African Export-Import Bank (Afreximbank) has signed a facility agreement with BSMART Technology Ltd expanding the Afreximbank African Collaborative Transit Guarantee Scheme (AACTGS) to cover the issuance of container deposit guarantees and customs bonds in the East African Community (EAC) region.
Under the terms of the agreement, signed at the just-concluded Afreximbank Annual Meetings (AAM2024) in Nassau, The Bahamas, Afreximbank will issue container guarantees to shipping companies on behalf of BSMART Technology Ltd. On its part, BSMART Technology Ltd will process Bills of Lading and release containers to container users (importers and exporters) without requiring them to put up any security deposits, thereby providing capital relief which is ploughed back into the trade sectors.
The container guarantee facility covers payments, on behalf of container users, for all their obligations to shipping companies in connection with the containers, including damage, and total loss. The shipping companies would, ordinarily, require cash deposits of up to US$5,000 as collateral for each container.
Mrs. Kanayo Awani, Executive Vice President, Intra-African Trade and Export Development Bank, signed the agreement on behalf of Afreximbank while Dr. Stephen Teang, Managing Director, signed for BSMART Technology Ltd.
In comments on the agreement, Mrs. Awani underscored the strategic significance of container guarantee for the East African region and its impact on the northern, central, and southern corridors. Annually, this region sees approximately 3,500,000 containers requiring deposits that tie up an estimated US$14 billion from importers and exporters.
“Freeing up this immobilized liquidity could significantly bolster trade finance for businesses,” Mrs. Awani explained. “The release of these funds will, indirectly, finance trading merchants and inject liquidity back into their operations. The facility will also support numerous small-scale and informal traders who, otherwise, will lack access to direct financing, thereby playing an essential role in enhancing trade and economic activity in the region,” she added.
Mrs. Awani added that the facility will lead to increased competitiveness and business opportunities by facilitating the movement of raw materials, manufacturing equipment and intermediate inputs required for export manufacturing, thereby facilitating participation in the regional and global value chains.
On his part, Dr. Teang noted that merchants in landlocked countries are particularly affected, facing the highest rates for container deposits — around US$5,000 per container — due to prolonged turnaround times.
“According to my estimation, through Afreximbank’s container guarantee initiative, about 2.6% of the region’s container traffic will benefit, freeing up approximately US$375 million in container deposits,” Dr. Teang said.
Hosted by the government of The Bahamas, AAM2024, which was combined with the third AfriCaribbean Trade and Investment Forum (ACTIF2024), was held from 12 June to 15 June, 2024.
About Afreximbank
African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. For 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank is setting up a US$10 billion Adjustment Fund to support countries effectively participating in the AfCFTA. At the end of December 2023, Afreximbank’s total assets and guarantees stood at over US$37.3 billion, and its shareholder funds amounted to US$6.1 billion. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure (together, “the Group”). The Bank is headquartered in Cairo, Egypt.
For more information, visit: www.afreximbank.com
