I.A.M - Magazine - Page 15
LEADERS CORNER
The Bank has also provided $696 million as a partial
credit guarantee unlocking $3.9 billion for the
construction of the Central Corridor Standard Gauge
Railway to connect Tanzania, Burundi and the
Democratic Republic of Congo. And the Senegambia
Bridge has reduced travel times from days to just 10
minutes – creating 1,000 jobs, and reducing freight cost
by up to 90%.
All these outcomes offer confidence to the Bank to
aggressively pursue bigger and better cross border
regional operations – with a focus on transformation
through the concept of integrated economic
development corridors that are climate – smart.
The Bank has
invested over
$50billion in
critical
infrastructure
projects
Financial Integration to #IntegrateAfrica
But what is also key to the success of an integrated
Africa, is regional financial integration. Deepening
Africa’s financial integration is, therefore, another key
priority of the Bank’s Integrate Africa Strategy
Liquid and robust financial markets powered by well
capitalized, properly regulated institutions are essential
for economic growth and market connectivity, including
the formation, expansion and competitiveness of
cross-border and regional value chains.
Financial systems integration, therefore, leads to deeper
and more liquid capital markets, creates economies of
scale, and increases the supply of capital. Africa’s
financial markets must, as such, be strengthened to
effectively play their intermediary role in mobilizing and
allocating resources to priority sectors and initiatives that
generate positive returns, as well as expand
inclusiveness in support of market integration and
development.
The Bank’s objectives are to enable financial institutions
to become regional players able to facilitate cross-border
trade, banking, and payments, and support the
integration of capital markets. These are all key
components to the realization of the objectives of the
AfCFTA, which we ardently support.
AfDB Financial Integration Areas of support
Trade Finance
There is a strong nexus between intra-regional trade and
financial markets across various sub-regions on the
continent. Trade is an important driver of economic
growth. But Africa’s trade is characterized by limited
intraregional activity compared to other continents and
access to trade finance remains a major impediment to
the development of Africa’s trade sector.
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The Bank’s Trade Finance Programme (TFP) was
therefore, launched in 2013 to reduce the trade finance
gap in Africa by complementing the activities of private
sector players and regional Development Finance
Institutions (DFIs) already active in the market. In fact, we
either founded (e.g. Afrexim) or have invested equity and
more (e.g. TDB Bank) in these regional DFIs, supporting
them to scale up their trade finance activities.
Between 2013 to September 2024, the Bank supported a
total trade value of more than $11 billion involving 160
African Issuing banks (IBs) in 35 RMCS, including 12
transition states.
In terms of transactional characteristics and reach,
approximately 60 percent of the transactions supported
are attributable to Small and Medium Enterprises (SMEs)
while 20 percent of total value of trade supported is
intra-Africa trade and transition states account for 29
percent. These figures tell a story of how the Bank’s TFP
is serving the objective for which it was set: to alleviate
bottlenecks impeding intra-African trade by leveraging
comparative advantages of trade finance stakeholders
on the continent.
Payment Systems
The AfDB also invests in national and regional
interoperable payment systems to reduce costs of
transfers whilst increasing efficiency. The investments
support financial inclusion enabling interoperability of all
financial services regardless of the type of account
(wallet to wallet, wallet to bank and bank to wallet).
Project examples include the Digital Financial Services
Interoperability project in the West African Economic and
Monetary Union (WAEMU) zone.
