The African Continental Free Trade Area (AfCFTA) Secretariat and African Export-Import Bank (Afreximbank) signed in Cairo on Wednesday an agreement for the management of the Base Fund of the AfCFTA Adjustment Fund.
The fund will support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA. The Adjustment Fund comprises a Base Fund, a General Fund and a Credit Fund. The Base Fund will consist of contributions from state parties, grants and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated.
The General Fund will mobilise concessional funding, while the Credit Fund will create commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.
The agreement was signed by Benedict Oramah, Chairman of Afreximbank, and WamkeleMene, Secretary General of the AfCFTA Secretariat.
The AfCFTA Secretariat and Afrexim bank were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade to establish the AfCFTA Adjustment Fund to support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement.
“As we make significant progress in establishing schedules of tariff concessions, the finalisation of the Adjustment Fund will enable us to maintain and even accelerate the momentum. We now have an excellent tool to provide support to our State Parties and their private sector through financing, technical assistance, grants and compensation funding,” Mene told the gathering.
Mene has stressed the importance of the Adjustment Fund as one of the instruments designed to support the implementation of the AfCFTA Agreement and assist AfCFTA State Parties to deal with short term tariff revenue losses as they dismantle tariffs and implement the Agreement.
For his part, Oramah said that the funds would be used to support both the public and private sectors to address short term disruptions, while enabling the private sector to retool, reskill, and develop capabilities to produce value added goods and services that can be traded competitively within the continent and catalyse the emergence of AfCFTA-led regional valuechains.
“The Adjustment Fund, which is taking shape, comes on top of the Pan African Payment and Settlement System (PAPSS), which was commercially launched on January 13 2022 in Accra,and the resoundingly successful second edition of the Intra-African Trade Fair, which held in November 2021 in Durban,” Oramah added.
