The African Export-Import Bank (Afreximbank) has partnered with the Islamic Trade Finance Corporation (ITFC), and the Arab Bank For Economic Development in Africa (BADEA), to launch a US$1.5-billion Collaborative COVID-19 Pandemic Response Facility (“COPREFA”) to support African economies with rapid financial assistance to reduce the impact of COVID-19.
The facility will be accessed by eligible central banks, commercial banks and businesses to finance the import of medical supplies, as well as agricultural equipment and fertilizers essential for addressing the pressing food production deficit.
A news report by the African Press Organisation Group (APO) on the COPREFA indicated that the facility was also designed to support African economies to overcome a myriad of challenges, including commodity price shocks, a significant drop in tourism, and disruption to supply chains and export manufacturing.
Similarly, it will also address the sudden declines in financial flows, including a drop off in trade and project finance, migrant remittances, portfolio investment and Foreign Direct Investments.
A key attribute of the COPREFA facility is the speed at which financial assistance can be provided through all partners involved. The impact of the COVID-19 pandemic has proven to be fast-paced, requiring support that can be deployed quickly and flexibly to prevent sharp declines in national economies.
According to the news report, standard eligibility criteria and credit appraisal process have been developed by COPREFA partners in order to facilitate implementation of the facility and it will be available through direct funding, lines of credit, confirmation and refinancing of documentary credits; guarantees, cross-currency swaps and other similar instruments.
The co-financed facility, led by Afreximbank leverages strategic partnerships with other Multilateral Financial Institutions and other international financial institutions in co-financing, risk sharing of transactions and promoting integrated trade solutions, to support African economies on navigating the impact of COVID-19.
Commenting on the partners’ financial support for African economies, President of Afreximbank, Prof. Benedict Oramah, said: “The COVID-19 pandemic has devastated many economies. Africa has not been spared. Afreximbank’s priority has always been to step-up when markets fall. That is why we are supporting African economies forcefully at the time of great difficulties.
“COPREFA, a product of a unique international partnership, is a major contribution to the global fight against the pandemic and will work alongside our other programs to ensure Africa’s future remains bright beyond this economic shock. We thank our partners for the confidence”, the banker added.
In his remarks, CEO of ITFC, Eng. Hani Salem Sonbol, said: “Providing fiscal bandwidth and practical support to SMEs and medical communities in African countries will deliver immediate relief from the supply side restraints on personal protective equipment caused by the pandemic. ITFC has worked extensively since the very start of the COVID-19 outbreak to provide comprehensive support to some of the most vulnerable countries.
“The multilateral arrangement that ITFC is embarking upon with our strategic partners will boost economic activity when and where it is needed most and help many countries maintain food security at a time when global commodity supply chains are being challenged and import activity sharply reduced”, Sonbol added.
Similarly, Director General of BADEA, Dr. Sidi Ould TAH, said: “DFI’s as the Arab Bank for Economic Development in Africa (BADEA), with its partners, have been and will always be; supporting the continent through tough and good times as a reliable, strong and resourceful financial institution. And since the COVID-19 pandemic posed drastic challenges that are reshaping the scene of the global economy, we sought that it will require an unprecedented cooperation and measures to tackle these challenges.
BADEA has joined the fight against the pandemic by allocating a gross amount of more than USD 350 million in the COPREFA and other initiatives. These allocations will be utilized to ease the negative impacts of the pandemic on African economies and ensure the flow of essential strategic commodities to the continent”, the development banker added.