Afreximbank seeks 300 mln USD to industrialize Africa

Afreximbank seeks 300 mln USD to industrialize AfricaThe African-Import-Export Bank (Afreximbank) said Thursday it is seeking 300 million U.S. dollars to shore up its capital to meet the growing borrowing demand from the continent’s private sector.

The fundraising will specifically be targeted at financing industrial projects, including light manufacturing to help the continent overcome its dependence on the export of commodities.

“We shall give priority to projects that add value to commodities in Africa. Dependence on exporting commodities exposes Africa to economic disruptions because of price disruptions,” the bank’s Vice President George Elombi told journalists in Nairobi.

“A good example is the case of cocoa coming from West Africa. A year ago, it was trading at 3,000 dollars per tonne. Today, the price is 1,800 dollars. We can only counter this fluctuation if we add value to the raw cocoa,” he added.

Adding value also means more jobs will be created. There will be development of export-led infrastructure like special economic zones and also power sources. Further, governments will get more revenue from the value addition industrial activities.

The 300 million dollars the bank is seeking is part of the 1 billion dollars that it plans to raise in the next five years.

“We have to shore up our capitalization to meet the increasing financing demands. Part of this money will also be used to finance projects that help increase intra-Africa trade,” he said.

The money will be raised from existing shareholders who include governments and new shareholders, and for the first time, individuals can also invest in the bank.

The new investment will be listed in Mauritius and later Kenya and Nigeria. The listing in Mauritius, arranged by the transaction adviser SBM Group will be done on Oct. 4.

Bank officials said the decision to list in Africa is a deliberate plan to strengthen capital markets in the continent. It is also the first time that a multilateral organization like Afreximbank is giving an opportunity to individual investors.

Data from the bank shows that 68 percent of its financing goes to the financial sector while 16 percent goes to finance energy. Other sectors like manufacturing, agriculture and transport take the rest of the share.

West Africa accounts for the largest share of borrowing at 43.7 percent, followed by North Africa at 42.3 percent while Southern Africa takes 7.3 percent.