Latest news with #AfricanExport-ImportBank
Reuters
3 days ago
- Business
- Reuters
Explainer: Why is Afreximbank in focus over Africa debt restructuring deals?
NAIROBI, June 18 (Reuters) - The African Export-Import Bank has been thrust into the spotlight due to a dispute over whether its loans to African countries now in default should be subject to writedowns in debt restructuring deals. Here are more details about the Cairo-based lender: Afreximbank was set up by African governments in 1993 to provide trade finance when their economies were reeling from a debt crisis resulting from a crash in commodities prices. Its balance sheet has since grown to $35 billion. Though mandated to promote trade, it has also helped economies weather shocks like West Africa's 2014 Ebola outbreak and the COVID-19 pandemic through a $3 billion stabilisation facility. Crisis lending has turned Afreximbank into an important source of hard currency for cash-strapped governments. It launched a central bank deposit programme in 2014 modelled on a Banco Latinoamericano de Comercio Exterior initiative to raise capital from regional central banks to fund development. From just $75 million in initial deposits, this has now mobilised $37 billion cumulatively, or 40% of Afreximbank's sources of financing. Afreximbank has four shareholder categories. Class A is made up of African governments, which hold more than 50% of shares spread among 53 member states. The African Development Bank, Africa's biggest development lender, and other sub-regional financial institutions are also category A shareholders. African financial institutions and private funds hold Class B shares - about a quarter of the total. Class C shares are reserved for overseas investors. Afreximbank created Class D shares for general investors in 2017, listing them on the Mauritius Stock Exchange, and is considering a secondary listing. The current debate focuses on whether Afreximbank enjoys Preferred Creditor Status - a widely accepted principle giving multilateral development banks priority if a borrower faces distress. Though accepted by convention rather than awarded by an entity, the status would insulate Afreximbank's lending from painful haircuts during the kinds of sovereign restructurings recently carried out by Ghana and Zambia. Afreximbank says its founding treaty confers it with Preferred Creditor Status, precluding it from engaging in debt restructuring talks with its member states. Critics, however, point out that some of Afreximbank's lending is done on commercial terms - or market rates - rather than the concessional terms the International Monetary Fund or World Bank employ to extend loans and grants. Its ownership structure also includes commercial investors. Afreximbank is in a dispute in English courts with South Sudan over a claim of around $650 million across three facilities from 2019 and 2020. Ghana, struggling to conclude its debt overhaul, said it has invited the lender for talks on how to restructure its Afreximbank debt. Zambia has stated that its Afreximbank loan, estimated by think tank ODI Global to be $45 million, will be restructured due to its commercial nature. Malawian officials quoted in domestic media outlets say they want to engage Afreximbank to restructure and lighten the country's debt service burden. Afreximbank has repeatedly said it is not in restructuring talks with any of its member states. Afreximbank's two main dollar bonds suffered their worst daily drop in over a year this month after Fitch downgraded it to BBB-, from BBB, citing emerging credit risks. Afreximbank blamed the downgrade on an "erroneous" interpretation of its founding treaty. Given the negative outlook from Fitch, Afreximbank is at risk of further downgrades, which could raise its borrowing costs and trigger some forced selling of its bonds. Some investors think the outcome of the standoff could have a bearing on the successful conclusion of current and future debt restructurings. For Afreximbank, this is a sensitive time. It is expected to pick a new president during its annual meeting later this month, replacing Nigerian economist Benedict Oramah, who is set to step down after a decade in charge.
Morocco World
10-06-2025
- Business
- Morocco World
Morocco Ranks Fourth Among Africa's Most Indebted Countries
Doha – According to a recent report by the African Export-Import Bank (Afreximbank), Morocco ranks as the fourth most indebted economy in Africa. The study, titled 'State of Play of Debt Burden in Africa and the Caribbean' and published on May 28, analyzes debt dynamics across Africa and the Caribbean with a focus on sovereign debt sustainability. It reveals that six African countries account for 50% of the continent's external debt. South Africa leads with 13.1% of Africa's total external debt, followed by Egypt (12%), Nigeria (8.4%), Morocco (5.9%), Mozambique (5.3%), and Sudan (5.2%). This high concentration of debt increases systemic risks. A financial crisis affecting any of these countries could have broader negative repercussions, potentially weakening cross-border financial flows, affecting trade, and altering investor sentiment toward African debt. Morocco's external debt was estimated at $45.65 billion in 2023. While the country shows relative stability in its debt management, it remains exposed to global budgetary adjustments and fluctuations in international financial markets. The country distinguishes itself with an import coverage exceeding three months, a crucial indicator for maintaining financial resilience. Unlike 26 African countries expected to fall below this critical threshold in 2025, Morocco benefits from monetary strength that helps mitigate external shocks and better manage debt refinancing cycles. According to Afreximbank, one of Morocco's major challenges remains its debt-to-exports ratio, which requires increased diversification of its markets and better valuation of its high value-added products. The bank warns against excessive dependence on international financing, which could become constraining as credit access conditions tighten. While Morocco does not exceed the critical threshold of 20% for the debt service-to-public revenue ratio, risks persist nonetheless. Budgetary discipline, optimized taxation, and efficient allocation of public resources will be essential to limit the impact of the debt burden and ensure a financing trajectory aligned with its development ambitions. $1,300 billion by the end of 2025 Africa's total external debt is expected to exceed $1,300 billion by the end of 2025. The report notes a slowdown in its growth after a period of rapid increase between 2016 and 2022. This deceleration since 2022 stems from restricted access to global financial markets, higher credit costs, and a more cautious attitude from states concerned with preserving their budgetary viability in an environment marked by rising interest charges. Projections indicate a slight easing of debt service pressures from 2025, due to reduced commercial borrowing, better inflation control, and expected monetary easing in major economies. However, the report flags persistent fragility signals: fourteen countries will exceed the critical threshold of 180% debt-to-exports ratio, while twenty-five will cross the 20% mark for debt service as a proportion of public revenue. Despite Africa's central public debt being expected to stabilize slightly above 55% of gross domestic product (GDP) by 2029—down from a peak of nearly 63% in 2020—the report projects modest improvement. However, it cautions that more than 60% of African countries will exceed the 50% public debt-to-GDP threshold in 2025, a prudence level set by the IMF and World Bank's Debt Sustainability Framework. For Morocco, although ranked among the continent's top debtors, its position remains relatively contained. However, its strong exposure to private creditors and dependence on external markets require vigilance. Afreximbank encourages all African countries, including Morocco, to reduce their dependence on external debt through increased mobilization of internal resources, innovative financing, and strengthened budgetary discipline. Tags: external debtsIndebtednessMoroccan Economy
Yahoo
09-06-2025
- Business
- Yahoo
Gulf countries expand their footprint in Africa
Gulf countries are expanding their footprint in Africa — moving beyond traditional sectors like mining, logistics, and agriculture — as they seek to deepen their commercial and diplomatic ties to the continent. The UAE is backing a new economic zone and digital incubator in Ghana, while Qatari businesses have been in talks over possible investments in construction and infrastructure projects in Tanzania. The African Export-Import Bank estimates Gulf countries invested more than $100 billion in Africa in the decade to 2022. Much more has followed since then, and the UAE now outpaces China, France, and the UK when it comes to investment in the continent. Gulf companies are still pouring capital into traditional sectors: Emirates Global Aluminium is planning a major investment in a bauxite project in Ghana, and Abu Dhabi's International Resources Holding agreed to buy a majority stake in a Democratic Republic of Congo tin producer for $367 million. — Dominic Dudley
Business Insider
04-06-2025
- Business
- Business Insider
Top 10 African countries making the most progress in infrastructure development
Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure, the backbone of any thriving economy. Business Insider Africa presents the top 10 African countries with the most progress in infrastructure development. The list is courtesy of Africa Infrastructure Development Index (AIDI), 2024. Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure. There is a clear link between a nation's infrastructure and its ability to drive sustainable economic growth. Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure. These investments reduce transaction costs, improve productivity, and attract both domestic and foreign investment. Much of this progress is evident in the recent surge of large-scale infrastructure projects. Just within the past week, Business Insider Africa reported that the World Bank has pledged $1 billion to support the Democratic Republic of Congo as it prepares for the next phase of what could become the world's largest hydropower project. When completed, the initiative has the potential to significantly expand energy access across Central and Southern Africa. In Ghana, a new memorandum of understanding with the United Arab Emirates aims to position the country as a regional leader in artificial intelligence and emerging technologies. The agreement will establish a tech and innovation hub to support Ghana's digital transformation, a critical area of infrastructure in the 21st century. Meanwhile, Uganda is planning to borrow €500 million ($568 million) from lenders, including the African Export-Import Bank, to fund ongoing infrastructure development. These funds are expected to go into key sectors like transport and energy, which are vital to unlocking regional trade potential. South Africa, Africa's wealthiest economy, is also making strides. South African President Cyril Ramaphosa said his plan to boost the economy by launching major construction projects has attracted a record 238 billion rand (about $13.3 billion) in investment. These examples are just a few of the infrastructure advancements happening across Africa. Below are the top 10 African countries making the most progress in infrastructure development according to the Africa Infrastructure Development Index (AIDI), 2024. Below are the top 10 African countries with the most progress in infrastructure development: Rank Country Development Index 1 Seychelles 99.77% 2 Egypt 91.43% 3 Libya 84.84% 4 Mauritius 82.77% 5 South Africa 82.54% 6 Tunisia 74.18% 7 Morocco 70.32% 8 Algeria 61.65% 9 Cabo Verde 51.51% 10 Botswana 42.13%
Business Insider
04-06-2025
- Business
- Business Insider
Top 10 African countries with the most progress in infrastructure development
Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure, the backbone of any thriving economy. Business Insider Africa presents the top 10 African countries with the most progress in infrastructure development. The list is courtesy of Africa Infrastructure Development Index (AIDI), 2024. Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure. There is a clear link between a nation's infrastructure and its ability to drive sustainable economic growth. Across Africa, countries are making bold moves to invest in energy, transport, and digital infrastructure. These investments reduce transaction costs, improve productivity, and attract both domestic and foreign investment. Much of this progress is evident in the recent surge of large-scale infrastructure projects. Just within the past week, Business Insider Africa reported that the World Bank has pledged $1 billion to support the Democratic Republic of Congo as it prepares for the next phase of what could become the world's largest hydropower project. When completed, the initiative has the potential to significantly expand energy access across Central and Southern Africa. In Ghana, a new memorandum of understanding with the United Arab Emirates aims to position the country as a regional leader in artificial intelligence and emerging technologies. The agreement will establish a tech and innovation hub to support Ghana's digital transformation, a critical area of infrastructure in the 21st century. Meanwhile, Uganda is planning to borrow €500 million ($568 million) from lenders, including the African Export-Import Bank, to fund ongoing infrastructure development. These funds are expected to go into key sectors like transport and energy, which are vital to unlocking regional trade potential. South Africa, Africa's wealthiest economy, is also making strides. South African President Cyril Ramaphosa said his plan to boost the economy by launching major construction projects has attracted a record 238 billion rand (about $13.3 billion) in investment. These examples are just a few of the infrastructure advancements happening across Africa. Below are the top 10 African countries making the most progress in infrastructure development according to the Africa Infrastructure Development Index (AIDI), 2024. Below are the top 10 African countries with the most progress in infrastructure development: Rank Country Development Index 1 Seychelles 99.77% 2 Egypt 91.43% 3 Libya 84.84% 4 Mauritius 82.77% 5 South Africa 82.54% 6 Tunisia 74.18% 7 Morocco 70.32% 8 Algeria 61.65% 9 Cabo Verde 51.51% 10 Botswana 42.13%
