The African Continental Free Trade Area (AfCFTA) Secretariat and the African Export-Import Bank (Afreximbank) have signed a Host Country Agreement with the Republic of Rwanda for the AfCFTA Adjustment Fund.
The $10 billion fund will be headquartered in Kigali, Rwanda. It will help countries to implement agreed protocols while supporting African firms to retool for effective participation in the new trading regime.
The AfCFTA Adjustment Fund will support AfCFTA State Parties to adjust smoothly to the new liberalized and integrated trading environment established under the AfCFTA Agreement by mitigating the potential adverse impacts of AfCFTA-induced tariff revenue losses. The fund will also help address the infrastructure deficits and supply chain bottlenecks to the implementation of the African Continental Free Trade Agreement.
Afreximbank established the AfCFTA Adjustment Fund, AfCFTA Secretariat, and the African Union Commission (AUC) following a mandate from the African Union (AU) Summit of Heads of State and Governments. It consists of three sub-funds: the Base Fund, the General Fund, and the Credit Fund.
The Base Fund will utilize contributions from AfCFTA State Parties and grants and technical assistance to address AfCFTA-induced tariff revenue losses. It will also support countries to implement the various protocols under the AfCFTA.
The General Fund will mobilize concessional finance to support the development of trade-enabling infrastructure and the execution of key industrialization initiatives, 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.
The Fund for Export Development in Africa (FEDA), the impact investment arm of Afreximbank, headquartered in Kigali-Rwanda, has been selected as the Fund Manager of the AfCFTA Adjustment Fund.
Dr. Vincent Biruta, Rwanda’s Minister of Foreign Affairs and International Cooperation stated that the Host Country Agreement reaffirmed the country’s commitment to the African Continental Free Trade Area and its potential to transform the continent’s economy. Professor Benedict Oramah, President and Chairperson of the Board of Directors, of the African Export-Import Bank, stated that “this defining moment is a testament to Africa’s unwavering determination to engineer Africa-led and Africa-controlled solutions to continental development challenges.” H.E. Wamkele Mene, Secretary-General of the AfCFTA Secretariat, said the fund is a critical instrument in the realization of the African Continental Free Trade Area.
Mrs. Kanayo Awani, Executive Vice President of the Intra-African Trade Bank at Afreximbank, commented that the signing of the Host Country Agreement is a critical step to operationalizing the Adjustment Fund. It facilitates the establishment of the Fund and its requisite structures in Rwanda. With the signing of this Agreement, the incorporation of the fund’s legal entities will be completed, as well as the setup of the necessary governance structures to facilitate its day-to-day operations. It breathes new life into the AfCFTA Agreement and empowers the AfCFTA Secretariat to deliver on the promise of the Agreement.
