The Cairo-headquartered Afreximbank announced on Wednesday that it has approved the launch of the $4 billion Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).
The programme is intended to help manage the impacts of the Ukraine crisis on African businesses and economies.
Russia and Ukraine are both major suppliers of crude oil and gas, raw materials, and grains, meaning that the outbreak of the conflict has global implications. A number of these implications will adversely affect African economies, particularly those that rely heavily on grain, fertilizer, and fuel imports.
Together, the two countries produce around 29% of global wheat exports, 19% of corn supplies, and 80% of sunflower oil exports.
Russian forces invaded Ukraine on February 24, 2022, in a widely condemned military operation that has led to widespread sanctions and global disruptions.
According to Afreximbank’s chairman and president, Benedict Oramah:
“We must now add the consequences of the ongoing Ukraine crisis to the catalogue of emergencies a strong Afreximbank has to contend with… This initiative will contribute immensely to averting social anxiety and upheaval that may arise from looming food shortages and high costs of fertiliser and petroleum products.”
The UKAFPA programme has been established to achieve several objectives:
Import Re-Order Cost Adjustment Financing, to help countries to meet immediate import price increases pending domestic demand adjustments
Oil and Metals Buy-Back Financing to refinance over-collateralized loans in the context of the current high oil and metal prices, and thereby release more free cash flow for use in meeting other urgent needs, eg. food and fertilizer imports and servicing the rising cost of debt
Commodity Export Revenue Stabilisation to help countries and companies to structure and enter derivative contracts at today’s high commodity prices and stabilise future export earnings
Tourism Revenue Deficit Financing to be extended to Central Banks of tourism-dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine
National Export Revenue Acceleration Facility to be used to accelerate the completion of impactful export-oriented projects by expediting access to foreign currency for use in importing critical equipment, technology, and expertise, for project completion
“There is some urgency to meet these requests to avoid catastrophic social conditions across Africa and reduce the risk of their morphing into political challenges,” Afreximbank said.