(Ecofin Agency) - Africa Finance Corporation (AFC) announced yesterday it has reached a $300 million financing deal with the Chinese Export-Import Bank (CEXIM). This 3-year agreement was signed on the sideline of the annual meetings of the Asian Infrastructure Investment Bank (AIIB) in Egypt, we learned.
The facility will be used to boost trade finance and investments in Africa and promote economic growth and development, while further facilitating the flow of goods and services between Africa and China. AFC is committed to providing unique and effective solutions that benefit stakeholders, adhere to standards, and promote sustainable development and economic growth in Africa.
"This partnership with CEXIM is a significant milestone for AFC. It significantly enhances our ability to provide trade finance solutions on the continent, and promote international trade and economic diversification, while strengthening the close economic ties between Africa and China," said Sanjeev Gupta, AFC's Director of Financial Services.
This agreement represents a contribution to meeting the various challenges facing Africa, particularly in terms of infrastructure. According to the World Bank, this limits Africa's share in world trade to 3%. The institution believes that "the continent needs to go beyond the trade in raw materials and connect its production and trade to the global economy to leverage unlimited demand and innovation throughout the supply chain."
To stimulate the economic transformation of the continent, regional and international integration initiatives have been implemented, including the African Continental Free Trade Area (AfCFTA), which presents significant opportunities to boost intra-African trade.
Furthermore, China's "Belt and Road Initiative" has led to increased Chinese investments in areas such as manufacturing, mining, and agriculture, making Beijing the primary infrastructure financier in Africa.
China remains Africa's biggest trade partner, with trade reaching $282 billion in 2022, according to Chinese authorities.