of US$1.5 billion (BDS$3 billion) for CARICOM states, with the promise of the limit to rise to US$3 billion (BDS$6 billion) when all CARICOM states join the partnership. Afreximbank has lent more than five trade and investment missions to CARICOM, which covered most of the countries that had signed the partnership agreement. This led to the building of over US$2 billion (BDS$4 billion) in pipeline deals across CARICOM.
“As a result, critical transactions have been approved or are at final stages of conclusion.”
In December 2022, Afreximbank directors approved the funding to enable CARICOM member states that had ratified the partnership agreement with Afreximbank to tap into its financial instruments. Eight months later, in August, the bank opened its CARICOM office in Barbados.
From a lending pool amounting to US$500 million (BDS$1 billion), Barbados has borrowed $50 million for tourism revitalisation. Loans have also gone to St Lucia for climate adaptation and interventions, small and medium enterprise support and development in the Bahamas, a Grenadian tourism project and renewable energy projects and trade finance for St Kitts and Nevis.
An Afreximbank promotion drive also attracted African investment interests in fisheries, renewable energy, ports, industrial parks, financial institutions and tourism, Professor Oramah announced.
During the forum in Guyana which ended on Tuesday, agreements were to be signed covering some of these finances and investments.
The Fund for Export Development in Africa is also expected to sign a Framework Agreement with Access Bank Group, Nigeria, to jointly invest in the Caribbean’s financial services sector.
“We also expect to sign a document evidencing the arrangement we reached with the government of Guyana for the US$500 million (BDS$1 billion) infrastructure financing facility. Afreximbank’s Pan African Payments and Settlement System, PAPSS, has been selected to run a pilot programme for CARICOM central banks as a payments infrastructure for CARICOM, We hope that very soon, the payment system (of) South Africa and the CARICOM would be integrated,” the Afreximbank chief said.
Once this system is in place, Guyana can, for example, buy an item from Africa and pay in Guyanese currency and vice versa, he explained.
Professor Oramah thanked the CARICOM Development Fund for blazing the trail in the region by becoming a shareholder in the African Export/Import Bank.
Referring to the many years of disconnect between the people of the Caribbean and Africa through the uprooting and sale of Black people during the Transatlantic Slave Trade, he declared that “the umbilical cord which was severed is now sown back”.
He continued: “Afreximbank expects to begin the process of developing the Afreximbank African Trade Centre in Barbados before the end of next year. This facility (is) to be modelled in line with similar projects ongoing in some cities in Africa. We will host the permanent Caribbean office and also incorporate a hotel, a technology occupation centre, a trade information centre, conference and distribution facilities.”
Professor Oramah noted that in February this year, his bank addressed the CARICOM Heads of Government Conference where he promised to expeditiously establish a presence in the region and to assist the Caribbean in setting up CARICOM’s own export-import bank.
He revealed that his institution will be a shareholder if invited to join the regional bank and is willing to buy 49 per cent equity. He hoped the planned CARICOMeximbank could be up and running soon.
Professor Oramah said a feasibility study on a CARICOM export-import bank is to be conducted.
In his outlook, the CEO contended that despite the “lightning” speed with which many achievements have been realised since the regional headquarters of the Afreximbank was opened in Barbados, the road ahead was rough and difficult, identifying such contributing factors as the climate crisis, high global interest rates, and political tensions across the globe.
Professor Oramah warned that small developing countries such as Barbados will suffer if they do not band together. He made it clear that the Cairo-based lender would not relent, promising additional investments in renewable energy and tourism.
He said: “Afreximbank has proposed to the Eastern Caribbean states that it will top up their efforts for a renewable energy facility with US$200 million (BDS$400 million). We are also interested in working with national and regional agencies to create a special tourism revamp facility that promotes local content. We will allocate up to US$300 million (BDS$600 million) to this effort.”
Acknowledging the challenges regional governments and others face with accessing funding in the Caribbean due to high interest rates, the Afreximbank chief said it is willing to help and “see some like at the end of the tunnel”.
He recalled that in June this year, the bank’s board and shareholders approved the establishment of a constitutional finance window, intending to initially set it up with US$1 billion ($2 billion), but believes the fund will grow quickly.
Professor Oramah hoped things would get going by early next year as states outside of CARICOM express an interest in joining this partnership.
“I hope we can have a constructive discussion around so that we can expand the benefits of this umbrella,” he added.
(EJ)
