Afreximbank proposes $1 billion facility to support Egypt’s foreign currency liquidity

The African Export-Import Bank (Afreximbank) is ready to arrange a facility of up to $1 billion for Egypt’s central bank (CBE), underwriting $500 of the amount, to support the CBE’s efforts to boost foreign currency liquidity.

Afreximbank President Benedict Oramah has made this announcement in Cairo.

Presenting the proposal during a courtesy call on Tarek Amer, Governor of the CBE, on Wednesday, Oramah said that the Countercyclical Medium Term Trade Liquidity Facility would support imports of essential goods towards the sustenance of industrial activity in the country.

The facility could operate either as an allocation of trade finance lines of credit to key state-owned commercial banks, on the basis of a list of import letters of credit, with Afreximbank honouring due payments under such import letters of credit through drawings under the allocated line to be repaid by the Egyptian banks or it could be in form of a foreign exchange swap arrangement with the CBE under which Afreximbank would fund the CBE with U.S. dollars in exchange  for an equivalent amount of Egyptian pounds, he said.

Explaining that the facility was part of Afreximbank’s effort to support African central banks to improve foreign currency liquidity, Dr. Benedict Oramah, said that once the proposal received the favourable consideration of the CBE, Afreximbank would start mapping out the operational modalities with the relevant parties.

He informed the Governor that Afreximbank had initiated a $500-million Egypt-Africa Trade Promotion Programme aimed at facilitating trade between Egypt and the rest of Africa and at deepening industrial activity in Egypt by financing import of capital goods and supporting improved access of Egyptian entities to African markets.

The President announced that Afreximbank had identified Egypt as one of five hubs for the facilitation of intra-regional trade in Africa and was working to support the re-emergence of export trading companies across the continent.

Afreximbank would also avail its investment guarantee and country risk guarantee programmes to the Egyptian government in order to help attract foreign investment into the country, he added.

From his part, Amer welcomed the proposal to introduce the Countercyclical Medium Term Trade Liquidity Facility and encouraged Afreximbank to continue to create opportunities for Egyptian businesses to expand their operations to other African markets.