The African Export-Import Bank (Afreximbank) has launched a $4bn credit facility to assist African countries and businesses affected by the Russia-Ukraine war.
The Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA) aims to help countries meet immediate import price increases and refinance over-collateralised loans as a result of high oil and metal prices.
It will also help African countries and companies stabilise commodity export revenues by structuring derivative contracts. In addition, support will be extended to the central banks of tourism-dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine.
The bank says that UKAFPA–compliant financing requests received from across Africa already exceed $15bn, and that there is “some urgency to meet these requests to avoid catastrophic social conditions across Africa and reduce the risk of their morphing into political challenges”.
Afreximbank says that funds from the facility – a response to “an urgent call for emergency intervention by member states” – will help to free up cash flow so that countries can meet “urgent needs including food and fertiliser imports and service the rising cost of debt”.
“Given the importance of both Russia and Ukraine as sources of crude oil and gas, raw materials and grains, the outbreak of the conflict has wider repercussions on a global scale, including adversely affecting African economies, especially those that rely heavily on grain, fertiliser and fuel imports,” the bank says.
Benedict Oramah, president and chairman of Afreximbank said:
“We must now add the consequences of the ongoing Ukraine crisis to the catalogue of emergencies a strong Afreximbank has to contend with… This initiative will contribute immensely to averting social anxiety and upheaval that may arise from looming food shortages and high costs of fertiliser and petroleum products.”
Heavy impact on Africa
Experts say that the economic fallout of the war in Ukraine will be substantial for Africa, leading to higher food prices, especially in countries which import crops from the region. Non-oil and gas producers on the continent also face rising bills.
Ngozi Okonjo-Iweala, director general of the World Trade Organisation, told the UK’s Guardian newspaper that 35 African countries were dependent on food imported from the Black Sea region.
“I think we should be very worried. The impact on food prices and hunger this year and next could be substantial. It is poor countries and poor people within poor countries that will suffer the most.”
IMF chief Kristina Georgieva says Africa is vulnerable through increased food prices, higher fuel prices, lower tourism revenues, and difficulty accessing capital markets.
In March, Kenyan presidential candidate Raila Odinga said the country stands to lose $100bn in exports to Russia as a result of the Western sanctions regime imposed in response to the conflict.