Dr Benedict O. Oramah, Executive Vice President, Business Development & Corporate Banking at AFREXIM Bank
Africa is Forfaiting’s New Frontier! This was the crux of the message delivered by Dr. Omrah who highlighted that forecasts indicated that African economies would grow by an average of 5.5% to reach US$10.4 trillion in 2050 with trade the major driver of growth, significantly with Asia. African trade was expected to rise by about 7% per annum to US S 2.1 trillion by the year 2020 with about 40% being with China and India. Intra-African trade, too, would exceed 16% of the total trade in 5 years, he said. Cross-border trade and investment flows that had been long suppressed by socio-political challenges and customs procedures have seen a rebound over the last decade, he pointed out. FDI inflows, which stagnated at around US$9 billion, have grown four-fold in a decade, consistent with the kind of FDI inflows that propelled Asia in the 1980s.
Dr. Omrah highlighted the changes across the industrial and agricultural spectrum across the continent pointing out that bankers would soon be required to finance cement, fertilizer and similar exports from West Africa and elsewhere.
The opportunities therefore were significant in areas like:
1. Large pre- export financing deals in the coming years as investments go into agriculture and heavy industries
2. Credit insurance, especially if the credit insurance market expands its risk appetite for non-traditional markets.
3. Forfaiting and factoring which was expected to grow from current volumes of US$23 billion in 5 countries to US$35 billion in 15 countries by 2017.
He highlighted that, as with Asia, Africa is today a beneficiary of many initiatives to promote African trade, including AGOA, EU-ACP initiatives, etc. Further access to Asian markets is becoming an important factor. Not only does the Asia region have a large population, its effective market is growing — due to an expanding middle class — and the region’s success in addressing poverty. A striking feature of the recent growth performance is Africa’s relative resilience and robustness to external shocks. Relative to the contractions suffered during the early 1980s and 1990s on account of the Latin American debt crisis and the Asian debt crisis, Africa was one of the few developing regions that weathered the global financial and economic crises that broke in 2008/9, Dr. Omrah said. For the complete presentation please click www.itfa.org
Paolo Provera, Chairman ITFA / General Manager, ABC International Bank Plc – Milan Branch
