Transforming Africa’s trade based on logistics

The title of this piece is partly derived from the theme of the recently held Annual General Meeting of the Afrexim Bank held in one of my favorite destination spots, Kigali, Rwanda, and from Efe Edjeba, the winner of Big Brother Nigeria reality TV show who refrained, and rightly so, that everything we do is based on logistics.

At the instance of Dr Benedict Oramah, President of African Export Import Bank (Afrexim), I was invited to this 24th AGM of the bank and one thing that particularly struck me was the giant strides the bank has made under the visionary stewardship of Dr Oramah and his management team. It is worth noting that he has been with the bank for the last 23 years in different capacities the last being Vice President Business Development and Corporate Banking and this probably explains why the bank posted stellar results in the last financial year. Callable capital rose from 460 million in 2015 to 568 million which in turn brought total shareholders fund and contingent capital to 2.2 billion dollars in 2016 a credit enhancement by the bank was equally undertaken and  that ensured their ratings by Moody from Baa2 to Baa1 no mean feat in this era of  economic contraction.

The bank was established interestingly in Nigeria in 1993 by African Governments, African Private and Institutional Investors amongst others to be a Continental Trade Finance bank to stimulate expansion, diversification and development of African trade and a center of excellence for same. The above background and subsequent results exemplifies why the discourse on Trade and Competitiveness. This, as my readers know, is one that interests me albeit being a member of the recently inaugurated Nigeria Industrial Policy and Competitiveness Advisory  Council (NPICAC).

By the way it has a mandate amongst its major terms of reference as boosting the contribution of manufacturing to the country’s GDP by 250% over a five year period, thus making Nigeria a hub for West Africa on the industrial front and taking advantage of Afrexim’s activities and support perfectly fits into this vision not only for Nigeria but for the entire Continent. We have since discovered that the level of intra-African trade is about 15%and if we could do more business with each other based on our respective comparative advantages, then we will be better for it as a continent and will not be subjected to the global vagaries of fossil fuel prices and the likes.

As a precursor it is important to let readers understand the importance of a bank like Afrexim in our quest for Trade transformation. The bank was set up as I highlighted to carry on the business of stimulating trade across the region but it has progressed  quite a bit with its unique bouquet of products that are tailored towards specific areas and three interest me particularly because of my Agricultural bias. This three particular schemes or programs aroused my interest instantly at the meeting which was well attended by the private sector and select public sector officials. They are the EXPORT DEVELOPMENT PROGRAMME, CONTRACT FARMING EXPORT AGRICULTURE and lastly INDUSTRIAL PARKS AND EXPORT PROCESSING ZONES  INITIATIVE. Let me speak to them briefly

The Export Development Programme according to the banks source document is actually the flagship development product  that the bank  uses to support decommoditisation of the continents export, this the bank does by combining Credit, risk bearing, twinning, market access and advisory services all geared towards creating non-commodity export products for sale to a broad range of export markets. The purpose in the main is to facilitate non- commodity export production like export manufacturing, which is targeted  at exploiting certain bilateral and multilateral market access opportunities open to the continent like the AGOA and Lome 11 convention amongst others and secondly promoting non- commodity export production. This is a needed one as we in Africa are confined to exporting raw commodities with no value addition.

As regards the Contract Farming For Export Agriculture, the scheme seeks to support the development and growth of contract farms on the continent, the bank does through this product facilitation of Access for African Agricultural entities to reliable and global markets. Its major plus is that it improves access to non- financial services and reduces production risk through access to inputs, extension and new technologies as well as longer term farming. Equally it ensures direct provision by Buyers and improved access to inputs through buyer credits and lastly helps planning and better utilization of capacities.

Lastly the programme which in my view will move the needle and transform radically our intra African trade numbers will be the industrial parks and export processing zones initiative; a model Nigeria is trying to replicate through the Ministry of Industry  Trade and investment. This scheme seeks to simply bring together financial(debt and equity investors as well as financiers) and non- financial stakeholders(governments, construction companies developers and managers of IPs and EPZ and export trading companies) to support the development of the hard infrastructure for IPs EPZs to increase value addition, facilitate international markets for made in Africa goods to ensure that goods produces go to market, conduct investment promotion activities to attract FDI and help bridge the information gap and lastly but not the least support the creation of the required soft infrastructure to ensure  its competitiveness.

How well the bank has fared this far can be gleaned from the support the bank is giving both budding and established players in the in the Continent viz-Dangote 1 billion dollars. Tony Elumelu;100 million dollar loan for expansion in Africa and lastly 10 million dollars for the Development Bank Of Rwanda amongst the plethora of countries and companies it supports.

The encapsulation of what is needed  to boost intra-Africa trade and by extension Transforming African trade is the political will and the urgent need to ensure movement of Goods is first served by easing the movement of people. This statement was harped on by no less a personality than President Paul Kagame of RWANDA  who is also doubles as the Chairman of the AFRICAN UNION at the close of the AFREXIM  Conversation. On his shoulders rests the heavy burden of encouraging his fellow African leaders on the continent(who are meeting this week in Addis Ababa Ethiopia) that the time to introspect is now and we should  rely less on the west and the oriental countries for finished products we can buy from ourselves and to ensure better Continental integration based on Logistics.