The African Continental Free Trade Area (AfCFTA) Secretariat with support from the African Export-Import Bank (Afreximbank) will introduce mechanisms for supporting trade under the agreement.
One of such mechanisms that the Secretariat is working on with Afrximbank is the Pan-African Payment and Settlement Platform.
Mr Wamekele Mene, the Secretary General of AfCFTA Secretariat, speaking at a virtual press briefing on the Status of AfCFTA, said the Bank had agreed to provide the liquidity settlement and payment with initial amount of US$500 million.
Trading under the AfCFTA started in earnest on January 1, 2021, following a five- and half-year period since negotiations were launched on June 15, 2015.
Tough negotiations were followed by signing of the Agreement on March 21, 2018, entry into force on May 30, 2019 and commencement of trading on January 1, 2021.
A total of 54 Member States of the African Union have signed, with some 34 countries depositing instruments of ratification with the Chairperson of the African Union Commission.
The main objectives of the AfCFTA are; to create a single market for goods and services, facilitate the movement of persons, promote industrial development and sustainable and inclusive socio-economic growth, and resolve the issue of multiple memberships in accordance with agenda 2063.
Mr Mene said the initiative would enable a trader, under the agreement to transact business with counterparts in other parts of Africa by exporting in local currencies.
“We want to reduce the cost associated with converting local currency into the dollar for easy business transactions,” he added.
He explained that with the partnership with the Bank, the platform would take the continent a step closer to finding solutions to the multi-currency trading on the continent.
The Secretary General said they were working with Commercial Banks on the African Continent to raise a minimum of one billion dollars for trade financing facility to support SMEs, so that they benefit from the agreement in the area of market access.
He said it was also to ensure that not only the big multinationals take advantage of the agreement but young Africans and women and that in due time, they would announce modalities for accessing the trade financing facility.
Mr Mene said the Secretariat was also introducing a digital enabling platform to make sure there was interconnectivity on the African Continent for business expansion and for reaching new customers.
He said with the digital platform, they believed they could accelerate interconnectivity, particularly for SMEs across the Continent to reach out to their goals of reducing barriers to trade and investments in Africa.
Professor Benedict Oramah, Afreximbank President, said the Bank designed the platform in partnership with AU to allow payments for goods and services, and intended as the first digital payment system across the entire Continent.
“It is a platform that will domesticate intra-regional payments, save the Continent more than five billion dollars in payment transaction costs per annum, formalise a significant proportion of the estimated US$50 billion of informal intra-African trade, and above all, contribute in boosting intra-African trade,” Prof. Oramah said.