The AfCFTA Secretariat and African Export-Import Bank (Afreximbank), on 10 March 2023 in Kigali, signed the Host Country Agreement for the AfCFTA Adjustment Fund with the Republic of Rwanda.
The agreement, signed by H.E. Wamkele Mene, secretary-general of the AfCFTA Secretariat; Mrs Kanayo Awani, executive vice president, Intra-African Trade Bank at Afreximbank; and Dr Vincent Biruta, minister of foreign affairs, and international cooperation of the Republic of Rwanda, paves the way for the operationalisation of the AfCFTA Adjustment Fund.
The $10 billion fund, headquartered in Kigali, Rwanda, is a critical instrument in the realisation of the AfCFTA. It will help countries to implement agreed protocols and support African companies to retool for effective participation in the new trading regime.
The AfCFTA Adjustment Fund will support AfCFTA State Parties to adjust smoothly to the new liberalised and integrated trading environment established under the AfCFTA Agreement by mitigating the potential adverse impacts of AfCFTA-induced tariff revenue losses.
Established by the Afreximbank, AfCFTA Secretariat and the African Union Commission (AUC) following a mandate from the African Union (AU) Summit of Heads of State and Governments, the AfCFTA Adjustment Fund consists of three sub-funds, namely, the base fund, the general fund, and the credit fund.
The base fund will utilise contributions from AfCFTA State Parties as well as grants and technical assistance to address AfCFTA-induced tariff revenue losses. It will also support countries in implementing the various Protocols under the AfCFTA.
The general fund will mobilise concessional finance to support the development of trade-enabling infrastructure and execution of key industrialisation initiatives, while the credit fund will be used to 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.
The Fund for Export Development in Africa (FEDA), the impact investment arm of Afreximbank, headquartered in Kigali-Rwanda, has been selected as the Fund Manager of the AfCFTA Adjustment Fund.
Dr Vincent Biruta, Rwanda’s minister of foreign affairs and international cooperation, said, “As we sign this Host Country Agreement for the AfCFTA Adjustment Fund, we reaffirm our commitment to the African Continental Free Trade Area and its potential to transform the continent’s economy.
This fund will play a critical role in supporting African countries to adjust to the new realities of the free trade area and seize the opportunities it presents. We look forward to working closely with the AfCFTA Secretariat and Afreximbank to ensure its success.”
Professor Benedict Oramah, president and chairperson of the board of directors, African Export-Import Bank, said, “ This defining moment is a testament to Africa’s unwavering determination to engineer Africa-led and Africa-controlled solutions to continental development challenges.
Afreximbank has committed $1 billion to the $10 billion adjustment fund and provided $10 million as a seed grant to the base fund. The bank is working with the AfCFTA Secretariat to mobilise additional resources from other financial institutions and like-minded partners”.
H.E. Wamkele Mene, secretary-general of the AfCFTA Secretariat, said, “The AfCFTA Adjustment Fund is a critical instrument in the realisation of the AfCFTA. The fund addresses, among other things, potential tariff revenue losses, infrastructure deficits to facilitate trade growth and possible supply chain disruptions that States Parties may face in the implementation of the African Continental Free Trade Agreement.”
Mrs Kanayo Awani, Executive Vice President – Intra-African Trade Bank, Afreximbank, added, “The signing of this Host Country Agreement is a critical step to operationalising the Adjustment Fund, as it facilitates the establishment of the Fund and its requisite structures in Rwanda.
With the signing of this agreement, the incorporation of the fund’s legal entities will be completed, as well as the setup of the necessary governance structures to facilitate its day-to-day operations. It breathes new life into the AfCFTA Agreement and empowers the AfCFTA Secretariat to deliver on the promise of the Agreement.”