The African Export-Import Bank (Afreximbank) has launched a new fund to provide seed capital to African exporters. Baptized as Fund for Export Development in Africa (FEDA), the development-oriented subsidiary has been set up with an initial USD 100 Mn.
The Mauritius-based fund expands the bank’s offerings to accommodate equity investments while being saddled with the implementation of the Afreximbank ’s aim to support companies within a range of sectors. Agriculture, manufacturing, consumer and retail, financial technology, travel and tourism, transport and logistics and industrial parks are the sectors bound to benefit from the newly-launched fund.
According to reports, the bank is specifically targeting SMEs and other business activities that bolster intra-African trade as well as value-added exports. The USD 100 Mn will be a fallback facility for related financial, non-financial and support services. The aim of FEDA is to invest USD 10 Mn and further raise USD 450 Mn in foreign direct investment by the end of 2019.
“The long-term objective of FEDA is the provision of equity capital and related financial, non-financial and support services to operators in Africa’s tradable and support sectors, with emphasis on activities that support intra-African trade and value-added exports,” reads part of the statement from Afreximbank.
This development is sequel to Afreximbank’s rollout of a variety of other programs to support intra-African trade. As far as the formation of the African Continental Free Trade Area (AfCFTA) is concerned, the focus of the bank is quite important and could not have come at a better time. The agreement for the trade, which was made in March, is currently undergoing ratification across Africa. As of now, it also has the backing of more than 55 African Union member states, with nine countries have ratified it to date.
Philip Kamau, Chief Executive Officer (CEO) of FEDA, said that a feasibility study conducted for Afreximbank had identified a funding gap which was inhibiting intra-African trade. “FEDA had, therefore, been set up to provide equity and to leverage FDI to help close that gap,” he said.