The African Export-Import Bank (Afreximbank), has challenged African banks to play a pivotal role in providing long-term loans to manufacturing companies on the continent.
Afreximbank chief economist Dr Hyppolyte Fofack, said that the success of the African Continental Free Trade Agreement (AfCFTA) depended on the continent’s financial institutions providing long-term capital for companies to produce goods on the continent.
He said this during a virtual media engagement, as part of the 2022 Afreximbank Annual Meetings.
Manufacturing companies, he said, should play key roles in the implementation of AfCTA and that they required long-term loans of between five to ten years to be able to successfully produce goods to be traded within the region.
“Manufacturing requires patient capital which can be invested for a long period of up to five to ten years and even more.
“To be able to provide long-term capital, we need strong financial institutions that have enough capacity to fund manufacturing companies in sectors such as steel and car factories, as well as, rail projects.
“African banks need to provide long-term financing to make AfCFTA work. Capital should not be a hindrance to trade among African countries. And we are not talking of short-term trade financing. We are talking of funding massive projects with long gestation periods.”
Dr Fofack added that AfCFTA was a game changer for the continent, as it has created the long-awaited avenue for free movement of goods among African countries.
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He noted that producing goods for the 1,4 billion people in Africa was a huge opportunity for Foreign Direct Investments to flow into the continent and that Africans themselves should take the lead, in that regard.
Dr Fofack urged African media to be the vanguard of a positive narrative about the continent, while working with political leaders, Afreximbank and other stakeholders to break down the artificial boundaries that were created by colonialists across the continent.
He said African political leaders, investors and the media must appreciate the harm that importation of goods has done to the continent for many decades.
“As we demand more and more imports, more and more do we need foreign loans to import those goods and the more our countries sink into indebtedness,” he said.
He lamented what he termed the “Blood Diamond” through which many African countries were destabilised by foreign interests, who encouraged crises among Africans, while taking away minerals from Africa to their countries.
He also urged the African media to change the negative narrative of Africa by telling the African stories of positive developments across the region from an African perspective. The AfCTA is a free trade area founded in 2018, with trade commencing as of January 1, 2021. It was created by the African Continental Free Trade Agreement by the African Union.
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