Below are the specific objectives that the loan program aims to achieve:
- It will support the financing of import replenishment cost adjustment for African countries, helping them to meet their immediate import price increases, pending adjustments in domestic demand.
- The loan will also support the financing of oil and metal buybacks by African countries so that they can refinance oversecured loans in the context of the current high oil and metal prices. This, in turn, would allow African countries to free up more available cash to meet other urgent needs such as food and fertilizer imports, as well as debt servicing.
- The loan program also helps stabilize commodity export earnings to enable African countries [and companies] structuring and entering into derivative contracts a and stabilizing future export earnings.
- There is also a tourism revenue gap financing component of the loan that will be provided to central banks of African countries whose economies are largely dependent on tourism. tourist arrivals from Russia and Ukraine.
- There is also the National Export Earnings Acceleration Facility which will be used to accelerate the delivery of high-impact export-oriented projects. This will be done by accelerating access to foreign exchange to be used for importing essential equipment, technology and expertise for the completion of the project.
While commenting on the development, Afreximbank Chairman, Pro. Benedict Oramah, provided additional insight into how the loan program is expected to benefit African countries.
“I am delighted that our Board has approved the introduction of UKAFPA, once again demonstrating its responsiveness to the needs of African Member States and their citizens. This initiative will go a long way in avoiding the social anxiety and upheaval that could arise from impending food shortages and high costs of fertilizers and petroleum products,” he said.
Recall that Russia invaded Ukraine in February 2022. Since then, the two countries have been at war, with much of Ukraine’s infrastructure and economy decimated, even as many Ukrainians have had to flee. Meanwhile, around the world the ripple effect of the war has been felt, particularly across Africa where many countries depend on wheat imports from Ukraine. In addition, the energy crisis that resulted from the conflict, including skyrocketing energy costs, has also had a negative impact on the cost of living in many African countries.