AfDB Promises $7 Billion Investment to Revitalize Trade in Africa
The COVID-19 pandemic has wreaked havoc on practically every country, with Africa being hit heavily. As a result, fears of a continent-wide economic collapse have arisen, pushing the AfDB to take action. See what the bank has planned for Africa's economic development.
The COVID-19 pandemic has had a major economic impact on nearly every country in the world, and Africa has not been an exception. Intra-continental trade, which was already insufficient even before the pandemic, fell further, raising fears of a continent-wide economic collapse. The African Development Bank (AfDB) is thus stepping up to the plate in response to this crisis.
The AfDB was created in 1964 with the primary goal of reducing poverty in these regional member countries by contributing to their economic development and social progress. This mission has broadened over the years to include sustainable development goals.
According to Bloomberg, the AfDB has vowed to financially support trade in Africa to the tune of $7 billion over the next five years as part of its main mission. The goal of this approach is to inject funds to stimulate growth within the framework of the implementation of the African Continental Free Trade Area (AfCFTA). In terms of specific initiatives, the financial institution plans to guarantee loans to African businesses so that they can market their goods across the continent. Over the next five years, the AfDB expects to facilitate more than 2,000 transactions.
Initiatives from Africa’s Financial Institutions
As a reminder, the AfCFTA aims not only to create a single continental market for goods and services, but also to establish free movement of economic operators. A customs union will be established in 2022, followed by an African economic community in 2028.
The AfDB's announcement follows that of the African Export-Import Bank (Afreximbank), which announced the release of $7 billion to help 14 African countries cope with the COVID-19 pandemic and support intra-African trade cooperation efforts during its last board of directors meeting in September 2021.
These various announcements are being viewed positively by supporters of the African solution to Africa's development difficulties, who are regarding them as a sign of the continent's decision-makers' awareness and expect to see such development projects grow.
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