Afreximbank Set to Target $4 Billion Worth of Foreign Direct Investment
The President of African Export-Import Bank (Afreximbank), Prof. Benedict Oramah, who spoke in Tunis during the opening of the Financing Investment and Trade in Africa conference, revealed that Fund for Export Development in Africa (FEDA), an equity investment fund created recently by the bank will accelerate the flow of foreign direct investment (FDI) into Africa’s trade and export sectors.
Oramah said Afreximbank’s vision is to leverage $1 billion in support of FEDA’s mission, and to catalyse four times that amount in FDI in five years.
The President of the Bank said the kind of equity funding currently available in Africa, was not appropriate for turning the continent into the trade hub, which it needed to become in order to achieve desired growth. He noted that FEDA would ensure that investors’ investments were protected under the immunities and privileges available to Afreximbank, and that the investments enjoyed tax privileges and incentives.
Oramah explained that development finance institutions (DFIs) are market failure institutions that exist to complement what markets are unable to offer or begin to create markets. Putting this into consideration, Afreximbank’s interventions were based on the philosophy of bringing additionality rather than displacing commercial banks.
Through its Intra-African Investment Guarantee Facility, Afreximbank expanded its guarantee offering to make it more accessible to companies coming into Africa. Afreximbank also introduced Mansa, a customer due diligence platform, which will help to address the challenge of many African countries not being able to access trade finance due to high compliance cost.
Oramah said with about $700 billion under management by African pension funds, and the reserves kept abroad by African central banks already adding up to about $1 trillion, the funds are already adequate to meet Africa’s need. He however noted that because they are outside the continent, and those keeping them deem it too risky to invest in Africa, the funds are not being invested in Africa, a situation he said needed to be fixed.
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