African development finance institutions must come together in partnership in order to more effectively tackle the challenges affecting the financing of intra-African trade, participants at the first ever continental conference on intra-African trade finance and payment systems have urged.

In discussions during the closing session of the two-day Intra-African Trade Finance and Payment Systems Conference held in Abidjan, the participants said that, as multilateral institutions in which African governments were key stakeholders, the institutions had the moral standing and capacity to gavlanise policy actions from the governments to make it possible to implement measures to address the major issues affecting intra-African trade finance.

The institutions did not face the same constraints which commercial banks and other similar entities confronted in trying to address issues of cross-border trade, they stated, adding that, with its trade finance mandate, the African Export-Import Bank (Afreximbank) was best positioned to champion that partnership.

The participants highlighted the important role of intra-African trade as a catalyst for economic growth in Africa and said that finding solutions to the issue of trade finance was critical to achieving that growth.

Recognising the challenge posed by settlements in the financing of trade among African countries, they recommended that Afreximbank should create a clearing house through which payments for intra-African trade would be carried out. According to them, the use of such a continent-wide clearing house would lead to significant reduction in the foreign exchange cost of such trade.

Another recommendation was for African central banks to be challenged to take a more continental outlook in making some of their policies, rather than continuing to operate in silos, as that would make them more amenable to adopting policies that do not create bottlenecks in the financing of cross-border trade.

In addition, it was recommended that Afreximbank should pioneer the creation of a network of African correspondent banks to make it easier for African traders to trade across borders.

In his closing remarks, Afreximbank President Dr. Benedict Oramah said that the conference had been convened to support the Bank’s objective of promoting intra-African trade as a strategic measure to address the continent’s dependence on commodities and curb its reliance on external markets.

The conference served as a platform for industry participants to exchange information on intra-African trade finance and payment systems and to identify solutions to the financing challenges confronting intra-African trade. Participants included chief executives and senior representatives of banks, law firms, think tanks, export credit agencies, logistics companies, regional economic communities, the African Union, central banks, other financial institutions involved in trade, and trading companies engaged in intra-African trade.

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Intra-African trade named path to Africa’s industrialization as finance and payment systems conference begins

The first ever continental conference on intra-African trade finance and payment systems and their impact on the achievement of enhanced trade among African countries opened in Abidjan on 2 May 2016 with Dr. Benedict Oramah, President of the African Export-Import Bank (Afreximbank), saying that putting Africa on the path to industrialization and greater relevance in global affairs called for the fostering of greater intra-African trade.

Dr. Oramah told guests at the opening of the Intra-African Trade Finance and Payment Systems Conference that the sorry state of affairs that had seen Africa staying at the lowest rungs of the development ladder was attributable to the fractious nature of the continent.

“With 54 countries, Africa is the continent with the highest number of constituent countries; it is the continent that is least interconnected infrastructure-wise; it is the region with the least intra-regional banking relationships; and, above all, it is the continent that trades the least with itself,” he said.

Dr. Oramah, reiterated Afreximbank’s commitment to being the intra-African trade bank envisaged by its founders, explaining that the institution had “developed solutions that touch the producers of goods and services, the traders and the buyers. We will be there from farm to mouth and from factory to the home!”

He pledged Afreximbank’s determination “to ensure that, in the foreseeable future, never again will intra-African trade be in the periphery of Africa’s international trade; never again will Africa’s economic fortunes be heavily tied to commodities; and never again will African economies be mere appendages of other markets”.

In her contribution, Fatima Haram Acyl, the African Union Commissioner for Trade and Industry, said that ensuring effective trade finance was key to the achievement of trade development across Africa through the creation of businesses and jobs.

Ms. Acyl urged for a review of the role African central banks in the development of the continent in order to ensure the existence of interest rates that served the needs of key sectors. According to her, continuing with the present high interest rate regimes was not sustainable.

She described intra-African trade as a critical part of the continental agenda and noted that that fact had been acknowledged by African heads of state through their decision to set up an African continental free trade area.

Africa could not continue to be exporters of raw materials, she argued, explaining that through the proposed continental free trade area, the continent could achieve the much needed structural transformation and sustainable growth.

Declaring the conference open, Adama Kone, Minister of Economy and Finance of Cote d’Ivoire, who stood in for Prime Minister Daniel Kablan Duncan, commended the work being done by Afreximbank to enhance intra-African trade and stressed the importance of capacity building and skills development as crucial elements in developing intra-African trade.

The opening of the conference was followed by the unveiling of a plaque to launch Afreximbank’s Intra-African Trade Strategy, which sets out the Bank’s intra-African trade finance and payment facilitation intentions.

The conference, which ends tomorrow, is providing a platform for industry participants to exchange information on intra-African trade finance and payment systems and to identify solutions to the financing challenges confronting intra-African trade.

Participants include chief executives and senior representatives of banks, law firms, think tanks, export credit agencies, logistics companies, regional economic communities, the African Union, central banks and other financial institutions involved in supporting trade in Africa. Others are from trading companies engaged in intra-African trade.