The African Export-Import Bank (Afreximbank) has urged the government and other African countries to prioritise the development of public and private export trading companies (ETCs) to position the continent’s small and medium enterprises (SMEs) to participate effectively in global trade.
In an address at the Africa International Exhibition, which opened yesterday on the sidelines of the United Nations General Assembly in New York, Afreximbank’s Executive Vice President, Intra-African Trade Bank, Kanayo Awani, while speaking on behalf of the bank’s President, Prof. Benedict Oramah, said that SMEs participating directly in global trade faced stiff competition from multinational and significantly large corporates, making their chances of success or survival marginal, if not zero.
Awani noted that Asia had addressed that challenge by establishing ETCs to act as conduits through which SMEs accessed global markets, noting that ETCs acted as aggregators and created a sizable volume of trade that attracted greater value and withstood competition.
She pointed out that the limited participation of Africa’s SMEs in global value chains reflected institutional policy failure and called for strong policy support systems that would provide capacity developments, incipient protections from unfair competition, improved access to regional markets and access to finance, adding that these support systems are particularly urgent as Africa commences implementation of the African Continental Free Trade Agreement (AfCFTA).
According to her, SMEs had been a central focus of Afreximbank’s continental interventions through its export development SME-focused strategy over the years, with unique funding instruments to bridge the financing constraints faced by African SMEs, including products, such as factoring, supply chain finance and intermediated financing.
She said Afreximbank was the principal promoter of factoring in Africa and that the factoring law it sponsored had been adopted in the Republic of Congo, Burkina Faso, Niger, Togo, Mali and Cote d’Ivoire and was under consideration by regulatory institutions in several other African countries.
Awani also announced that Afreximbank had launched a $1-billion Creative Africa Nexus (CANEX) programme to provide access to finance, capacity building, digital solutions and other support to the African creative industry, noting that the industry had become one of the fastest-growing areas within the continent and that creatives had become major export earners in Nigeria, South Africa and a few other countries, topping traditional export goods. The Bank had disbursed about $120 million to boost the industry.
The bank was also providing support for market access for African SMEs through the African Trade Gateway, a digital ecosystem that comprises assets designed to address non-tariff barriers, such as the MANSA customer due diligence repository platform which collects KYC information of SMEs and corporates and which had already onboarded more than 11,000 entities, she said.
She added that the Intra-African Trade Fair also provided an excellent platform to foster the integration of SMEs into continental value chains by promoting interconnections and networking, she added, noting that the third edition of the fair would be held in Cairo in November.
Other speakers at the event included President Bola Tinubu of Nigeria, who was represented by the Minister of Industry, Trade and Investment; Dr. Doris Uzoka-Anite, the Nigerian Minister of Aviation and Aerospace Development; Festus Keyamo, Chief Executive Officer of First Bank Group Dr Adesola Adeduntan and Ireti Kingibe of the Nigerian National Assembly.
