Kenya free to tap Sh320bn African coronavirus fund

A past Afrexim Bank event. The institution finances and promotes African trade. FILE PHOTO | NMG 

By BRIAN NGUGI
More by this Author

Summary

• Afrexim will support its member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults.
• It will also be available to support and stabilise the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.
• The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments.

Kenya is among member countries allowed to tap a Sh319 billion ($3billion) emergency fund set up this week by the African Export Import Bank (Afreximbank) to help African countries alleviate sudden economic disruptions caused by the coronavirus outbreak.

Afrexim, which finances and promotes African trade, said the kitty named Pandemic Trade Impact Mitigation Facility (PATIMFA) will support its member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults.

It will also be available to support and stabilise the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions, the multilateral lender in which Kenya is a member said.

The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afrexim.

"Besides its worrying effect on human life, the pandemic is projected to cost the global economy up to $1 trillion and to result in a significant 0.4 per cent decline in global GDP growth, which is expected to drop from 2.9 per cent in 2019 to 2.5 per cent in 2020,” said president Benedict Oramah.

Dr Oramah added the fund will come in handy to cushion African countries including Kenya exposed in many fronts by the pandemic, including risks of significant declines in tourism earnings, diaspora remittances and disruption of manufacturing supply chains.”

"A rapid and impactful financial response is required to avert a major crisis in Africa,” he said.

Afreximbank, has in the past decade become a significant player in Kenya’s economy, having financed big-ticket deals, including national carrier Kenya Airways.

The latest fund comes at a time Kenya has turned to Bretton Woods institutions for emergency help to blunt effects of the Coronavirus economic fallout.