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    $5 Billion Capital percolates in surveying 185 Banks from across the African Landmass

    Posted On 23 Apr 2021
    By : New Africa Business News, Staff Correspondent
    Comments: 8

    By Abdul Rahman Bangura–

    Photo Credit: Investopedia

    NEW AFRICA BUSINESS NEWS (NABN) Freetown, Sierra Leone- The African Export-Import Bank (Afreximbank), in alliance with the United Nations Economic Commission for Africa (ECA), the African Development Bank (AfDB), and Making Finance Work for Africa Partnership (MFW4A) previously published the African Trade Finance Survey Report that contributes to an adequate awareness of the trade finance topography across Africa, and how it has unfolded during the COVID-19
    pandemic.

    The surveying of 185 banks from across Africa, exemplifying more than 58% of cumulative investments held by African banks. Professor Benedict Oramah, President of Afreximbank, while noting on the report, highlighted how the tightening transnational financial circumstances accelerated enormous equity outpourings from Africa, surpassing $5 billion in the initial quarter of 2020.

    “These massive capital outflows strained African banks, many of which recorded sharp drops in their net foreign assets. This further exacerbated liquidity constraints and undermined the capacity of banks to finance African trade”, told Professor Oramah.

    Thus, of the COVIDD-19 pandemic and intrinsic tightening financing situations, exacerbating equilibrium of payment stresses, and liquidity limitations, the supply of trade finance was implicated between January and April 2020, the period covered by the survey. According to the report, the number of correspondent banking relationships fell across the region, and the rejection of L/C requests improved, with about 38% of local/privately-owned banks and 30% of foreign banks noting an increase in rejection rates, respectively.

    Dr. Vera Songwe, Executive Secretary at the ECA, applauded Afreximbank for the counter-cyclical criteria it seized to enable countries deal with the economic and health impacts of the COVID-19 pandemic.

    “The Bank has also played a major role in putting together a $2 billion facility to help African member states purchase up to 400 million doses of the COVID-19 vaccines”, she broadened.

    Dr. Songwe also exhorted African leaders, especially Central Bank Governors and Ministers of Finance and other development partners to further support institutions such as Afreximbank through capital increases as such banks can influence this capital five or six times and deploy more resources towards Africa’s recovery. The report pointed up the position trade finance can take advantage of in withstanding the social and economic aftermath of the COVID-19 pandemic to rev the process of economic recovery through trade and investment growth.

    For H.E. Ebson Uanguta, Deputy Governor of Bank of Namibia, the crisis was deep, and government interventions desired to be assertive and swift to support banks businesses and limit insolvencies. Vastly, sectors of the thrifts were harshly affected, and carried various criteria to finance the vaster economy and trade finance in particular, including alleviating of monetary policy, relaxation of regulatory requirements and institution of loan repayment moratoriums to the tune of $619 million”, stated Uanguta.

    According to Ms. Mervat Soltan, Chairperson and Managing Director at the Export Development Bank of Egypt, the bank had discerned an enormous uptake in its digital services during the pandemic downturn. Egypt is one of the few nations where output increased in the face of a synchronized global downturn.

    “Digitalization which sustained business and trade growth during the pandemic offers a great opportunity to help reduce costs and increase the use of trade finance facilities and should become an integral part of the strategy to boost African trade post-COVID19”, she added.

    The document brought up that African trade amounts to $1,077 billion, but that banks intermediate $417 billion of this, approximately 40%, whilst the global average is 80%. Bola Adesola, Senior Vice Chairman for Africa at Standard Chartered underscored the desire to improve businesses on the continent, to help drive trade both extra- and intra African trade and banks’ intermediation. The African Continental Free Trade Agreement (AfCFTA), she added, can provide a platform to help drive greater businesses.

     

    For New Africa Business News (NABN) Abdul Rahman Bangura Reports,  Africa Correspondent

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    Email: Info@newafricabusinessnews.com

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    About the Author
    New Africa Business News Staff Correspondent
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    8 Comments

    1. Amida April 23, 2021 at 3:53 am Reply

      Thank you for the report and the daily newsletters. Tokyo Japan. Amida

      • New Africa Business News, Staff Correspondent April 23, 2021 at 4:11 am Reply

        Thanks for reading, Africa’s fastest growing online newspaper. Please forward http://www.newafricabusinessnews.com

    2. Semai April 23, 2021 at 3:58 am Reply

      Survey of these banks, shall greatly help policy makers make timely policies. Semai in Luanda Angola

      • New Africa Business News, Staff Correspondent April 23, 2021 at 4:11 am Reply

        Thanks for reading, Africa’s fastest growing online newspaper. Please forward http://www.newafricabusinessnews.com

    3. Bupe April 23, 2021 at 4:00 am Reply

      Love the newsletters. Thank you. Dodoma Tanzania. Bupe

      • New Africa Business News, Staff Correspondent April 23, 2021 at 4:10 am Reply

        Thanks for reading, Africa’s fastest growing online newspaper. Please forward http://www.newafricabusinessnews.com

    4. Johan April 23, 2021 at 4:09 am Reply

      Governments all over Africa, intervention for the banks helped. However, the people should also be help and small business owners. Johan in Cape town, South Africa

      • New Africa Business News, Staff Correspondent April 23, 2021 at 4:10 am Reply

        Thanks for reading, Africa’s fastest growing online newspaper. Please forward http://www.newafricabusinessnews.com

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