AfCFTA: Africa Trade at UNGA 77

'Africa is unstoppable. Africa is an essential part of global business and a major investment destination. Africa includes some of the world’s fastest growing economies. And Africa has more – much more – to offer. Every sector of the African economy is growing – from manufacturing to agriculture, from services to finance. The continent’s vibrant, young population represents a dynamic workforce and a massive consumer and business market. And the Africa Continental Free Trade Area Agreement will further accelerate investment and trade opportunities. The world must see Africa for what it is: a land of enormous potential and resources.'

The words above by the Secretary-General of the United Nations, António Guterres at the Global Africa Business Initiative (GABI) which held last week at the 77^th United Nations General Assembly set the tone for Africa and African Trade

Last week, leaders from around the world will come together to focus on global challenges and zero in on global solutions at the 77^th United Nations General Assembly.

The global economy has taken a hit in the past 2 years, from COVID-19 to the Russian-Ukraine crisis, our world has been plagued with growing inequalities, global inflation, a cost-of-living crisis, and the reversal of the Sustainable Development Goal.

However, with the African Continental Free Trade Area, we see an opportunity to drive intra-Africa trade and creating an unparalleled momentum for Africa’s economic diversity and transformation. We know that industrialisation is the way to go and, with the single market as the added incentive, the world must see Africa for what it is: a land of enormous potential and resources.

As often advocated by the Group Chairman, Tony O. Elumelu and reiterated in his sessions at UNGA 77 - working together, Governments by creating the enabling environment and the private sector by investing in critical sectors guided by the philosophy of Africapitalism can create the conditions for success.

Now is the time for innovation with the AfCFTA underway, for new public-private partnerships and there are opportunities in all sectors – from education and healthcare to finance and services.

Hopes of greatly boosting intra-African trade rest on the implementation of the African Continental Free Trade Area (AfCFTA). The initiative will reduce both tariff and non-tariff barriers to African cross-border trade, encourage the construction of much-needed logistics infrastructure and above all, create a new mindset, that potentially huge untapped markets lie on the doorsteps of every African business.

The role of the banking sector in this process is a central driver of this change and simultaneously be heavily impacted by it. In Nigeria, the United Bank for Africa (UBA) Plc ranks No. 1 in export banking among Nigeria’s deposit money banks (DMBs) for three consecutive years as at FY 2021 facilitating $1.34 billion non-oil export for that year alone. This was 31 percent of total non-oil export volume for 2021 making it the highest since 2019. This comes on the heels of the bank’s robust export financing scheme designed to boost local productivity and diversify the sources of foreign exchange earnings

From a US$200 million Non-oil export trade financing programme to bridge working capital requirements of SME/commercial exporters at concessionary interest rate and favourable collateral structure, and Provision of project & structured trade financing to enhance export capacities of manufacturing as well as commodity aggregators, to a dedicated export desks and an export manager for our business to lead the charge of our export business arrangements and UBA Afritrade – to facilitate regional trade and settlements that start and end within the UBA ecosystem across Africa.

UBAs partnership with Export focused Agencies in Nigeria CBN/NEPC/NIRSAL and as the Pilot bank to AfCFTA/PAPSS to facilitate Regional Trade payments across Africa, commencing in 5 Countries (Nigeria, Ghana, Guinea, S/Leone and Liberia) will place the bank at the forefront of driving the commencement of cross-border transactions with the new Pan-African Payment and Settlement System in the fourth quarter of 2022.

Perhaps the biggest effect of the AfCFTA on the African banking sector is the Pan-African Payment and Settlement System (PAPSS), a centralised payment and settlement system that was launched by Afreximbank with the support of the AfCFTA Secretariat that would facilitate and improve intra-African trade and commerce payments as making payments across border could sometimes be a challenge.

This opportunity as the pilot bank is set to bring about a growing number of supply chain finance opportunities in the coming years.

With UBA at the heart of the AfCFTA’s attempt to create a single continental market for goods and services that will hopefully optimise the use and allocation of resources and will make the trade area a success and more effective at supporting African economic development.