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AfCFTA: Afreximbank plans $1bn support for countries suffering revenue losses
AFRICA’S trade finance bank, African Export–Import Bank (Afreximbank), says it will institute $1-billion facility to support countries suffering revenue losses due to the implementation of Africa Continental Free Trade Area (CFTA).
Afreximbank President Professor Benedict Oramah in address to a recent African Union (AU) summit in Niamey said AfCFTA does not represent revenue loss.
His words: “ If any country experiences revenue loss, it is because they didn’t pursue a manufacturing program. Every African nation within AfCFTA, must commit to it’s own industrlialisation plan. That is the right and only way to benefit fully from AfCFTA.”
In the same way the pan-African multilateral trade finance institution on July 7, launched the Pan-African Payment and Settlement System (PAPSS), which it believes will transform how Africa trades.
Professor Benedict Oramah said, “PAPSS is intended to make payments easier in local currencies.
“If a Nigerian wants to buy goods from Ghana, the Nigerian will pay for the goods in Naira, while the Ghanaian supplier will get paid in the Ghanaian Cedi,” he clarified.
According to him, Afreximbank’s Pan African Payment and Settlement System (PAPSS), will introduce a simplified, low-cost and risk-controlled payment clearing and settlement system to help integrate Africa financially, and spur economic growth and intra-Africa trade and commerce.
Meanwhile, covering a population of 1.2 billion people, the Africa Continental Free Trade Area aims to boost intra-African trade levels, and eventually create a single continent market spanning from the Red Sea to the Atlantic.
With the formal launch done, the count down to trading under CFTA rules 12 months from now, begins.
But between now and July 1, 2020, there is much to be done, with some countries still deeply concerned about potential revenue losses.
The CFTA according to analysts is going to take away six per cent of the tariffs down to zero on 90 per cent of the goods .
“Our board has approved a $1 billion CFTA Fiscal Adjustment facility to support countries that will suffer fiscal revenue losses as a result of the CFTA implementation. We hope that this well help countries to accelerate the ratification of the CFTA,” Oramah, said.
By removing tariffs on 90 per cent of goods, and non-tariff barriers, the CFTA aims to boost the proportion of intra-African trade to 60 per cent, by 2022.
But most of that trade, especially outside monetary unions, takes place in a third currency.
Afreximbank estimates that currency conversions on billions of transactions cost the continent at least $5 billion a year.
AfCFTA: Afreximbank plans $1bn support for countries suffering revenue losses
Tribune Online
Source: Tribune
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