African export-import bank initiates US$6.5 billion expansion of equity capital

African export-import bank initiates US$6.5 billion expansion of equity capital

Contemporary moves by the African Export-Import Bank (Afreximbank) are plowing ahead with a whopping US$6.5 billion General Capital Increase (GCI), aimed at broadening its reach and amping up its service offerings. This ambitious plan aims to fortify Africa's economic resilience and promote growth across vital regions.

The GCI will significantly beef up Afreximbank's capacity to support the mass procurement of COVID-19 vaccines for the African continent, help post-pandemic recovery efforts for African economies, and accelerate the implementation of the African Continental Free Trade Agreement (AfCFTA). Crucially, African leaders, including the African Union Ministers of Finance, the AU Executive Council, and the AU Assembly of Heads of State, have endorsed this additional funding to support the Bank's pivotal role on the continent.

Countries allied with Afreximbank are expected to contribute up to US$1.5 billion as paid-in capital (US$3.9 billion in callable capital) to meet their total contribution under the GCI. Meanwhile, the Bank's Board of Directors has opened the GCI to other shareholders of the Bank to contribute up to US$1.1 billion, allowing them to participate proportionally to their shareholding in Afreximbank. This brings the total size of the GCI to a staggering US$6.5 billion, of which US$2.6 billion will be paid-in.

Prof. Benedict Oramah, President of Afreximbank, graciously acknowledged the shareholders' backing for the GCI. Oramah expressed that the General Capital Increase would help Afreximbank drastically increase its endeavors to boost intra-African trade, encourage export development, and spearhead Africa's recovery from economic hardships brought on by the COVID-19 pandemic.

"This is a milestone moment for the Bank; it presents an incredible opportunity to enhance our capacity to drive transformative growth across this continent," enthused Oramah.

Key Strategic Initiatives

The GCI will breathe new life into several strategic domains, including:

• COVID-19 Vaccine Procurement and Distribution: Under the leadership of Dr. George Elombi, Chair of the Emergency Response Committee, Afreximbank has already mobilized over $2 billion for vaccine acquisition and distribution across African and Caribbean nations. The new capital increase will further reinforce these vaccination efforts, securing continuous supply of essential vaccines and health resources to protect public health on the continent.
• Post-Pandemic Economic Recovery: By increasing its financing capabilities, Afreximbank aims to bolster the gradual post-pandemic recovery of Africa by allocating funds to vital industries and sectors essential for economic recovery. This includes industrialization, local value addition, and fostering intra-continental trade – all critical factors for sustained long-term growth and job creation.
• Support for the African Continental Free Trade Agreement (AfCFTA): Afreximbank is gearing up to play a crucial role in backing the implementation of AfCFTA by providing more substantial financing to facilitate trade expansion across the continent. By doing so, the Bank aligns itself with its evolving function as a key underwriter of Africa's industrial and economic aspirations. The Bank anticipates that heightened intra-African trade, fostered by this financing, will fuel continent-wide economic integration and growth.

Expected Outcomes

With the enhanced capital, Afreximbank has ambitious plans to become a $250 billion institution within the next ten years. The funds will be channeled towards industrializing Africa, thereby restoring the dignity of Africans through economic empowerment, as emphasized by Dr. George Elombah.

Furthermore, the Bank expects Africa's GDP to expand progressively from 4.0% in 2025 to 4.2% in 2027, fueled by rising global demand, inflation decline, and structural reforms. The capital increase will enable Afreximbank to provide the financing required to maintain this positive growth trajectory.

The financial injection solidifies the Bank's financial health, as demonstrated by growing shareholders' equity ($7.5 billion) and improved asset quality and liquidity ratios. This enhancement allows the Bank to tackle more ambitious development initiatives and effectively manage pandemic-related risks.

Lastly, the Bank is dedicated to financing sectors traditionally overlooked by conventional financiers, such as textiles, film, creative industries, and digital technologies, thereby diversifying and enriching Africa's economic landscape.

In conclusion, Afreximbank's US$6.5 billion General Capital Increase signals a strategic move to boost its lending and investment capacity. This move will directly aid COVID-19 vaccine endeavors, facilitate robust post-pandemic recovery, and encourage greater intra-African trade under AfCFTA. The wide-ranging impacts expected span industrialization, economic growth, and financial stability across the continent over the coming decade.

1. The General Capital Increase (GCI) of Afreximbank will contribute to boosting its financial capacity, enabling it to drastically increase its efforts to support the mass procurement of COVID-19 vaccines.
2. The GCI will also bolster Afreximbank's ability to finance key sectors, including industry, local value addition, and intra-continental trade, thereby aiding in the post-pandemic economic recovery of Africa.
3. By providing more substantial financing, Afreximbank aims to play a pivotal role in the implementation of the African Continental Free Trade Agreement (AfCFTA), thereby aligning itself with its function as a key underwriter of Africa's industrial and economic aspirations.
4. With the enhanced capital, Afreximbank plans to diversify and enrich Africa's economic landscape by financing sectors often overlooked by conventional financiers, such as textiles, film, creative industries, and digital technologies.

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