REMARKS: AFREXINSURE

The remarks were delivered by Mr Jonas Mushosho, Principal Officer and Financial Services Expert at Afrexinsure, a subsidiary of the Africa ExportImport Bank (Afreximbank). He reminded the delegates that the 2023 LLZ Conference and Exhibition was taking place against the backdrop of the Ukrainian-Russian war and conflict which has resulted in erratic supplyshocks, global inflation, increased commodity prices, creating a potential debt crisis among some Africa countries and a potential global economic recession. Land-locked countries such as Zambia, Botswana, Malawi and Zimbabwe have been the worst-hit and affected. Out of the 32 land-locked countries in the world, 16 are found in Africa. Socio-economic development of landlocked developing countries continues to be severely hampered by factors such as the lack of territorial access to the sea, distance to overseas markets, numerous border crossing points, complicated transit procedures, poor infrastructure and high transit costs.

Ever since the establishment of the World Trade Organisation (WTO), the creation of the AfCFTA has formed the largest Free Trade Area (FTA) in terms of participating and Member States. Continental trade under the AfCFTA commenced in January 2021 (the AfCFTA has established a single market with a projected population of 1.7 billion people and $6.7 trillion in consumer and industry spending by 2030). The United Nations Conference on Trade and Development (UNCTAD) estimates that the AfCFTA might contribute to increased intra-African trade by as much as 33 percent and at the same time reducing continental trade deficit by some 51 percent.

However, in order to fully enjoy the benefits of the AfCFTA, there is need to overcome significant infrastructure challenges being faced by the continent in the transport and logistics sector. According to a United Nations Economic Commission for Africa (UNECA) study of 2021, investment in the transport and logistics sector is essential in order to facilitate Trade in Goods (TiG) and is predicted to gain at least 25 percent of intraAfrican trade gains in services and over 40 percent of the increase in services production in Africa. It is envisaged that all means of transportation will record increased traffic flows. However, in order to generate and record gains from the AfCFTA, coordinated regional infrastructure projects is needed. Therefore, it is crucial to address the urgent need for funding and developing suitable infrastructure and services in Africa to promote transport connectivity across the continent.

Afreximbank is key to various continental initiatives in the context of accelerating implementation of the AfCFTA, through the promotion of intra-African trade, industrialisation and export development and providing trade finance. It has rolled out several initiatives and products in order to stimulate Africa’s economic transformation. These include the Africa Trade Gateway (ATG) which is a digital super platform comprising digital solutions such as the Pan-African Payment and Settlement System (PAPSS), KYC due diligence repository (MANSA ), Trade Information Portal (TIP) and Trade

Regulations Information

Portal (TRIP). Others are the AfCFTA Adjustment Fund, the Africa Collaborative Transit Guarantee Scheme (ACTGS), Trade Enabling Infrastructure (TEI), the Export Trading Companies Initiative (ETCI), Global Facility for Intra-Champs (GFIC), Automotive Programme (AP), Creative Africa Nexus (CANEX) programme, industrial parks and Export Processing Zones (EPZs), African Quality Assurance Centres (AQACs) / Quality Infrastructure Programme (QIP), African Medical Centre of Excellence (AMCE), Afreximbank Guarantee Programme (AfGAP), supplychain financing products and the Intra-Africa Trade Fair (IATF) among others.

Some of the Afreximbank programmes, products and initiatives include the following:

• Bank’s commitment to financing intra-African trade is reflecting in the share of the Bank’s portfolio relating to IAT direction of trade growing to 28 percent in 2021 against a target of 24 percent set in 2016, when the share was only around 3 percent. Approximately $20 billion worth of support of intraAfrican trade and investments was disbursed during that period, and Afreximbank’s target is now to grow that to $40 billion.

Recognising that the new trade regime created by the AfCFTA may create short-term challenges for some state parties, in order to address the costs associated with the AfCFTA and maximise the benefits, Afreximbank and the AfCFTA Secretariat have been mandated by the African Union (AU) Assembly to establish and operationalise the AfCFTA Adjustment Fund. The costs under the Adjustment Fund are estimated at $10 billion and Afreximbank has already committed $1 billion. The Adjustment Fund will also support projects and transactions aimed at addressing challenges related to infrastructure, industrialisation, Regional Value-Chains (RVCs), retooling, re-skilling etc

• AfCFTA Secretariat and the Bank signed a Fund Management Agreement on 9th February 2022 and the AfCFTA Adjustment Fund is hosted in Kigali following the signing of the Host Country Agreement with the Republic of Rwanda on 10th March 2023 in Kigali, paving the way for the establishment of the requisite governance structures that will support the operationalisation of the Fund

• Afreximbank also made tremendous investments in the conceptualisation and development of a Pan-African Payment and Settlement System (PAPSS), which was endorsed by the AU Heads of State as a key instrument to support of the AfCFTA. The PAPSS will help Africans to pay for cross-border trade in national currencies and reduce the use of foreign currency in settling intra-Africa trade thereby potentially boosting intra-African trade by at least 40 percent. It will help the continent to save over $5 billion annually in intraregional payment charges paid to non-Africa entities and reduce intra-regional payment delays. The PAPSS was launched on 13th January 2022

• Bank partnered with the International Trade Centre (ITC) to launch the “How to Export with AfCFTA Training Programme”. The programme was developed to support operationalisation of the AfCFTA and to equip businesses with the skills to seize the export opportunities presented by the new trading environment. ITC and Afreximbank have made the programme’s online platform (to all 55 AU Member States) to ensure that previously marginalised groups including women and youth have access

• Bank developed and commenced implementation of its Export Trading Companies Strategy (ETCS) which provides financing and trade facilitation services to facilitate the emergence and expansion of Export Trading Companies (ETCs) across the continent as lead institutions to assist Small and Medium Enterprises (SMEs), informal cross-border traders and also large companies to participate in regional and international trade and global value-chains. Afreximbank also developed a model regulatory framework which will be included in the AfCFTA

• Intra-African Trade Fair (IATF): $32.6 billion worth of deals were generated and realised in 2018, attracting over 2’500 delegates and over 1’000 exhibitors from 45 countries. In 2021, despite the on-setting of the Covid-19 pandemic, $42.1 billion was realised, attracting over 32’541 participants (12’985 people attended in person and 19’556 participated virtually, via the IATF virtual platform) and over 1’501 (in person and virtually) exhibitors from 69 countries (46 African countries). The 2023 IATF will take place in

Ivory Coast between 21-27 November 2023:

 Freedom of transit and adequate transit facilities are crucial for the overall development of landlocked developing countries. Transit costs add to already high transportation costs in Africa, and this affects intra-African trade and industrialisation ($450 per truck per day). For example, 1’262 shipments from one (1) African country in Southern Africa to another country in the same region, would today require 64’362 documents to conclude, which equates to 758’462 pages. This is clearly not sustainable and is a key factor causing the crippling delays experienced in moving goods across African borders. In order to address the transit challenges, Afreximbank has developed the African Collaborative Transit Guarantee Scheme (ACTGS). The ultimate objective of the ACTGS is to allow goods to move freely within RECs or throughout the continent under a single technologyenabled continental bond. This is expected to have significant boost in intra-African trade volumes as bottlenecks at borders are eliminated

 Afreximbank, in collaboration with the AfCFTA Secretariat, has been working with the COMESA Secretariat to pilot the scheme before it is rolled out to the whole continent. The aim is to provide a single Continental Transit Guarantee Scheme (CTGS). The Bank signed the Instrument of Accession to the Inter-Surety Agreement for the Implementation of the COMESA Regional Customs Transit Guarantee / Bond Agreement to implement the scheme. The Bank has set aside $1 billion for the entire continent of which $200 million is earmarked for the COMESA region.

Report: Land-Linked Zambia @2023: A Transport & Logistics Event

Discussions are at the final stage for a transit facility agreement in favour of the Zambia Customs and Forwarding Agents Association (ZCFAA) for affordable transit bonds to facilitate cross-border trade. It sets the stage for the implementation of the Afreximbank African Collaborative Transit Guarantee Scheme (AACTGS), a programme designed to facilitate the smooth transit of goods across Africa through a continent-wide single technology-enabled transit guarantee scheme. The Transit Guarantee Scheme is expected to lead to cost-savings of more than $300 million per year. The implementation of the continental scheme will be supported by other trade facilitation measures aiming to mitigate the risks associated with transit like the Regional Electronic Cargo Systems (RECG) and e-seals to secure, monitor and secure cargo in transit

 Bank also established

Afrexinsure, a subsidiary of the Afreximbank, which is an insurance management services company offering specialty insurance solutions for trade and trade-related investments across Africa.

AfrexInsure is a single-entry point for a business’s specialty insurance needs and assist in optimally managing its risks.

AfrexInsure offers:

 Focal point for specialty insurance solutions and ensuring that the rightfit insurance solutions are secured

 Vital insurance solutions for trade and traderelated investments across Africa

 Access to quality, bestin-breed specialty insurance

 Tailor-made specialty insurance solutions

 African knowledge and risk expertise by leveraging its presence across the African continent and deep understanding of the African market

The following are some examples of the insurance solutions that Afrexinsure offers: cargo, construction, operations and energy.

Afreximbank recommends that African businesses engage them to discuss the various products on offer and programmes of Afreximbank and all its subsidiaries.

Afreximbank is steadfast in its commitment to promoting intra-African trade and investment. To that end, the organisation is prepared to collaborate with others in the public or private sector to ensure that adequate resources (both financial and non-financial) are in place, allowing for both adaptations to the world’s ongoing turbulence amid global crises and success in the new business environment brought about by the AfCFTA. It’d be beneficial for African stakeholders to participate in the 2023 IATF. Registrations could be made on https:// www.intrafricantradefair.com/