Lusaka – Southern Africa experienced capital outflows of US$3.1 billion in 2020, representing more than half of the US$5 billion the continent lost last year, partly due to the COVID-19 pandemic.
The African Trade Finance Survey report – jointly published by Afreximbank, the UN Economic Commission for Africa and the African Development Bank – underscores how the pandemic undermined the continent’s financing and trade last year.
Afreximbank president Professor Benedict Oramah said, “These massive capital outflows strained African banks, many of which recorded sharp drops in their net foreign assets. This further exacerbated liquidity constraints and undermined the capacity of banks to finance African trade.”
The report noted positives, such as strong resilience and some expansion during the pandemic, chiefly on account of rapid digitalisation of operations.
Dr Vera Songwe, the UNECA Executive Secretary, commended Afreximbank for measures taken to aid countries deal with the economic fallout from COVID-19.
“The bank has also US $2 billion facility to help African member states purchase up to 400 million doses of the COVID-19 vaccines,” she added.
Chairperson and Managing Director at the Export Development Bank of Egypt, Mervat Soltan, said despite the downturns caused by the plague, his institution saw a significant increase in its digital services.
“Digitalisation, which sustained business and trade growth during the pandemic, offers a great opportunity to help reduce costs and increase the use of trade finance facilities, and should become an integral part of the strategy to boost African trade post-COVID-19,” she noted.
Dr Hippolyte Fofack, chief economist at Afreximbank weighed in: “Trade finance is the lifeblood of commerce and will play a key role in the recovery and structural transformation of African economies to better prepare the region to future global crises.”
And Bola Areole, senior vice-chair for Africa at Standard Chartered Bank, said the African Continental Free Trade Area (AfCFTA) would help grow economies.
“The AfCFTA can provide an ideal platform to help drive new businesses on the continent, which will help accelerate trade.”