New report highlights impact of COVID-19 on African trade finance



New report highlights impact of COVID-19 on African trade finance

CAIRO, Egypt, April 20, 2021 – / African Media Agency (AMA) / – African Export-Import Bank (Afreximbank), in collaboration with the United Nations Economic Commission for Africa (ECA), the African Development Bank (AfDB)and Making Finance Work for Africa Partnership (MFW4A)released the African Trade Finance Survey Report on April 15, 2021, which provides a better understanding of the trade finance landscape in Africa and how it has evolved over the years. the COVID-19 pandemic. The report is the first of its kind, surveying 185 banks across Africa, representing more than 58% of the total assets of African banks.

In his opening remarks, Professor Benedict Oramah, Chairman of Afreximbank, highlighted how the tightening of global financial conditions led to massive capital outflows from Africa, exceeding $ 5 billion in the first quarter of 2020. “These massive capital outflows affected African banks, many of which recorded sharp falls in their net external assets. This further exacerbated liquidity constraints and undermined the ability of banks to finance African trade. “As a result of the pandemic and the inherent tightening of financing conditions, increased balance of payments pressures and liquidity constraints, the supply of trade finance was affected between January and April 2020, the period covered. by the survey. According to the report, the number of correspondent banking relationships fell across the region and the rejection of L / C applications increased, with approximately 38% of local / private banks and 30% of foreign banks reporting an increase in rejection rates respectively.

Dr. Vera Songwe, ECA Executive Secretary, praised Afreximbank for the counter-cyclical measures it took to help countries deal with the economic and health impacts of the COVID-19 pandemic. “The Bank has also played an important role in creating a $ 2 billion facility to help African member states purchase up to 400 million doses of COVID-19 vaccines.”Dr. Songwe also urged African leaders, especially central bank governors and finance ministers and other development partners to further support institutions such as Afreximbank through capital increases, as such banks can take advantage of this capital five or six times and deploy more resources in Africa. Recovery.

The report highlighted the role that trade finance can play in overcoming the social and economic consequences of the COVID-19 pandemic to accelerate the economic recovery process through growth in trade and investment. It was deep, and government interventions had to be bold and swift to help banks support businesses and limit insolvencies. “Most sectors of the economies were severely affected, and we took various measures to support the economy in general and trade finance in particular, including easing monetary policy, easing regulatory requirements, and instituting moratoriums on repayment of loans in the amount of $ 619 million “said Mr. Uanguta.

According to Ms. Mervat Soltan, President and CEO of the Export Development Bank of Egypt, the bank had experienced a great acceptance of its digital services during the pandemic recession. Egypt is one of the few countries where production expanded in the face of a synchronized global recession. “Digitization, which sustained business and trade growth during the pandemic, offers a great opportunity to help reduce costs and increase the use of trade finance facilities and should become an integral part of the strategy to boost African trade. after COVID-19 “she added.

The report noted that African trade amounts to $ 1.077 billion but that banks intermediate $ 417 billion of this, roughly 40%, while the world average is 80%. Bola Adesola, Senior Vice President for Africa at Standard Chartered, highlighted the need to increase business on the continent, to help boost trade, both extra-African and intra-African, and banking intermediation. The African Continental Free Trade Agreement (AfCFTA)he added, can provide a platform to help drive more business.

Mr. Amr Kamel, Executive Vice President of Business Development and Corporate Banking at Afreximbank, highlighted the role of development finance institutions during recessions, noting that “Afreximbank’s Pandemic Trade Impact Mitigation Mechanism (PATIMFA) has provided timely support to banks, helping to settle overdue payments and avoid payment defaults.” He also shared some of the key initiatives the Bank is taking to address the challenges of liquidity constraints and boost African trade, such as the Pan African Payment and Settlement System (PAPSS) and the Afreximbank Trade Finance and Trade Facilitation (AFTRAF) program. to increase the provision of correspondent banking services to African banks.

One of the Bank’s long-time partners, Eng. Hani Salem Sonbol, Executive Director of the International Islamic Trade Finance Corporation (ITFC) reiterated the importance of international collaboration, even if the initial instinct in a crisis is to look towards indoors. Its response to the crisis in Africa has been based on three R’s: assist to help Respond to the pandemic; helps with recovery; and contribute to restart the economy.
The report made numerous recommendations. These include: increased engagement between central banks and industry; drive greater digitization and adoption of technologies; and better data, which will help to better understand and assess risk.

In his closing remarks, Dr. Hippolyte Fofack, Afreximbank’s chief economist, reiterated the need to sustainably grow the supply of trade finance across the region. “Trade finance is the lifeblood of trade and will play a key role in the recovery and structural transformation of African economies to better prepare the region for future global crises.”he added.

Short Link:

Coronavirus – Nigeria: COVID-19 case update (May 13, 2021) Lawan to Governors: Restructure your States before calling for restructuring at federal level Coronavirus – South Africa: COVID-19 Statistics in South Africa (May 13, 2021) Police investigate fire incident at Enugu INEC office Pozzovivo forced to withdraw from Giro d’Italia after stage 6 crash Emir of Ningi tasks title holders to promote positive changes in communities New report on COVID-19 in Africa shows impact of COVID-19 on African continent has been underestimated Eid -el-Fitr: Gov. Ganduje frees 123 prison inmates Coronavirus – Malawi: Daily update of information on COVID-19 (May 13, 2021) World Bank to construct 13.16km Lagos farm roads Coronavirus – Ethiopia: COVID-19 cases reported in Ethiopia (May 13, 2021) Eid el-fitri: Cleric preaches unity, tolerance to check ethnicity Cargo Airport project ‘ll increase economic fortunes of Anambra- ONICCIMA FIFA World Report: Give Every Talent a Chance Diaspora voting critical to effective participation in governance – council Visit Rwanda and RwandAir join the Basketball Africa League as official partners Pray for unity, cleric calls on Nigerians On May 25, 2021, Africa DayBrand Africa will announce the 100 Most Admired Brands in Africa. European Union (EU) contribution of € 8 million will boost gains in Desert Locust control FG to resuscitate special terrorism prosecution courts, says Malami Humanitarian Coordinator in South Sudan condemns murder of aid worker in Budi, Eastern Equatoria Eid-el-Fitr: Okowa calls for prayers to fight insecurity Nigeria’s Federal Capital Territory (FCT) Minister Pledges to Support Implementation of Polio Transition Plan to Preserve Legacy Gov. Sani-Bello advocates peaceful coexistence on Eid el-Fitr MINUSMA strongly condemns amputations of civilians in Gao region and calls for perpetrators to be brought to justice Buhari mourns Dogonyaro, former Chief of Defence Staff Coronavirus – Republic of South Africa: COVID-19 statistics in RSA as of May 12, 2021 16,000 jobs’ll be created when National Theatre’s renovation is completed – Official Gen. Joshua Dogonyaro, ex-CDS dies at 80 Death Coronavirus – Eritrea: Ministry of Health announcement (May 12, 2021) New board will run the National Theatre after renovations – GM Ogun Govt. restates commitment to quality health care Eid-el-Fitr: Ganduje urges Muslims to pray for peace Coronavirus – Nigeria: COVID-19 case update (May 12, 2021) Eid-el-Fitr: Orji Kalu advocates national cohesion Expert wants greater investment in food security Incentives for the production of the digital economy in Cameroon (by Achare Takor) Ex minister, Turaki urges Muslims to uphold Ramadan values, peace, unity, benevolence Coronavirus – Daily update on the status of COVID-19 statistics in Zambia (May 12, 2021) Wet Season Farming: FG to distribute farm inputs to farmers Video press release: Weekly press briefing on the coronavirus epidemic Coronavirus – Ethiopia: COVID-19 cases reported in Ethiopia (May 12, 2021) Marriott International opens 5-star hotel in Lagos Coronavirus – South Africa: COVID-19 Statistics in South Africa (May 12, 2021) Kogi governor lauds appointment of Obaje as NG-CARES coordinator COVID-19: NCDC records 1 death, 44 new infections AbdulRazaq appoints 41-year-old multimedia czar as Kwara Tv GM Sallah: Gov. Matawalle assures workers of job security Company Income Tax increases by N97bn in Q1, 2021- NBS Coronavirus – Kenya: COVID-19 update (May 12, 2021)