Afreximbank, EU Investment Bank to Finance €300m COVID-19 Response

By Adedapo Adesanya

The African Export-Import Bank (Afreximbank) and the European Investment Bank (EIB), the European Union’s lending arm, are directing €300 million to finance the flexibility and recovery support of African countries in response to the COVID-19 epidemic.

This was disclosed in a statement issued by Afreximbank on Wednesday, explaining that the money will guarantee companies across the continent the working capital to maintain jobs and maintain vital imports.

The support package is the first expedited COVID-19 response to the entire sub-Saharan region under the European Investment Bank’s European Team Initiative – a € 6.7 billion package, to help the most vulnerable and vulnerable countries respond to the immediate health crisis, mitigate social and economic impacts and build resilience for the future.

Support for sub-Saharan Africa is organized with Afreximbank in two parts, with the package reallocating €200 million of funds previously earmarked for trade-related investments, specifically channelled to sectors most affected by the epidemic.

Realizing the urgent need for support, Afreximbank and EIB are also pumping an additional €100 million into the package, according to the statement.

Giving reasons for this, it stated that the COVID-19 pandemic is having an unprecedented negative impact on African economies, just as it has on countries around the world as manufacturing in the global supply chains is disrupted.

It noted that remittances from migrants to some of the world’s poorest economies have dwindled, leaving the most vulnerable groups in those markets worsening the difficulties.

As a result, many African economies suffer from serious weaknesses including liquidity pressure, the risks of defaults in trade payments and financial challenges, as well as reductions in foreign direct investment, long-term financing, and portfolio flows.

Part of the support package will be targeted to enable cross-border trade in medical supplies and equipment needed to slow the spread of COVID-19.

In addition, the support package will provide financing for long-term investments in commercial expansion, helping both commodity availability and growth in the economic boom and will also support the member states participating in the African Bank, including part of the Cotonou Agreement in sub-Saharan Africa.

The statement pointed out that there are two main areas of focus in Africa on women in business and the green revolution. As a result, it will target part of the business package owned or run by women.

In addition, at least 25 per cent of the funds earmarked will be allocated in the partnership framework for green projects, such as renewable energy, energy efficiency and climate change adaptation measures.

Afreximbank also explained that part of the funds will support factory redesign to manufacture personal protective equipment and other materials, through the African Medical Supplies platform, a digital platform promoted by Centre for Disease Control (CDC) Africa, Afreximbank, United Nations Economic Commission for Africa (UNECA) and African Union Envoy, Mr Strive Masiyiwa.

Quoting Mr Benedict Urama, President of Afreximbank, “As continental neighbours, Europe and Africa must stand together against the global epidemic. The funding announced today is welcome not only because it meets an urgent need, but because it is being published quickly.

“With the combined expertise of Afreximbank and the European Investment Bank, support will quickly reach the most affected and will be carefully designed to have the greatest impact on post-epidemic recovery.

“Moreover, the package’s support for green projects will help push Africa towards a sustainable economy for the future and all the opportunities it presents,” according to the head of the African Export Bank.

On the part of the EIB, Vice President Ambroise Fyol added, “Once again, the European Investment Bank is strengthening our close cooperation with Afreximbank to open high impact investments by companies across Africa.

“A total of €300 million was saved as a direct result of the Fast Track and Global Response support from the European Investment Bank as part of the Europe team.”

He continued: “The European Investment Bank Board agreed to increase funding with existing partners to provide an immediate response quickly.

“This new financing will work with Afreximbank to open up medical investment and ensure that investment in climate action does not delay to reduce energy use and emissions.”

Under the 2018 agreement, EIB and Afreximbank have already pumped some of the €200 million previously earmarked for projects that now support African countries ’resilience to the epidemic.

These include programs to expand intra-African trade and export manufacturing in sectors with high employment rates, and both organizations aim to continue to focus on this proven approach to providing short-term relief and long-term resilience.