Latest news with #AfricanGovernments
Zawya
2 days ago
- Business
- Zawya
Why is Afreximbank in focus over Africa debt restructuring deals?
NAIROBI - 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: WHAT IS AFREXIMBANK'S ROLE? 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. WHO OWNS AFREXIMBANK? 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. WHAT IS AFREXIMBANK'S STATUS? 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. WHAT DISPUTES IS AFREXIMBANK FACING? 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. WHAT ARE THE IMPLICATIONS OF THE STATUS DEBATE? 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.
Zawya
10-06-2025
- Business
- Zawya
Adopt ILO budget at 113 ILC, BAEC, ITUC-Africa urge African governments
AS the 113th International Labour Conference (ILC) opens in Geneva, the continent's leading employers and workers' organizations; Business Africa Employers Confederation (BAEC) and the African Regional Organisation of the International Trade Union Confederation (ITUC-Africa), have urged African governments to unite in support of the proposed 2026–2027 Programme and Budget of the International Labour Organisation (ILO). In a letter addressed to African heads of government, the two continental bodies called for a decisive vote in favour of the ILO budget proposal adopted at the March 2025 Session of the ILO Governing Body, warning that failure to do so could have 'significant and far-reaching negative impact on workers and employers worldwide, particularly in Africa.' The joint statement, signed by Jacqueline Mugo, Secretary General of BAEC, and Joel Akhator Odigie, General Secretary of ITUC-Africa, lauded the collective efforts of African governments in shaping the ILO's agenda. 'We sincerely commend your efforts, working together as African governments, to represent the interests of Africa in the ILO, to ensure that African governments can secure the needed support and technical assistance to address the challenges facing the continent,' the statement read. However, the two leaders expressed concern over the division triggered by references to sexual orientation and gender identity (SOGI) in the programme, a point of contention that led to a rare vote in the March Governing Body meeting instead of consensus. 'While we fully appreciate the debate and the divergence of views on this matter,' the statement noted, 'we are of the view that the joint proposals of the social partners, which garnered the majority of votes in the Governing Body, is the most feasible way forward to avert the high risk of not adopting an ILO 2026-2027 Program and Budget at this year's international labour conference.' They emphasised that while policy differences on SOGI exist among governments, the Employers and Workers Groups have already agreed that the subject be taken up under a separate agenda item in the upcoming November Governing Body session. This compromise, they argue, should allow the current programme and budget to move forward. 'We therefore urge you, Your Excellencies, to vote for the 2026-2027 ILO Program and Budget based on the March GB decision and to continue your reasonable efforts to ensure that Africa… benefits together from the financial and other resources of the ILO,' the letter concluded. The plea comes at a crucial time when global labour challenges, economic uncertainties, and the growing need for international cooperation have heightened expectations on the ILO's role, particularly in Africa. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Zawya
05-06-2025
- Business
- Zawya
AFC says Africa has $4trln local capital available to fund infrastructure
African governments should turn to an estimated $4 trillion in capital held by domestic institutions like pension funds to develop much-needed local infrastructure as external funding sources wane, the Africa Finance Corporation said on Thursday. Building railways and expanding power generation are major priorities for the continent as its population and economies grow, but traditional sources of funding such as foreign direct investment and official development assistance are proving "increasingly insufficient", the AFC said. Higher interest rates globally, declining donor budgets and protectionist policies in advanced economies are further tightening the availability of funds, it said in the report. "These developments underscore Africa's need for a more resilient and internally anchored financing strategy," the financier, which is owned by African governments, multilateral lenders and private funds, said. African governments are also struggling to find space within national budgets to pay for development projects as interest payments gobble up an ever-rising share, the report said. They can however turn to the potentially trillions of dollars in domestic capital held by sovereign wealth funds, pension funds, and central and commercial banks, it added. These are currently held by institutions or invested in short-term liquid instruments like money markets due to legal restrictions on where assets such as pension funds can be invested, it added in the report. To unlock these funds, African governments will have to modernise huge swathes of their economies that are not taxed and regulated, and reform the rules around pension funds to allow them to invest in long-term infrastructure projects, AFC said. They will also need to boost national savings rates, which on average stand at half those of Asian nations, it added. The African Development Bank, a shareholder in AFC, has pegged Africa's annual financing gap for structural transformation at more than $400 billion, or nearly 14% of the continent's projected GDP by 2030. (Reporting by Duncan Miriri; Editing by Jan Harvey)
Zawya
30-05-2025
- Business
- Zawya
Libya becomes a full participating state and shareholder of Afreximbank
The State of Libya has taken a critical step towards its full membership of African Export-Import Bank (Afreximbank) ( with the acquisition of shares in the African multilateral Bank, making the country both a participating state and a shareholder of the Bank. The country submitted its payment for the acquisition of the Bank's shares on 13 May 2025. Libya acceded to Afreximbank's Establishment Agreement in October 2024, becoming the 52nd African nation to do so, and marking an important step towards full continental coverage and advancement of the Bank's continental integration agenda; through trade and investments. The acquisition of Afreximbank's shares by Libya further strengthens ties with the oil rich nation and enhances critical support to the Libyan economy. Target areas of intervention by Afreximbank include infrastructure and oil and gas, and export of manufactured goods to the rest of Africa, while also supporting regional integration projects targeting other countries in North Africa. 'Libya's shareholding in Afreximbank puts the Bank in a strong position to support the government's reconstruction efforts while also helping to deepen its regional connectivity through investments in critical projects such as the oil pipeline and road projects between Egypt and Libya, and the electricity transmission and linkage project covering Libya, Tunisia, and Algeria. It reaffirms the confidence of African governments in their Pan-African Multilateral Financial Institution,' said Prof. Benedict Oramah, President and Chairman of the Board of Directors, of Afreximbank. Prof. Oramah commended Libya for its investment in the Bank which demonstrates increased confidence in the organisation's activities, primarily its mandate of transforming African Trade. He noted that the shareholding in the Bank will help to expand its services, reach and influence in the region, besides enhancing its capital base. In acceding to the Establishment Agreement, His Excellency Dr. Khaled Al-Mabrouk Abdullah, Minister of Finance for the State of Libya, highlighted the importance of the partnership in supporting reconstruction and economic diversification efforts in his country and said that the nation's accession was a milestone in its journey towards rebuilding its economy and re-establishing its role as a regional trading hub. He said: 'Libya is grateful to His Excellency, Prof. Benedict Oramah, President and Chairman of the Board of Directors, of Afreximbank, for his persistent efforts in facilitating Libya's full participation in the Bank's foundational agreement. The acquisition of shares in Afreximbank solidifies Libya's position as a full member state and shareholder in this esteemed multilateral African institution. This represents a historic achievement, following our accession to the Bank's Establishment Agreement in October 2024. 'We regard this development as a critical step forward in Libya's journey towards greater economic integration within the African continent. Our accession as the 52nd African nation to Afreximbank underscores our commitment to fostering robust trade and investment relationships across Africa.' Dr. Abdullah noted that the partnership between Libya and Afreximbank would help unlock new avenues for economic growth, diversification, and development in his country. 'We eagerly anticipate leveraging the Bank's expertise and resources to support our national economic agenda and to contribute effectively to the advancement of intra-African trade and continental integration. We commend Afreximbank for its unwavering commitment to African economic advancement and look forward to a fruitful and mutually beneficial collaboration,' he added. Distributed by APO Group on behalf of Afreximbank. About Afreximbank: African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra- and extra-African trade. For over 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa's trade, accelerating industrialisation and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank has set up a US$10 billion Adjustment Fund to support countries effectively participating in the AfCFTA. At the end of December 2024, Afreximbank's total assets and contingencies stood at over US$40.1 billion, and its shareholder funds amounted to US$7.2 billion. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody's (Baa1), China Chengxin International Credit Rating Co., Ltd (CCXI) (AAA), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its equity impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure (together, "the Group"). The Bank is headquartered in Cairo, Egypt.
