The $1bn adjustment fund, established in 2023 to assist African governments and private actors to trade under preferential tariffs on the continent, will begin disbursements in 2025 with a main focus on manufacturing activities, African Continental Free Trade Area (AfCFTA) secretary-general Wamkele Mene says.
The fund, which is domiciled in Rwanda, has already mobilised up to $1bn in liquid capital and aims to raise an additional $10bn, with support coming from governments and the private sector. The fund is a form of blended finance, including grants and concessions.
African states that have ratified the AfCFTA may access this fund to mitigate negative effects which may occur when transitioning to the new trade regime.
The AfCFTA is a pan-African trade agreement which seeks to turn the continent into the largest regional free trade area, with most tariffs on goods traded between African countries eventually at zero, complete with a consumer base of 1.3-billion people and an estimated $31.1bn (R565bn) in export potential. It aims to lift up to 50-million Africans from poverty.
SA ratified the AfCFTA in 2019 and began trading with 12 African countries under the preferential regime in January, beginning with Kenya and Ghana. SA is the first among the four Southern African Customs Union (Sacu) countries to launch its preferential trade exports under the AfCFTA’s second Guided Trade Initiative.
Speaking on the sidelines of the AfCFTA business forum in Kigali, Mene said the adjustment fund sought to mobilise additional funds from the private sector, commercial banks and private equity firms.
“The AfCFTA secretariat and Afreximbank [African Export — Import Bank] will go on a road show to talk to investors across the continent, to have them invest in the adjustment funds so that more and more countries can be eligible for the support,” Mene said.
The board of the AfCFTA Adjustment Fund Corporation is set to discuss eligibility criteria over the next two days at the business forum.
“The ministers on trade will soon agree on the criteria for eligibility. And then, of course, the board itself and subcommittee, the credit subcommittee of the board, will have its own criteria from a lending standpoint,” Mene said.
“The role of the private sector becomes very critical because it is not the governments that are negotiating agreement that will be training, it’s the private sector. But we need the governments to establish the appropriate regulatory conditions for the trade to happen.”
Rwanda trade & industry minister Prudence Sebahizi said: “This forum presents an unparalleled opportunity for decisionmakers, public and private sector leaders, and partners to engage, collaborate and innovate in ways that will shape the future of intra-Africa trade.”
“Rwanda remains committed to being a catalyst for trade, innovation and sustainable growth. We are excited to host this transformative event, where together we will explore new pathways to achieve the AfCFTA’s vision of creating a single African market.”
The three-day conference will cover various trade issues including in sectors such as automotive, agriculture and agri-processing, transport and logistics, pharmaceuticals, digital trade, women and youth in trade.
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