A CONSORTIUM of banks have pooled up resources to help Africa’s fight against novel coronavirus pandemic.
The two financial giants are African Export-Import Bank (Afreximbank) and the European Investment Bank (EIB), the lending arm of the European Union, that have pooled Euro 300 million to support the resilience and recovery of African nations in response to the lingering COVID-19 pandemic.
The funds will ensure businesses across the continent have the working capital to sustain jobs and maintain vital imports. It also earmarks at least a quartre of the capital for climate change mitigation and adaptation, helping Africa maximise the opportunities of a green recovery.
The support package is the first accelerated COVID-19 response for the entire sub-Saharan region under the EIB’s Team Europe initiative —a Euro 6.7 billion package to help the most vulnerable and exposed countries respond to the immediate health crisis, mitigate social and economic impacts, and build resilience for the future.
The support for sub-Saharan Africa delivered with Afreximbank is structured in two parts. The package redeploys EUR 200 million of funds previously allocated to trade-related investments, directing them specifically to sectors most impacted by the pandemic. Recognising the pressing need for support, Afreximbank and the EIB are also injecting a further EUR 100m to the package. This combination of existing and new funds, in addition to Afreximbank’s position on the ground, means support can be activated immediately – a degree of agility that would not have been possible under a new agreement. Furthermore, Afreximbank’s deep knowledge and broad presence across African markets will ensure capital reaches businesses and communities in all areas of the continent.
The COVID-19 pandemic is inflicting an unprecedented negative impact on African economies, just as it has on nations around the globe. Manufacturing has been impacted by disruptions in global supply chains.
Meanwhile, migrant remittances to some of the poorest economies in the world have dwindled, exposing the most vulnerable in those markets to exacerbated difficulties. As a result, many African economies are suffering serious vulnerabilities including liquidity pressure, trade payment defaults risk and fiscal challenges, alongside cuts to FDI, long term financing and portfolio flows.
A portion of the Afreximbank and EIB support package will be targeted at enabling cross-border trade in medical supplies and equipment essential for slowing the spread of COVID-19. In addition, the support package will provide financing to long-term investments in trade expansion, helping both the availability of goods and growth in economic prosperity. The package will support participating Member States of Afreximbank, 46 of which a part of the Cotonou Agreement in Sub-Saharan Africa.