Operationalization of AfCFTA Adjustment Fund MoU signed in Rwanda
The AfCFTA Secretariat and the African Export-Import Bank (Afreximbank) signed the Host Country Agreement for the AfCFTA Adjustment Fund with the Republic of Rwanda.
The Agreement was signed by H.E. Wamkele Mene, Secretary-General of the AfCFTA Secretariat; Mrs. Kanayo Awani, Executive Vice President, Intra-African Trade Bank at Afriximbank; and Dr. Vincent Biruta, Minister of Foreign Affairs and International Cooperation of the Republic of Rwanda, paved the way for the operationalization of the AfCFTA Adjustment Fund.
The US$10 billion fund, headquartered in Kigali, Rwanda, is an important instrument in the realization of the African Continental Free Trade Area. It will help countries implement agreed protocols and support African companies to effectively participate in the new trading regime. The AfCFTA Adjustment Fund will support AfCFTA State Parties to smoothly adjust to the newly liberalized and integrated trading environment established under the AfCFTA Agreement by mitigating the potential adverse effects of AfCFTA-induced tariff revenue deficits. Also, the fund will help address infrastructure constraints and supply chain bottlenecks for the implementation of the African Continental Free Trade Agreement.
Established by Afreximbank, the AfCFTA Secretariat and the African Union Commission (AUC) following the mandate of the African Union (AU) Summit of Heads of State and Governments, the AfCFTA Adjustment Fund consists of three sub-funds, namely, the Base Fund, the General Fund, and credit funds. The Base Fund will use contributions from AfCFTA State Parties as well as grants and technical assistance to address AfCFTA-induced tariff revenue deficits. It will also support countries to implement various protocols under AfCFTA. The General Fund will raise concessional finance to support the development of business-enabling infrastructure and the execution of key industrialization initiatives, while the Credit Fund will be used to raise commercial funding to support both the public and private sectors as they adjust and be able to take advantage. Opportunities created by AfCFTA.
The Fund for Export Development in Africa (FEDA), the impact investment arm of Afreximbank, headquartered in Kigali-Rwanda, has been selected as the fund manager of the AfCFTA Adjustment Fund.
Dr. Vincent Biruta, Rwanda’s Minister of Foreign Affairs and International Cooperation, said: “As we sign this host country agreement for the AfCFTA Adjustment Fund, we show our commitment to the African Continental Free Trade Area and its potential to transform the continent’s economy. reaffirm commitment. This Fund will play an important role in supporting African countries to adjust to the new realities of the free trade area and seize the opportunities presented by it. We will work with the AfCFTA Secretariat and Afreximbank to ensure its success Hope to work together.
Professor Benedict Ormah, President and Chairman of the Board of Directors of the African Export-Import Bank, said, “This simple ceremony marks another historic milestone in the implementation of the AfCFTA and moves Africa closer to achieving its trade and economic transformation agenda. He added that “this pivotal moment is a testament to Africa’s unwavering determination for Africa-led and Africa-controlled solutions to continental development challenges.” He reiterated Afreximbank’s unflinching support for the AfCFTA, saying It is reported that “Afreximbank has committed USD1 billion to the USD10 billion Adjustment Fund and provided USD10 million as a seed grant to the Base Fund. The Bank is working with the AfCFTA Secretariat to mobilize additional resources from other financial institutions and like-minded partners.
HE Wamkele Mene, Secretary-General of the AfCFTA Secretariat, said: “The AFCFTA Adjustment Fund is an important instrument in the realization of the African Continental Free Trade Area. The Fund will, among other things, address potential tariff revenue losses, lack of infrastructure to facilitate trade development and addresses potential supply chain disruptions that States Parties may face in the implementation of the African Continental Free Trade Agreement.
Mrs Kanayo Awani, Executive Vice President – Intra-African Trade Bank, Afrexibank, commented: “The signing of this Host Country Agreement is an important step for the operationalization of the Adjustment Fund, as it will facilitate the establishment of the Fund and its requisite structures in Rwanda. With the signing of this agreement, the incorporation of the legal entities of the Fund will be completed, as well as the establishment of the necessary governance structures to facilitate its day-to-day operations. It breathes life into the AfCFTA Agreement and Empowers the AfCFTA Secretariat to deliver on the promises of the Agreement.