Since the commencement of the African Continental Free Trade Area (AfCFTA) in January 2021, the Secretariat keeps intensifying its efforts in making sure that no one is left out of the continent-wide pact.
It is for this reason that several mechanisms for supporting trade under the AfCFTA will soon be introduced.
One of such is the establishment of a trade finance facility for Small and Medium-scale Enterprises (SMEs) across the continent, so they can also benefit from the agreement.
According to Secretary-General of the AfCFTA, Wamkele Mene, the finance facility which will be set up with the help of commercial banks across Africa, will be funded with an amount of US$1 billion.
He made this announcement in a meeting with the press on Wednesday, January 13, 2021.
“We are working with commercial banks in Africa to raise a minimum of US$1 billion for a trade finance facility primarily for SMEs so that the benefits of this agreement, the market access that this agreement creates is not taken advantage of only by the big corporations on the African continent, but such that our SMEs, women in trade, young Africans in trade, can also have the opportunity to grow their businesses in support of trading under the AfCFTA,” he noted.
Pan-African payment and settlement platform
Also, the Secretariat will soon set up to a pan-African payment and settlement platform to solve the problem that comes with multi-currency trading.
This, according to Wamkele Mene, will help to “reduce the cost that is associated with converting local currency to the dollar in order to be able to transact under the AfCFTA”.
He stated, “One of the mechanisms that we are working on is the Pan-African payments and settlement platform which Afreximbank has agreed to provide the liquidity for the settlement and payments and initial amount of US$500 million so that when a trader in Ghana trading under the AfCFTA has to transact with a counterpart in Kenya, that Ghanaian exporter will be able to transfer funds in Ghana cedis to the other counterpart who will receive the funds in Kenyan shillings.”
Furthermore, the Secretariat will be introducing digitally-enabled platforms to make sure that there is interconnectivity on the African continent for business expansion and reaching new customers.
“On the AfCFTA app, a trader will be able to access a new market in a different part of the continent. Through digital-enabled platforms, we believe that we can accelerate interconnectivity particularly of SMEs across Africa so that we reach our goals of reducing trade and investment barriers in Africa in accordance with the objectives of this agreement,” H.E Mene pledged.