Nigeria’s contributions to African trade may increase significantly in the near future as Afeximbank has unveiled plans to roll out a payment system that would enable intra-African trade to be consummated using domestic currencies.
Besides, the bank also disclosed that it has approved over $26 billion in support of Nigerian public and private sector entities since its inception in 1993.
Executive Vice President, Corporate Governance and Legal Services, Afreximbank, George Elombi while addressing participants that gathered at the Intra – Africa Trade Fair (IATF) 2021 official Nigeria roadshow said the initiative is expected to enhance industrialisation and export development in Africa as well as reduce over dependence on foreign currencies.
According to him, despite Nigeria’s status as the largest economy in Sub-Saharan Africa, representing about 17 per cent of the African economy and about 64 per cent of the economy of West Africa by GDP, its export contribution to the African region remains at 20 per cent while import constitutes about seven per cent.
But with the new payment initiative, Nigeria can sell to other African countries in Naira and receive Naira in Nigeria thereby increasing its trade export.
To ensure sustainability and trust, Elombi said the group of African central bank governors would govern the initiative in its entirety.
“It has become obvious to us that there is a need to reduce our dependence on foreign currency for our trade. The growth of intra African trade has been affected in many ways.
“The market fragmentation, lack of economy of scale, over reliance on primary export and weak value chain. The result has been low circa in intra African trade.”
He said the bank targets an Intra African trade growth of 25 per cent by 2025 from the current 17 per cent.
On the 2021 IATF, he said the programme is intended to enhance the trade of African states among themselves and to meet the objectives of agenda 2063 as declared by African Heads of State.
He stated that the bank anticipates maximum support from Nigeria, considering its continued support to the economy through various funding programs to boost businesses in the country.
According to him, the total loan approvals for Nigeria from January to August 2021, were in excess of $1.89 billion while the bank’s total loans exposure to Nigeria at the end of August 2021 hits US$5.5 billion, representing 26.8 per cent share of the bank’s total loans and advances.
Therefore, he urged the government at all levels and the organised private sector to provide the necessary support to the bank by mobilising businesses, including women in business and the SME’s, to participate and take advantage of the benefits of the IATF.
Executive Director/Chief Executive Officer of Nigerian Export Promotion Council (NEPC), Olusegun Awolowo said IATF offers Nigerian businesses the platform to leverage regional value chains and extend their operations into the advanced level in the industry to satisfy rules of origin requirements, enjoy the duty waiver and mutual recognition arrangements that will accrue from AfCFTA.
Beyond IATF, he pointed out that AFREXIM Bank has been contributing towards promoting trade and investment in Nigeria with the signing of a $1 billion Memorandum of Understanding (MoU) on the Nigeria-Africa Trade and Investment Promotion Programme (NATIPP).
According to him, the MoU was signed between AFREXIM Bank, NEPC and Nigeria Export – Import Bank (NEXIM) with the aim of identifying, preparing and appraising trade transactions and projects, exploring co-financing and risk and knowledge sharing opportunities to enhance Nigeria’s participation in intra-African trade.