By Dolapo Aina

On Wednesday, the 20th of March 2024, The African Export Import Bank (Afreximbank)’s Fund for Export Development in Africa inaugurated its’ Kigali office with a keen eye on addressing Africa’s $110 billion equity financing shortfall. The bank unveiled its Fund for Export Development in Africa (FEDA) office in Kigali, capital of Rwanda.

While the Fund for Export Development in Africa (FEDA) became the Fund Manager of the US$1 billion AfCFTA Adjustment Fund in 2023, it is noteworthy to state that the Fund for Export Development in Africa is the impact investment subsidiary of Afreximbank set up to provide equity, quasi-equity, and debt capital to finance the multi-billion-dollar funding gap especially in equity which are needed to transform the trade sector on the African Continent.

According to an official statement by Afreximbank, FEDA pursues a multi-sector investment strategy along the intra-African trade, value-added export development, and manufacturing value chain which includes financial services, technology, consumer and retail goods, manufacturing, transport and logistics, agribusiness, as well as ancillary trade enabling infrastructure such as industrial parks.

The statement by Afreximbank further stated that FEDA was established to tackle Africa’s US$110 billion financing gap for intra-African trade, value-added export development, and industrialisation value chains, with Rwanda being the first among fifteen African nations to ratify its establishment agreement.

The event had in attendance Dr. Edouard Ngirente, the Prime Minister of the Republic of Rwanda’ President and Chairman of the Board of Directors of Afreximbank, Professor Benedict Oramah; Executive Vice Presidents of Afreximbank, members of the Board of Directors of FEDA including Ms. Marlene Ngoyi, who is the Chief Executive Officer of FEDA; officials from the Rwandan Government; representatives from the business and diplomatic communities in Rwanda; just to name a few.
Rwanda’s Prime Minister Dr. Ngirente stated: “The establishment of FEDA in Rwanda reflects Rwanda’s commitment to not only fostering economic development within our borders but also to playing a pivotal role in the economic transformation of our continent. This initiative is a step closer to the realisation of the goals outlined in the Agenda 2063 of the African Union which lays great emphasis on the transformation of African economies and acceleration of economic growth on the continent.” The Prime Minister of Rwanda highlighted the fact that despite Africa’s significant resource endowments and contiguous markets, the continent had the lowest level of intra-regional trade in the world, adding that the continent’s share of value created remained the lowest across many products and commodities due to sub-optimal value addition.

President of Afreximbank, Professor Benedict Oramah in his speech stated that: “FEDA adds to the pool of institutions helping Africa to create its own capital base for development. With a focus on providing long-term, patient capital targeting all segments, from SMEs to corporates, and cutting across dynamic sectors of value-addition, services, and technology, FEDA is positioned to drive Africa’s development under a new vision of de-commoditised, growth-oriented pathways underpinned by a dynamic private sector. We all share the view that the goals of the African Continental Free Trade Agreement (AfCFTA) will be a mirage, and its benefits will accrue to others unless tangible steps are taken to create tradable goods and services for the continental market. We also do recognise that the benefits of the Free Trade Agreement will not be evenly shared among all Participating States if pragmatic steps are not taken to equip all economies, especially small and fragile economies, with the capacity to produce goods or provide essential services necessary for the conduct of trade within the continent.”

Professor Benedict Oramah went further: “Less than four years since the commencement of operations, the evidence of the strategic importance of this institution is beginning to show as it has started to leave impactful footprints across the continent. Funds Under Management under different strategies amount to about 800 million US dollars. FEDA is using some of these funds to create and mobilise additional funds and is currently a co-promoter of a 500 million US dollar Africa Credit Opportunity Fund (ACOF). With seed funding provided by Afreximbank, it is also creating a 100 million US dollar Venture Capital Fund to focus on start-ups and SMEs. In 2023, FEDA became the Fund Manager of the 1 billion US dollar AfCFTA Adjustment Fund. Thanks to the equity and supporting debt instruments offered by Afreximbank, industrial complexes are emerging across Africa. The Fund has supported the emergence of Special Economic Zones in Gabon, Benin, and Togo. These Industrial Zones have changed the profiles of the countries from commodity-exporting countries to exporters of value-added or manufactured goods, attracting multiple times the values gained from commodity exports, helping to achieve economic diversification, creating dynamic local economies with strong domestic supply chains and, above all, jobs and stable incomes for the people. Similar investments are spreading and are expected to reach at least twenty countries, including Rwanda, Malawi, Cote d’Ivoire, Nigeria, Kenya, Congo Democratic Republic, the Republic of Chad, and Zambia, by year-end.”

On Rwanda, Professor Benedict Oramah posited in his speech that “Rwanda is also poised to benefit significantly. On the heels of the various supports provided by Afreximbank to Rwandan public and private sector entities, FEDA has progressed a significant deal pipeline in Rwanda. A number of investments are being processed across many sectors and industries, ranging from transport and trade logistics, manufacturing, agro-processing, and power generation. These equity investments, amounting to about 50 million US dollars, when concluded, will complement the over 300 million US dollars disbursed to Rwandan entities by Afreximbank in the past 5 years, boost local industrial actives, create domestic value chains, and elevate Rwanda’s preparedness to harness the benefits of the AfCFTA.”