AfCFTA success hinges on strong bank lending in Africa
Tapiwanashe Mangwiro Senior Business Reporter
The African Export-Import Bank (Afreximbank) has challenged African banks to play a central role in providing long-term loans to manufacturing companies on the continent.
Afreximbank’s Chief Economist, Dr. Hyppolyte Fofack, said the success of the African Continental Free Trade Agreement (AfCFTA) depends on the continent’s financial institutions providing long-term capital to businesses to produce goods on the continent.
He said so during a virtual media engagement, as part of the Afreximbank Annual Meetings 2022.
Manufacturing companies, he said, should play a key role in the implementation of the AfCTA and that they needed long-term loans of five to ten years to be able to successfully produce goods to be traded. In the region.
“Manufacturing requires patient capital that can be invested for a long period of up to five to ten years or more.
“To be able to provide long-term capital, we need strong financial institutions that have sufficient capacity to finance manufacturing companies in sectors such as steel and automobile plants, as well as railway projects.
“African banks need to provide long-term financing to make the AfCFTA work. Capital should not be a barrier to trade between African countries. And we’re not talking about short-term trade finance. We are talking about funding massive projects with long gestation periods.
Dr. Fofack added that the AfCFTA was a game-changer for the continent, as it created the long-awaited pathway for the free movement of goods between African countries.
He noted that producing goods for the 1.4 billion people in Africa was a huge opportunity for foreign direct investment to flow into the continent and that Africans themselves should take the lead in this regard.
Dr Fofack urged African media to be at the forefront of a positive narrative on the continent, while working with political leaders, Afreximbank and other stakeholders to break down the artificial borders created by colonialists in across the continent.
He said African political leaders, investors and the media must appreciate the harm the importation of goods has done to the continent for many decades.
“As we demand more and more imports, we need more and more foreign loans to import these goods and the more our countries get into debt,” he said.
He lamented what he called the “blood diamond” by which many African countries have been destabilized by foreign interests, which have encouraged crises among Africans, while taking minerals from Africa to their countries.
He also urged African media to change the negative narrative of Africa by telling African stories of positive developments in the region from an African perspective. The AfCTA is a free trade area founded in 2018, with trade commencing on January 1, 2021. It was established by the African Continental Free Trade Agreement by the African Union.