Secretariat, Afreximbank Sign Deal for Management of AfCFTA Adjustment Fund

ADDIS ABABA – The African Continental Free Trade Area (AfCFTA) Secretariat and African Export-Import Bank (Afreximbank), signed an agreement relating to the management of the Base Fund of the AfCFTA Adjustment Fund.

The adjustment Fund will support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA.

The two continental institutions signed the agreement on wednesday as per the mandate given to them by the Heads of State and Government of the AU to set up the fund in support of the AfCFTA State Parties, according to Afreimbank.



The Adjustment Fund consists of a Base, a General and a Credit Funds. 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 Bank said.

The General Fund, on the other hand, will mobilize concessional funding, while the Credit Fund will mobilize commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.

After signing the agreement, Wamkele Mene, Secretary General of AfCFTA Secretariat said the Adjustment Fund will assist State Parties to deal with short term tariff revenue losses as they dismantle tariffs and implement the Agreement.

“As we make significant progress in establishing schedules of tariff concessions, the finalization of the Adjustment Fund will enable us to maintain and even accelerate the momentum,” said Mene the head of the organ that coordinates AfCFTA’s implementation.

“It will help them mitigate revenue losses and competitive pressures that may result from reduction in tariffs and liberalization of markets in order to tap into the opportunities of the AfCFTA,” he said.

“This is another important step towards the successful implementation of the continental free trade agreement.”



The resources required for the Adjustment Fund over the next 5-10 years are estimated at $10 billion. Afreximbank said it has already committed $1 billion towards the Adjustment Fund.

Benedict Oramah (Prof.), President of Afreximbank, said that the funds will be key to address short term disruptions.

“Today we have launched the Base Fund of the Adjustment Fund to address urgent needs of State Parties relating to tariff revenue losses and the transposition costs to enable them to implement the AfCFTA Agreement,” he said.

Benedict said the General Fund and Credit Fund will be launched “very soon” with a view to address the needs of the private sector including the small and medium enterprises.

 

Featured Image Caption: Wamkele Mene, Secretary General of the AfCFTA Secretariat (left) and Benedict Oramah (Prof), President and Chairman of the Board of Directors of Afreximbank during the signing ceremony on February 9, 2022.

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