African Bank for Exports and Imports has USD 1 billion available, out of the planned USD 10 billion for the next six or ten years, to ensure a non-stop implementation of the African Continental Free Trade Area (AfCFTA), of which Angola is a signatory member.
AfCFTA Secretary General, Wamkele Mene, and Afreximbank CEO, Benedict Omarah, signed the Management Agreement for the Adjustment Mechanism Core Fund, during on-site and remote ceremony held on Wednesday in Cairo, Egypt.
Both institutions were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers to support States Parties in adjusting to the new liberalized trade environment established by the African Continental Free Trade.
The AfCFTA Adjustment Fund is designed to facilitate and support the process, based on technical and financial assistance grants and compensation funding from AfCFTA Parties and private entities.
Thus, whoever needs it, in the case of the country, must resort to the African Bank for Exports and Imports (Afreximbank).
Such a fund also provides for encouraging individuals, such as young women and managers of micro, small and medium-sized companies, to adapt and effectively participate in a commercial environment, within the scope of the African Agreement established for the operation of the project.
The Adjustment Fund provides for the receipt of voluntary financial contributions from States Parties and development partners, for the creation, maintenance and growth of the Base Fund, which will create reserves for other funds, such as General and Credit, and any others that may arise.
With these existing funds, it is expected that they will also serve as vehicles for the mobilisation of funds considered necessary for the fulfillment of their purpose, implementation grants, technical assistance financing, concessionary and commercial financing.
The Adjustment Fund will further develop and operate as a compensation mechanism, to mitigate the short-term fiscal impact of State Parties’ loss of tariff revenue, provide direct funding to Member States and to fund sector initiatives as needed.
Likewise, it is intended to increase the competitiveness of the established commercial environment, in addition to facilitating the financing of commercial projects.
However, Afreximbank and the AfCFTA secretariat are open to working with development partners, development finance institutions, commercial banks and other stakeholders to provide technical and financial assistance grants to the Core Fund.
The aim is to help state parties to the AfCFTA deal with the loss of tariff revenue and carry out the necessary reforms to implement the Agreement.
Afreximbank and the AfCFTA secretariat believe that support to the Core Fund will allow the African continent to implement interventions within the framework of the adjustment fund that will have a greater focus on mitigating the impact of climate change, gender equality and developing young entrepreneurs.
It was in July 2019 that the Assembly of the African Union (AU) committed to creating an Adjustment Mechanism Fund as a tool to support for the implementation of the continental free trade agreement.
Subsequently, in February 2020, the thirty-third ordinary session of the Assembly of Heads of State and Government requested the completion of work on the adjustment mechanism of the African Continental Free Trade Area.
An innovative area of the AfCFTA adjustment mechanism was also approved in the structure of the AfCFTA secretariat, at the same time that a secretariat that self-supports its operational cost was created.