The African Export-Import Bank (Afreximbank) has called on African countries to prioritise the development of public and private export trading companies (ETCs) in order to position the continent’s small and medium enterprises (SMEs) to participate effectively in global trade.
In an address to the Africa International Exhibition, which opened on the sidelines of the United Nations General Assembly in New York, Mrs,Kanayo Awani, Afreximbank’s Executive Vice President, Intra-African Trade Bank, who delivered the President of the Bank, Prof. Benedict Oramah’s address at the event, said that SMEs participating directly in global trade faced stiff competition from multinational and significantly large corporates, making their chances of success or survival marginal, if not zero.
Oramah noted that Asia had addressed that challenge by establishing ETCs to act as conduits through which SMEs accessed global markets, explaining that ETCs acted as aggregators and created a sizeable volume of trade that attracted greater value and withstood competition.
According to him, the limited participation of Africa’s SMEs in global value chains reflected institutional policy failure and called for strong policy support systems that would provide capacity developments, incipient protections from unfair competition and improved access to regional markets and access to finance.
He pointed out that doing so had become particularly urgent as Africa commences implementation of the African Continental Free Trade Agreement (AfCFTA).
Oramah recalled that, over the years, SMEs had been a central focus of Afreximbank’s continental interventions through its export development SME-focused strategy, with unique funding instruments to bridge the financing constraints faced by African SMEs, including products, such as factoring, supply chain finance and intermediated financing.
The banker said that Afreximbank was the principal promoter of factoring in Africa and that the factoring law it sponsored had been adopted in the Republic of Congo, Burkina Faso, Niger, Togo, Mali and Cote d’Ivoire and was under consideration by regulatory institutions in several other African countries.
Oramah recalled that over the past years, the Bank has been creating market access for African SMEs through the African Trade Gateway, a digital ecosystem which comprises assets designed to address non-tariff barriers, such as the MANSA customer due diligence repository platform which collects KYC information of SMEs and corporates and which had already on-boarded more than 11,000 entities.
He listed other Afreximbank interventions as including the TRADAR Club, which delivers innovative digital tools and networking opportunities, helping SMEs to pursue scale and scope economies, the Pan-African Payment and Settlement System, which is an important mechanism for deepening the participation of SMEs in regional trade by allowing them to make payments for imports from the continent using national currencies, the creation of the Fund for Export Development in Africa, which provides venture capital to nurture startups, early-stage and emerging SMEs, and a number of other flagship initiatives.
The bank’s Intra-African Trade Fair also provided an excellent platform to foster integration of SMEs into continental value chains by promoting interconnections and networking, and that the third edition of the fair would hold in Cairo in November.
Afreximbank had launched a US$1-billion Creative Africa Nexus (CANEX) programme to provide access to finance, capacity building, digital solutions and other support to the African creative industry, noting that the industry had become one of the fastest-growing areas within the continent and that creatives had become major export earners in Nigeria, South Africa and a few other countries, topping traditional export goods. The Bank had disbursed about US$120 million to boost the industry, she added.
Other speakers at the event included President Bola Tinubu of Nigeria, who was represented by Minister of Industry, Trade and Investment, Dr. Doris Uzoka-Anite; the Nigerian Minister of Aviation and Aerospace Development, Festus Keyamo; a federal lawmaker, Senator Ireti Kingibe; and the CEO of First Bank Group, Dr. Adesola Adeduntan.
