Funding resources for AfCFTA adjustments necessitate a $10 billion investment... Afreximbank allocates $1 billion.
AfCFTA's 5-10 year resource demands for the Adjustment Fund are estimated at an impressive $10 billion, with Afreximbank already allocating a substantial $1 billion. This fund is designed to help African countries navigate and leverage the African Continental Free Trade Area (AfCFTA). It's all about mitigating the impacts of increased competition and market shifts due to trade liberalization, particularly for vulnerable sectors and communities.
The Adjustment Fund consists of three main components: the Base Fund, the General Fund, and the Credit Fund. The Base Fund, funded by contributions from state parties and grants, tackles tariff revenue losses as tariffs are phased out and supports nations implementing AfCFTA protocols. The General Fund mobilizes concessional funding, while the Credit Fund gears up commercial funding, benefiting both public and private sectors.
During the official signing ceremony in Cairo, the AfCFTA Secretariat and Afreximbank sealed an agreement regarding the management of the Adjustment Fund. Prof. Benedict Oramah, Afreximbank's head honcho, emphasized the fund's importance for supporting public and private sectors, allowing them to address short-term disruptions and retool, reskill, and develop capabilities to produce value-added goods and services that can thrive in the AfCFTA environment.
According to Mr. Oramah, the Base Fund, already in motion, addresses urgent needs of state parties regarding tariff revenue losses and transposition costs. Preparations for the General Fund and Credit Fund are well underway, set to offer vital assistance to SMEs, women, and youth within the private sector.
The Adjustment Fund, combined with initiatives like the Pan African Payment and Settlement System (PAPSS) and the Intra-African Trade Fair, marks a significant stride towards a smooth AfCFTA implementation. Secretary-General of the AfCFTA, H.E. Wamkele Mene, highlighted the Adjustment Fund's crucial role in supporting AfCFTA state parties to manage tariff revenue losses and competitive pressure as they dismantle tariffs and implement the agreement.
This fund, mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for Trade, targets enhancing local production, supporting SMEs, and offering skills training programs. It is an essential instrument aimed at ensuring sustainable development across the continent while addressing the challenges faced by vulnerable sectors. Keep your eyes peeled for updates on this significant financial mechanism!
- The Adjustment Fund, established by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers, aims to enhance local production, support Small and Medium Enterprises (SMEs), and offer skills training programs.
- The articulated role of the Adjustment Fund is to ensure sustainable development across the African continent, while addressing challenges faced by vulnerable sectors during the implementation of the African Continental Free Trade Area (AfCFTA).
- The Base Fund of the Adjustment Fund, already in motion, addresses urgent needs of state parties, including tariff revenue losses and transposition costs, and benefits both the public and private sectors.
- Afreximbank is actively involved in the development of the Adjustment Fund, committing $1 billion to support African countries in navigating and leveraging the African Continental Free Trade Area (AfCFTA), with the aim of facilitating trade and business.
