African nations plan $8 billion fund to offset trade-act losses
African nations plan to raise about $8 billion for a fund to help offset revenue losses for countries that lower cross-border tariffs, as part of a continent-wide free-trade agreement.
The African Export-Import Bank, or Afreximbank, previously provided $1 billion for the fund after the African Union set it up to help cushion sudden revenue losses and encourage participation. The free-trade area went into effect on Jan. 1.
“The $1 billion made available by Afreximbank will be used to leverage funding from other multilateral development-finance institutions, export credit agencies, commercial banks and donors,” Afreximbank said in an emailed response to questions on Thursday.
“About $8 billion is expected to be mobilized” to meet the level of support required by countries, it said.
The world’s biggest free-trade area aims to bolster intra-African trade by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a customs union.
Trade within the continent, which stands at more than $350 billion a year, is expected to grow by 52% in the next decade, according to David Luke, coordinator of the African Trade Policy Centre at the United Nation’s Economic Commission for Africa.
Afreximbank, in collaboration with the African Union, will hold intra-Africa trade fair in South Africa in November to provide access to trade and market information to companies and countries.
In addition, it’s planning “face-to-face training workshops’’ in 13 countries from October to build the capacity required to meet trade targets, the lender said.