President Nana Akufo-Addo has enjoined key stakeholders on the continent, including the Bank of Ghana (BoG), to grow the capital base of the African Export-Import Bank (Afreximbank) – describing the bank as crucial for the continent’s economic prosperity.
Speaking at the opening of Afreximbank’s 30th Annual Meetings, President Akufo-Addo emphasised the need to support growth of the bank’s capital base from its current level of US$6billion to a level that enables it to effectively support economic growth on the continent, which has a potential gross domestic product (GDP) of US$3.4trillion.
President Akufo-Addo highlighted the importance of the Central Banks Deposit Programme (CENDEP) launched by Afreximbank to mobilise resources for the bank.
He urged the Bank of Ghana to proactively support the domestic resource mobilisation programme under CENDEP, which aims to enhance the utilisation of reserves held by African central banks. The programme has successfully reduced the cost of funding to African sovereign and corporate entities over the years, benefitting the continent’s trade and trade-related initiatives.
“I implore the Bank of Ghana to proactively support the domestic resource mobilisation programme launched by Afrexim under the Central Bank Deposit Central Banks Deposit Programme. Over the years, CENDEP has enabled Afreximbank to significantly reduce the cost of funding to African sovereign and corporate entities,” President Akufo-Addo stated.
In his remarks, President Akufo-Addo further highlighted the importance of capital and effective coordination to strengthen the development impact and financial wherewithal of African development finance institutions.
This, he said, is because many African development finance institutions remain under capitalised compared to their international counterparts. For instance, he noted that the Japan Bank for International Cooperation has a shared capital of approximately US$19billion while China EXIM has a capital of US$54billion, in contrast to Afreximbank’s US$6billion capital.
The president also acknowledged the historical challenge of abandoning promising financial institutions before they reach their full potential. He stressed that strong financial institutions are essential for the development of African economies, as relying solely on foreign capital is both risky and costly.
President Akufo-Addo stated: “The ownership of our financial institutions should be strengthened over time to enhance, continuously, their development and relevance.
“The reality is that unless we have strong financial institutions, we are not going to develop. As we have learned over the past decades, relying on foreign capital is both risky and costly. It has resulted in huge financial leakages due to the high cost of default-driven borrowing rates and interest payments that undermined the growth of our financial institutions, domestic resource mobilisation and private sector development through the cost of funds,” he added.
He also urged the bank’s management to develop an aggressive strategy to upgrade the bank’s rating from BBB to A, which would require strengthening governance, management structures and personnel.
Expressing gratitude to countries that have contributed to the ongoing general capital increase, President Akufo-Addo encouraged those who can afford it to go beyond their allocated share.
He emphasised that governments’ contributions to the capital of Afreximbank are not only a sound investment but also the best way to support private sector development and economic growth by increasing access to and lowering the cost of funds.
President Akufo-Addo highlighted the need to gain greater control over the extractive sectors and address illicit financial outflows from the continent, which would contribute to strengthening the capital of Afreximbank. He emphasised that continued growth of Afreximbank and the development of many African countries are intertwined, and it is crucial to support the bank in navigating challenges.
“I believe that if we are able to gain greater control over the huge elements that emanate from our extractive sectors, and to plug the holes that lead to significant outflows of illicit funds from the continent, we would be in a better position to strengthen the capital of Afreximbank,” President Akufo-Addo asserted.
Switching his focus to coordination with development financial institutions, President Akufo-Addo stressed the importance of better coordination and increased accountability to ensure these institutions work for the benefit of Africa and the African diaspora. He called on the African Union (AU) Commission to expedite the admission of Afreximbank as a specialised agency of the African Union at the forthcoming AU summit in July.
President Akufo-Addo emphasised that Afreximbank’s influence will be instrumental in the African Continental Free Trade Area’s (AfCFTA) success. As a champion of the AU financial institution, he urged all stakeholders to work together and enable Afreximbank to serve Africa even better and contribute to the continent’s economic transformation.
Afreximbank
During the 30th Anniversary Celebration and 30th Annual Meetings of shareholders of Africn Export-Import Bank (Afreximbank), Ken Ofori-Atta highlighted how under the leadership of Prof. Benedict O. Oramah, President and Chairman-Board of Directors, the bank disbursed over US$7billion to assist African economies in addressing the health and economic impacts of the pandemic; and in a landmark US$2billion financing deal in 2021, Afreximbank guaranteed the procurement of 400 million doses of Johnson and Johnson COVID-19 vaccines that provided access to 30 percent of Africa’s population and some Caribbean countries.
He stressed the need to build on a broader sense of shared responsibility and ensure that institutions are supported enough to crowd-in trillions of dollars’ worth of financing to Africa.
He believes that Afrexim, under the guidance of President Oramah, can contribute an incredible amount of work toward Africa’s collective goal of achieving a prosperous Africa within the next 30 years of the bank’s existence.
Mr. Ofori-Atta emphasised that setbacks will be inevitable on this journey – and as anyone who has ever tried to change anything will tell you, it is the difficult, not the easy, that imbues our souls with the kind of success that sustains.
Quoting Dr. Kwame Nkrumah, he called for the courage to dream, believe, dare, envision, fight, work and achieve, as the challenge ahead is great but noble and glorious.