The African Continental Free Trade Area (AfCFTA), with its partners, has set up an adjustment fund to enhance the industrialisation and export capacity of African Union (AU) member states, Wamkele Mene, Secretary-General of the agency, said Wednesday.
Mene said this via teleconferencing during the launch of the 2023 Africa Trade Barometer Report by Stanbic Bank Ghana, adding that the fund would also cushion weaker countries as they adjust to the dynamics of new trading regime on the continent.
The secretary-general stated that given the different levels of economic and industrial development of the various member states, the AfCFTA Adjustment Fund is a critical tool to enable all the countries that ratified the AfCFTA agreement to participate fully and effectively in trade.
“This fund is important at this stage of the implementation to ensure that countries that do not have the export readiness or the industrial capacity get the support to improve and enhance their export and industrial capacity,” Mene stated.
The secretary-general added that as countries reduce and eliminate tariffs, the AfCFTA Adjustment Fund would provide them with an alternative support mechanism to withstand any harsh effects of the transition.
So far, he said Afreximbank had supported the fund with an initial capital of one billion U.S. dollars, with more support needed to raise to 10 billion dollars.
Mene urged the Standard Bank Group, the mother company of Stanbic Bank Ghana, and other commercial banks on the continent to consider investing in the fund.
The African Union (AU) heads of state mandated the AfCFTA Council of Ministers responsible for Trade, Afreximbank, and the AfCFTA Secretariat to establish and operationalise the AfCFTA Adjustment Fund through a general partnership named the AfCFTA Adjustment Fund Corporation, based in Rwanda.
The fund aims to support countries and private entities through financing, technical assistance, grants, and compensation funding in their transition to the new trading regime and mitigate any negative impacts that may arise during this process.
By providing targeted support, the Adjustment Fund aims to ensure that no country is left behind and that the benefits of the AfCFTA are shared equitably and sustainably across the continent.