Afreximbank opens Sh460bn loan to aid Africa against Russian war

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Afreximbank opens Sh460bn loan to aid Africa against Russian war


Smoke rises from a Russian tank in UKraine

Smoke rises from a Russian tank destroyed by the Ukrainian forces on a roadside in Lugansk region on February 26, 2022. PHOTO | AFP

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Summary

  • Kenya will be able to tap a newly created $ 4 billion (Sh460 billion) fund by the African Export-Import Bank (Afreximbank) designed to help African countries stave off economic fallout brought on by the ongoing Russian war in Ukraine.
  • The pan African bank said countries like Kenya can access the funds on request to help blunt the effects of disruption

Kenya will be able to tap a newly created $ 4 billion (Sh460 billion) fund by the African Export-Import Bank (Afreximbank) designed to help African countries stave off economic fallout brought on by the ongoing Russian war in Ukraine.

The pan African bank said countries like Kenya can access the funds on request to help blunt the effects of disruption.

Member countries like Kenya can tap the tourism revenue deficit financing to be extended to Central Banks of tourism-dependent economies to cover foreign exchange revenue shortfalls arising from a decline in tourism arrivals from Russia and Ukraine.

They can also request the import re-order cost adjustment financing targeted at helping countries to meet immediate import price increases pending domestic demand adjustments, the bank said.

It was not immediately clear what limit a country can borrow under the facility and what the terms of lending are.

“The new facility is timely and will support countries build resilience as they face yet another exogenous shock,” said Benedict Oramah, president of the Cairo-based bank in a statement after the launch of the fund.

The latest fund comes at a time the African Development Bank (AfDB) is also aiming to raise $ 1 billion (Sh115 billion) to rapidly ramp up agricultural production in Africa and stave off a potential food crisis brought on by Russia’s invasion of Ukraine, AfDB President Akinwumi A. Adesina said recently.

The Ukraine crisis could knock more than a percentage point off global growth this year and add two and a half percentage points to inflation, the OECD estimated on Thursday this week, calling for targeted government spending hikes in response.

The World Bank Group and the International Monetary Fund have asked developing countries like Kenya and to strengthen the social safety nets to protect the most vulnerable citizens on the back of the Russia-Ukraine crisis fallout.

But offering the social safety nets, as the Bretton Woods Institutions are urging, may be hard for a country that in a tight fiscal space with debt repayments taking up a big chunk of the revenues generated.

As the war between Russia and Ukraine draws into its second month, fuel, wheat and fertilizer prices have skyrocketed hitting Kenyan consumers hard.

Petroleum prices have remained high due to the Russian-Ukraine conflict, forcing the government to retain subsidies in a bid to stem public anger.

Together Russia and Ukraine produce more than a quarter of global wheat exports, and Africa is heavily dependent on both countries.

Kenya turned to Bretton Woods institutions for emergency help to blunt effects of the coronavirus economic fallout.

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