Afreximbank commits $500m to support Ethiopian commercial banks
The African Export-Import Bank (Afreximbank) has committed to provide $500 Million to support Ethiopian commercial banks through the Afreximbank Trade Facilitation (AfTRAF) Programme, which incorporates various products devised to increase intra-extra African trade volumes, diversify the character of this trade, and assure the confidence of trade partners in the settlement of international trade transactions for critical imports into Africa.
Specifically, the programme is designed to enable and escalate trade activities and investments through, among other measures: the provision of bank-to-bank Reimbursement Undertaking facilities; issuances of Promissory Notes & Bills of Exchange Aval facilities; issuances of Bonds, Guarantees & Indemnities (BGI) facilities; and issuances of Trade Confirmation Guarantee facilities.
To support these initiatives, the Bank also sponsored a forum gathering key stakeholders and decision-makers from Ethiopia’s banking sector, as part of a wider strategy to deepen its relationships with, and support for, the country’s commercial banks. Central to this effort, and the focus of today’s forum, is the AfTRAF Programme for commercial banks in Ethiopia, which aims to unlock capital to support trade finance in Africa.
Though the Bank’s Ethiopian interventions have traditionally been executed through its relationship with the country’s largest financial institution, the Commercial Bank of Ethiopia (CBE), with whom it has existing facilities as well as an operating AfTRAF programme – Afreximbank aims to develop strong partnerships with all commercial banks in Ethiopia, and is actively pursuing its target of signing up, and providing the AfTRAF Programme to 10 other commercial banks in Ethiopia by the end of 2021.
Rene Awambeng, Global Head, Client Relations, Afreximbank, said “Commercial banks play an important role in facilitating and promoting trade – a core ingredient of economic growth. Today’s forum serves to demonstrate the Bank’s commitment to support Ethiopia’s efforts to expand its trade capacity and establish the knowledge, infrastructure and resources by which this will be achieved”.
The forum took place in the context of far-reaching reforms undertaken by the Government of Ethiopia to open up its economy for the participation of the private sector. Central to this economic liberalization is the work of the National Bank of Ethiopia to reform the country’s banking sector. These changes are expected to strengthen the capacity of Ethiopian institutions, including commercial banks, to accelerate the development of the Ethiopian economy through trade and investments. The reforms are also expected to increase Ethiopian trade with Africa and the rest of the world.