Afreximbank, Africa’s largest trade finance bank, said on Wednesday that it has arranged an initial $8 billion financing package for South Africa following the country’s admission as a new member.
According to Reuters, the funding is expected to support projects across key sectors including mining, automotive production, and manufacturing.
South Africa was unable to fully join Afreximbank when the bank was established in 1993 because the country was still under apartheid.
However, its cabinet approved a plan last year for South Africa to move to a “Class A” shareholding in the institution. “We have put together an important package of 8 billion United States dollars … for South Africa,” Afreximbank President George Elombi said at a ceremony in Johannesburg.
“In particular we will prioritise mineral processing, the expansion of automotive manufacturing … and the expansion of industrial parks and specialized zones.”
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Membership in Afreximbank gives Africa’s most advanced economy access to new trade finance products at a time when it is seeking alternative export markets due to a tariff dispute with the United States.
In August, U.S. President Donald Trump imposed a 30% tariff on South African exports to the U.S., the highest rate applied to any country in Sub-Saharan Africa.
South African President Cyril Ramaphosa said the country’s closer relationship with Afreximbank demonstrates its commitment to “African industrial development and to deepening trade, investment and development across the continent.”
South Africa’s entry into the bank comes as Afreximbank has been involved in a dispute over whether its loans to African countries should be restructured in the event of defaults.
Responding to questions about Fitch’s decision last month to downgrade Afreximbank to “junk” status and withdraw its future credit ratings, Elombi said the bank was “extremely solid” and that its treasury operations were “more than sufficient for our objective.”
“Investing remains our key objective, … so long as we remain policy-relevant with the member states … then we don’t have to worry about this,” he added.
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Image Credit: Afreximbank
