AfCFTA: Afreximbank mobilizes $1bn-adjustment facility to offset revenue losses
The African Export-Import Bank has mobilized $1 billion for an adjustment facility to offset revenue losses for countries that lower cross-border tariffs as part of an Africa-wide free trade area, according to Wamkele Mene, secretary-general of the African Continental Free Trade Area Secretariat.
“We will be able to go to global capital markets and we will be able to go to development finance institutions to mobilize more resources, but at the moment, it is a fund of a facility of $1 billion.
“Officials are making “very, very good progress” on the facility, and countries may be able to draw on it by year-end,” Mene said in an interview.
The African Continental Free Trade Area (AfCFTA), world’s biggest free-trade area was implemented on January 1. It aims to bolster intra-African trade by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union.
The planned reduction in duties has raised concerns from countries that rely on them for income. However, a World Bank report shows that short-term tariff revenues would decline by less than 1.5% for 49 out of 54 African countries, with total tax revenues set to decrease by less than 0.3% in 50 countries under the deal.
“That’s because only a small share of tariff revenues come from intra-African trade.
“The bulk is from a few tariff lines and that would enable some protectionist measures to be maintained even if countries liberalize,” according to the World Bank report.
