Afreximbank partners FCSSC, MIAI for $1b fund to support industrialization, boost Africa-South cooperation
The African Export-Import Bank (Afreximbank), the Finance Center for South-South Cooperation (FCSSC) and the Made-in-Africa Initiative (MIAI) have announced a joint effort to mobilise $1 billion in equity fund to channel foreign direct investment from developing (South) economies towards Africa’s industrialization and integration into global value chains.
The framework agreement executed by the three organisations in Beijing recently, mark the establishment of a strategic partnership among the institutions aimed at leveraging diversified financial instruments and resources to boost Africa’s industrialization and expand China-Africa economic and commercial cooperation
The objective of the arrangement is to develop a common investment platform anchored on Afreximbank in order to reduce investment risks and better support Africa’s industrialization and dynamic development.
The platform is expected to attract investment capital from the public and private sectors and to facilitate the flow of foreign direct investment from China and other South economies into manufacturing and other value-added activities in Africa.
The agreement also provides for the setting up of institutional trading platforms for commodities and manufactured goods to promote intra-African trade and export from African countries to countries within the continent and the global South. The three organizations will make full use of Hong Kong’s role as an international services and trading hub to bridge the information gap between the Chinese and African markets, in order to better balance trade flows between China and Africa.
They will, in addition, explore the establishment of e-commerce trading platforms to facilitate the transformation from traditional offline business-to-business and business-to-customer transactions to online mode, especially with regard to small and medium-sized enterprises in Africa. This will enable the enterprises to access new markets, participate in global value chains, and reduce intermediate transaction costs.
Other areas covered in the agreement include the utilisation of FCSSC’s financial network and expertise to facilitate exchange of resources, technology, and experience between China and African countries under the framework of South-South cooperation and the “Belt-and-Road” initiative.
It also provides for collaboration in the establishment of training centres and for capacities connected to industrial parks, including provision of skills training for workers and capacity building events for government officials in charge of industrialization.
Speaking during the signing ceremony, Cai E-Sheng, Chairman of FCSSC, said that his organisation saw itself as being positioned to strengthen partnerships among South-South countries and that it had identified Afreximbank as a critical partner in achieving its goals.
He stated that, under the “Belt-and-Road” initiative, which China launched in 2013, Africa had been highlighted as one of the key targets for infrastructure and other related investments.
Dr. Benedict Oramah, President of Afreximbank, welcomed the strong relations which China had maintained with Africa over the years and said that the collaboration with FCSSC would enable the Bank to achieve its objectives of promoting intra-African trade as well as industrialization and export development in Africa.