African Union nations are looking to raise $8 billion in a move to cushion the revenue losses for countries on the continent who have lowered their cross-border tariffs in support of the Africa Continental Free Trade Agreement (AfCFTA).
The cross-border trade agreement takes effect on the 1st of January and is geared towards driving inclusive and sustainable development in Africa.
The African Export-Import Bank (Afreximbank), initially provided $1 billion as part of its contribution to encourage participation in the AfCFTA and cushion possible losses.
“The $1 billion made available by Afreximbank will be used to leverage funding from other multilateral development-finance institutions, export credit agencies, commercial banks and donors,” Afreximbank told Bloomberg.
The world’s largest free-trade area intends to boost intra-African commerce by decreasing or eliminating cross-border tariffs on 90% of goods, enabling capital and people mobility and encouraging investments. According to David Luke, coordinator of the African Trade Policy Centre, the continent stands at more than $350 billion a year with trade and is projected to rise by 52 per cent over the next decade.