Abuja, Nigeria, January 26, 2009
Chief Executive Officer, Africa Finance Corporation (AFC), Mr. Andrew Alli
The Resident Representative of ADB, Mr. Herve Assa
Senior Executives of AFC and Afreximbank
Ladies and Gentlemen of the Press
Distinguished Ladies and Gentlemen
It is with great pleasure and a sense of satisfaction that I welcome you to today’s event. We are particularly excited at the opportunity to enter into a Cooperation Agreement with the Africa Finance Cooperation, a sister Pan- African financial institution, especially at this time when international financial institutions are gradually withdrawing their support for African trade finance due to the current global financial crisis. We are more than convinced that a collaboration of this nature between AFC and Afreximbank will provide an enduring support that will justify investments made in both our institutions by our shareholders and member countries.
Distinguished Ladies and Gentlemen,
There is no doubt that recent events in the global financial markets are threatening to take Africa back to the dark days of the 1980s. The dark days when letters of credit originating from Africa could only be confirmed on full cash-covered basis; the dark days when even cash-backed import financing deals for African importers attracted charges of up to 15% per annum; the dark days when structured trade finance was the only way of financing African exports; and the dark days when African governments travelled the world begging for grants. Today, distinguished Ladies and Gentlemen, international banks have again massively cut credit lines to Africa but for a different reason: It is not because of country risk; not because of weak financial system; and not because of poor
absorptive capacity. Thanks to tremendous progress Africa has made through years of economic reform, many appear well prepared to absorb the prevailing negative economic shocks. The cut-back in credit lines is therefore rather because many international banks are on the brink of failure due to large losses arising from huge so-called “toxic assets” on their balance sheet. And because of the interconnected global financial system and the dominance of global trade finance infrastructure by international commercial banks, the ‘toxic waste disease” is rapidly being transmitted to African financial markets and economies. Our over-reliance on these global financial institutions have often blinded us from looking inwards for solutions to challenges we face. Recent global events are therefore a wake-up call to us for a change in attitude .
It is on account of the foregoing that under Afreximbank’s Third Plan of strategy, emphasis has been placed on pursuing pan-African initiatives that make sense. Our studies indicate that if African financial institutions are able to share information and collaborate, the over-reliance on foreign banks will be reduced; intra-African trade and banking relationships will blossom; and Africans can stand proud to be countered as part of the solutions rather than a source of problems. This philosophy is at the foundation of some pan-African initiatives we have spear-headed, such as the creation of an African Bankers’ Association; the development and implementation of an African Correspondent Banking and Letter of Credit Confirmation Scheme, dubbed Africorrbanking; an Annual Trade Finance Seminar for African bankers; and other initiatives we are currently pursuing with the African Development Bank, Africa Re, Shelter Afrique, Ecowas Regional Investment Bank, PTA Bank, and of course Africa Finance Corporation.
This Agreement we are signing today, therefore, underscores our strategic focus of leveraging pan-African partnerships for addressing the challenges before our Continent, especially in the context of the prevailing global financial crisis. It is our firm belief that our common Member States can only begin to appreciate the value of the institutions they created through creative, result-oriented partnerships of the kind we are celebrating today.
Before entering into this relationship, distinguished Ladies and Gentlemen, we had actually begun to work together with AFC. We collaborated in providing
funding to Union Bank of Nigeria (UBN) in support of one of its key customers through a risk-sharing approach. I am happy to announce that that transaction is progressing very well and that that the Managing Director of UBN, Dr. Barth Ebong, is here today to testify to this fact. Thank you Barth for joining us today! We have also mapped out how our joint effort can assist us in providing significant volumes of trade finance support to our mutual clients. We, for example, look forward to active collaboration in expanding the African Letter of Credit Confirmation Scheme I had earlier alluded to.
Looking forward, AFC and Afreximbank will jointly cooperate in (i) identification, preparation and appraisal of projects; (ii) co-financing of projects and the sharing of financing risks; (iii) implementing the African Export-Import Bank African Letter of Credit Scheme; Afreximbank Country-Risk Guarantee Facility and (iii) Depository relationship. We are convinced that our joint effort will contribute in ameliorating the economic problems of our common Member states and shareholders, especially at this time of great difficulties.
Permit me now, Ladies and Gentlemen, to thank all those who contributed in making today’s event possible. I will like to thank the management and staff of AFC for working tirelessly with us in fashioning a common strategy in support of our various clients. In, particular, I will like to thank the Chairman of AFC, Professor Soludo for joining us today. His presence is no doubt a reflection of his appreciation of the tremendous opportunities an AFC/Afreximbank partnership can unleash. I will also like to use this opportunity to thank the Ladies and Gentlemen of the Press for finding time to join us on this occasion. I hope they will give this event the publicity it deserves.
On behalf of the Board and Management of Afreximbank, we wish to welcome you all to this epoch making event. I thank you for your kind attention.
Jean-Louis EKRA
President
African Export-Import Bank