Nigeria, Africa’s largest economy is among the beneficiaries of the $4 billion Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA), launched last week by African Export-Import Bank (Afreximbank).
The facility is more beneficial to the country in the area of fuel import, Benedict Oramah, president of Afreximbank, said during a virtual press conference on Tuesday.
“Nigeria is a member of the African Union and Afreximbank. Nigeria is able to access the facility. We supported fuel import and we are expanding that because there is an urgent need there. There are discussions going on with regards to funding. We are supporting Nigeria”, he said.
The programme, which amounts to US$ 4 billion, is a response to an urgent call for emergency intervention by member states of the Bank. He said UKAFPA-compliant financing requests received from across Africa, already exceeds US$15 billion.
But he said with the $4 billion the bank should be able to support up to $16 billion, leveraging on partnership. “Although we have made our own modest contribution, we are determined to do all we can, working with partners, not only to deal with the urgent short term demand but also to use the Africa Continental Free Trade Agreement (ACFTA) as an engine to make Africa more self-reliant going forward,” Oramah said.
He explained that the programme covers the import of food, fuel, and fertilisers and that some member countries have also come to enable them to cover the increased cost of subsidies for fuel, fertilisers, and some new programmes to subsidise food. He said in this case they are seeking financing to import food directly from the government so that they can serve them at a subsidised rate.
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Oramah noted that Russia and Ukraine are the breadbaskets of the world as they produce most of the world’s wheat, corn, sunflowers and a number of other items, the same thing applies to agrochemicals like fertilisers. “Africa is very dependent on all of these. Many countries in Africa import most of the wheat and the fertilisers from Russia and Ukraine”.
“So the effect has been rising food prices challenging the economic situation. There are indications that the continent may go back into recession. So our board has to act and on March 31, 2022, they approved a programme that we have put in place to support African countries at this time of crisis,” he said.
“We have also seen requests from countries that are producing metals and minerals and oil, who are now trying to push investment into those sectors to take advantage of rising prices. Most of the requests we are getting are intended to help cushion the rising food, fuel and fertilisers.”
One of the objectives of UKAFPA programme is import re-order cost adjustment financing, to help countries to meet immediate import price increases pending domestic demand adjustments.
Another objective is oil and metals buy-back financing to refinance over-collateralised loans in the context of the current high oil and metal prices, and thereby release more free cash flow for use in meeting other urgent needs – food and fertilizer imports and servicing the rising cost of debt.
