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By Kimani Chege
Published February 6, 2018
The African Export-Import Bank (Afreximbank) has laid out plans to provide seed capital to African companies by rolling out the Fund for Export Development in Africa (FEDA) which is currently headed by a Kenyan, Dr. Philip Kamau as the Chief Executive Officer (CEO).
FEDA has been set up to implement the Bank’s Equity Investment Programme by providing seed capital to companies in Afreximbank’s key focus sectors, including agri-business; manufacturing; consumer and retail; financial services; technology; travel and tourism; transport and logistics; and industrial parks.
It will invest across all market segments but will have its greatest focus on small and medium-sized enterprises.
The long-term objective of FEDA is the provision of equity capital and related financial, non-financial and support services to operators in Africa’s tradable and support sectors, with emphasis on activities that support intra-African trade and value-added exports.
The Fund, which has been set up with an initial $100-million commitment, will also seek to leverage on the role Afreximbank has played in mobilising trade finance into Africa to also mobilise foreign direct investment (FDI) into the continent.
Addressing the pre-incorporation meeting, Prof. Benedict Oramah, Chairman of the Board of Directors of FEDA and President of Afreximbank, said that the fund would expand Afreximbank’s offerings to include vital equity investments that would boost intra-African trade.
Dr. Philip Kamau, Chief Executive Officer (CEO) of FEDA, said that a feasibility study conducted for Afreximbank had identified a funding gap which was inhibiting intra-African trade. FEDA had, therefore, been set up to provide equity and to leverage FDI to help close that gap.
He announced that FEDA would start investment activities in 2019, with a target to invest $10 million during the year. It was also targeting to raise $450 million in FDI during the period.
FEDA will be headquartered in Mauritius.
The African Export-Import Bank (Afreximbank) is the foremost pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.
The Bank was established in 1993 by African governments, African private and institutional investors, and non-African investors. Its two basic constitutive documents are the Establishment Agreement, which gives it the status of an international organization, and the Charter, which governs its corporate structure and operations.
Since 1994, it has approved more than $67 billion in credit facilities for African businesses, including $7.2 billion in 2018. Afreximbank had total assets of $11.9 billion as at 31 December 2017 and is rated BBB+ (GCR), Baa1 (Moody’s), and BBB- (Fitch).
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Source: The Exchange
