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$4 billion to ease the shock on African grain and oil imports

(Agence Ecofin) – The conflict between the Ukrainians and the Russians is causing instability in world trade. Afreximbank wants to provide solutions for African countries. But the needs expressed are already more numerous than the funds that will be available.

The board of directors of Afreximbank, the African import-export finance bank, has approved the establishment of a $4 billion fund called the “Ukraine Crisis Adjustment Trade Financing Program for Africa (UKAFPA)”. Its objective is to enable African countries that import cereals and petroleum products to cushion the price shock caused by the conflict between Russia and Ukraine, due to supply disruptions.

“I am delighted that our Board has approved the introduction of UKAFPA, demonstrating once again its responsiveness to the needs of African Member States and their citizens. This initiative will go a long way to averting the anxiety and social unrest that could arise from impending food shortages and high costs of fertilizers and petroleum products,” declared Benedict Oramah, president of the multilateral institution, commenting on this news.

The initiative was also hailed by the Senegalese President, Macky Sall, who currently serves as President of the African Union (AU). ” Afreximbank has once again shown the way forward in enabling the continent to tackle the impact of the crisis head-on, through financing solutions tailored to the specific challenges faced by our member countries,” did he declare.

According to the press release providing the information, requests from African countries to benefit from these funds have already reached $15 billion. If inflation is the most visible and most commented form of the consequences of the Russian invasion in Ukraine, the conflict is currently causing profound instability in international trade.

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Several African countries, notably The Gambia, need revenue from tourism to support their economies. However, the rises in energy prices in the main European economies are reducing the share of the budget reserved for leisure expenditure. A constraint that arises as the world is just emerging from the confinements linked to covid-19.

The other consequences affect the prices of products such as gasoline, diesel, wheat, of which Russia and Ukraine are major potential suppliers. Rising oil prices are also likely to push up shipping costs, generating even more inflation in countries. The UKAFPA fund aims to provide responses to these different types of challenges.

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