On 9 February 2022, the African Continental Free Trade Area (AfCFTA) Secretariat and African Export-Import Bank (Afreximbank), signed an Agreement relating to the management of the Base Fund of the AfCFTA Adjustment Fund.
The Fund, estimated at US$10 billion over the next 5-10 years, will support African countries that will in the short term experience revenue losses as a result of reducing or eliminating their tariffs. This is to enable countries to effectively participate in the new trading environment established under the AfCFTA. Afreximbank has already committed US$1 billion towards the AfCFTA Adjustment Fund.
The agreement was signed in Cairo, Egypt by Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank and H.E Wamkele Mene, Secretary General of the AfCFTA Secretariat, in the presence of Mr. Aly Basha, Minister Plenipotentiary (Trade) of the Arab Republic of Egypt as well as African bankers and captains of industry.
The AfCFTA Secretariat and Afreximbank were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade to establish the AfCFTA Adjustment Fund to support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement.
The Adjustment Fund consists of a Base Fund, a General Fund and a Credit Fund. The Base Fund will consist of contributions from State Parties, grants, and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated. It will also support countries to implement various provisions of the AfCFTA Agreement, its Protocols and Annexes. The General Fund will mobilise concessional funding, while the Credit Fund will mobilise commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.
In his remarks, Prof. Benedict Oramah said, “this Adjustment Fund, which is taking shape, comes on top of the Pan African Payment and Settlement System (PAPSS), which was commercially launched on 13 January 2022 in Accra, and the resoundingly successful second edition of the Intra-African Trade Fair, which held in November 2021 in Durban. These are some of the initiatives that we are proud to implement in close collaboration with the AfCFTA Secretariat, setting the conditions that will undoubtedly lead to a smooth implementation of the AfCFTA,”
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