The African Export-Import Bank, Afreximbank, and the European Investment Bank, EIB, the lending arm of the European Union, have pooled EUR 300 million to support the resilience and recovery of African nations in response to the lingering COVID-19 pandemic.
The funds will ensure businesses across the continent have the working capital to sustain jobs and maintain vital imports. It also earmarks at least a quarter of the capital for climate change mitigation and adaptation, helping Africa maximize the opportunities of a green recovery.
The support package is the first accelerated COVID-19 response for the entire sub-saharan region under the EIB’s Team Europe initiative—a EUR 6.7 billion package to help the most vulnerable and exposed countries respond to the immediate health crisis, mitigate social and economic impacts, and build resilience for the future.
The support for sub-Saharan Africa delivered with Afreximbank is structured in two parts. The package redeploys EUR 200 million of funds previously allocated to trade-related investments, directing them specifically to sectors most impacted by the pandemic.
Recognizing the pressing need for support, Afreximbank and the EIB are also injecting a further EUR 100m to the package. This combination of existing and new funds, in addition to Afreximbank’s position on the ground, means support can be activated immediately – a degree of agility that would not have been possible under a new agreement.
Furthermore, Afreximbank’s deep knowledge and broad presence across African markets will ensure capital reaches businesses and communities in all areas of the continent.
The COVID-19 pandemic is inflicting an unprecedented negative impact on African economies, just as it has on nations around the globe. Manufacturing has been impacted by disruptions in global supply chains.
Meanwhile, migrant remittances to some of the poorest economies in the world have dwindled, exposing the most vulnerable in those markets to exacerbated difficulties. As a result, many African economies are suffering serious vulnerabilities including liquidity pressure, trade payment defaults risk and fiscal challenges, alongside cuts to FDI, long term financing and portfolio flows.
A portion of the Afreximbank and EIB support package will be targeted at enabling cross-border trade in medical supplies and equipment essential for slowing the spread of COVID-19. In addition, the support package will provide financing to long-term investments in trade expansion, helping both the availability of goods and growth in economic prosperity.
The package will support participating Member States of Afreximbank, 46 of which a part of the Cotonou Agreement in Sub-Saharan Africa.
Two key focus areas in Africa are on women in business and the Green Revolution. As a result, a portion of the package will target businesses owned or managed by women. In addition, at least 25% of the funds allocated under the partnership will be earmarked for green projects, such as renewable power, energy efficiency and climate change adaptation measures.
Afreximbank is currently appraising renewable energy projects in excess of circa EUR 100 million for which the EBI facility will support. In addition, part of the funds will support the re-purposing of factories to manufacture PPE and other COVID-19 materials, through the African Medical Supplies Platform, a digital platform promoted by Africa CDC, Afreximbank, UNECA and AU Envoy, Mr. Strive Masiyiwa.