THE ROLE OF THE AFRICAN EXPORT-IMPORT BANK (AFREXIMBANK) IN PROMOTING INTERNATIONAL TRADE FINANCING UNDER THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA)
Abstract
This study deliberated the contribution of the African Export-Import Bank (Afreximbank) to international trade financing under the African Continental Free Trade Area (AfCFTA) agreement. The paper's impetus was that of assessing the role of trade-finance institutions in the successful implementation of the AfCFTA, especially the financing needs that remain a constraint to intra-African trade. The qualitative study design used was a documentary one with secondary data sourced from books and selected and peer-reviewed journal articles and publications of reputable institutions such as Afreximbank, the African Union, African Development Bank, World Bank and the World Trade Organization. Thematic content analysis was used to analyze the data. The study revealed that poor access to trade finance, financial exclusion, foreign exchange pressures, and the integration of cross-border payment systems and the lack of infrastructure are significant trade implementation challenges that AfCFTA needs to overcome. It also highlighted Afreximbank's contribution to solving these issues, including through providing trade-finance facilities, the Pan-African Payment and Settlement System (PAPSS), and support to regional value chains, and also the AfCFTA Adjustment Fund. Such interventions have contributed to better access to finance, more efficient payment procedures and to Africa’s trade-finance architecture. The study has revealed that Afreximbank has played a notable role in furthering the implementation of the AfCFTA, but complementary efforts by African governments, such as enhancing infrastructure, regulatory harmonisation, strengthening financial systems, and providing more support for micro, small and medium-sized enterprises (MSMEs), are needed to fully realize the AfCFTA's objectives. The study calls for increased access to trade finance, faster rollout of PAPSS, better coordination of policies regionally, and more investment in trade supporting infrastructure to make sustainable trade and economic integration among African countries a reality.
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