To boost access to trade finance, the African Export-Import
Bank (Afreximbank) has entered into an agreement to introduce a facility and
associated instruments to alleviate the liquidity challenges confronting the
financial sector in Zimbabwe.
The Afreximbank Trade Debt-backed Securities (AFTRADES)
will be provided to participating banks as debt securities that could be used
as collateral for interbank funds placements in order to promote interbank
dealings among Zimbabwean Banks active in trade finance, according to the terms
of a memorandum of understanding signed on by Afreximbank, the Zimbabwe
Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe.
“Our
objective is to use this facility to enable trade finance banks in Zimbabwe to
access much-needed liquidity from cash-surplus banks in the country, thereby
increasing their capacity to deepen their trade finance activities,” said
Jean-Louis Ekra, President of Afreximbank, after signing the memorandum of
understanding in Cairo on 10
February. Patrick Chinamasa,
Minister of Finance and Economic Planning, and Dr. Charity L. Dhliwayo, Acting
Governor of the Reserve Bank, had signed it on 31 January on behalf of the
Zimbabwean parties.
Mr. Ekra said
that Afreximbank’s decision to introduce the facility was motivated by its
recognition of the serious constraints limiting the access of Zimbabwe’s trade
finance banks to funding as a result of the liquidity challenge confronting the
financial sector.
Under the terms of the memorandum of understanding,
AFTRADES would be structured as a collateral swap involving the issuance of
securities by Afreximbank to participating banks in exchange for trade–related
collateral or securities presented by those banks.
The Government of Zimbabwe, through the Ministry of Finance
and Economic Development, will serve as the facility’s guarantor and liquidity
support contributor, up to agreed levels, while the Reserve Bank of Zimbabwe
will grant the regulatory approvals required by the participating banks. In
addition, the Reserve Bank will provide the infrastructure required for the
implementation and administration of the facility.
Only
solvent banks which are not facing fundamental problems of viability will be
eligible for the facility, according to the memorandum.
About Afreximbank:
The African Export Import Bank was established in October 1993 by
African governments, African private and institutional investors, and
non-African investors to finance and promote intra- and extra-African trade.
Its two basic constitutive documents are the Establishment Agreement, which
gives it the status of an international organization, and the Charter, which
governs its corporate structure and operations. Since 1994, the Bank has
approved more than $25 billion in credit facilities in support of African
trade, including $3.71 billion in 2012. Afreximbank is headquartered in Cairo.
For more information, visit: www.afreximbank.com
Manal Mounir Hendy
Associate,
External Communications
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