SA’s Afreximbank upgrade opens door to more trade and investment
ECONOMY
Sovereign membership will grant South Africa access to more competitive trade finance, expanded opportunities under the African Continental Free Trade Area (AfCFTA).
Image: TV BRICS
On Wednesday, South Africa will officially elevate its standing within the African Export–Import Bank (Afreximbank) by transitioning to Class A Shareholder status.
This significant shift marks a deeper strategic engagement between the nation and one of Africa’s pivotal multilateral financial institutions, signalling a commitment to strengthened economic collaboration across the continent.
President Cyril Ramaphosa is poised to deliver a keynote address during the signing of the Instrument of Accession to the Afreximbank Establishment Agreement, a ceremony that will cement South Africa’s status as a sovereign member of the bank.
This transition is seen as a milestone in the country's overarching strategy to promote industrial development, export-led growth, and increased intra-African trade integration, according to Business Report.
President Cyril Ramaphosa is expected to use his address to outline South Africa’s vision for industrialisation, export diversification, decarbonisation and digitisation, and to reaffirm the country’s commitment to advancing Africa’s economic integration.
Image: Itumeleng English/Independent Newspapers
Afreximbank, a pan-African multilateral development finance institution, has emerged over the last decade as a central figure in financing Africa’s industrialisation efforts. By facilitating trade infrastructure, developing value chains, and incentivising cross-border investments, the bank plays a vital role in boosting economic prospects across the continent.
South Africa’s transition to Class A Shareholder status signifies an elevation of its relationship with Afreximbank from that of a participating member to a sovereign shareholder. This transition not only fortifies the nation's influence within the bank's governance structures but also unlocks a plethora of benefits for South African companies, commercial banks, and State-Owned Enterprises (SOEs).
Sovereign membership will grant South Africa access to more competitive trade finance, expanded opportunities under the African Continental Free Trade Area (AfCFTA), and increased involvement in cross-border investments and projects throughout Africa, Business Report stated.
Furthermore, it paves the way for enhanced cooperation with other financial institutions across the continent and access to risk mitigation tools, aimed at fostering trade and investment in complex financial landscapes.
This partnership arrives at a critical juncture as South Africa seeks to reposition itself as a primary industrial and export hub within Africa, all while managing a global framework marked by trade fragmentation, supply chain disruptions, and tightening financial conditions. By strengthening its ties with Afreximbank, South Africa intends to leverage continental markets to enhance manufacturing capabilities, diversify its export portfolio, and promote inclusive economic growth.
During his address, President Ramaphosa is expected to outline the nation’s vision for advancing industrialisation, export diversification, decarbonisation, and digital transformation, whilst reaffirming a commitment to further Africa’s economic integration. These themes resonate closely with Afreximbank’s strategic objectives, particularly the focus on supporting the AfCFTA and financing initiatives aimed at enhancing regional value chains.
The ceremony will also welcome Dr George Elombi, Afreximbank president and chair of the board of directors, along with board members, cabinet ministers, senior government officials, business leaders, and diplomatic representatives. Their presence at such a pivotal moment underscores the political and economic import of South Africa’s accession into the bank as a Class A shareholder.
South Africa's formal membership will not only bolster Afreximbank’s shareholder base, but it also reinforces the bank’s capacity to mobilise capital in support of trade financing across the continent. For South Africa, this move is a clear strategic investment and a testament to its intention of playing an influential role in shaping the trade and development landscape of Africa.
Recently, Deputy Minister of Public Works and Infrastructure, Sihle Zikalala, noted that the rapid advancements made by Finance Minister Enoch Godongwana in South Africa’s transition to full sovereign shareholder would unlock vast funding opportunities. The partnership is expected to alleviate fiscal pressures on the government and enhance infrastructure development, especially through a Memorandum of Understanding (MoU) signed with Afreximbank regarding project preparation including feasibility studies and business plans.
“Afreximbank has already committed over R90 million towards project preparation for Infrastructure South Africa. We are now aiming to expand on this,” Zikalala stated, emphasising the importance of collaboration with institutions like Afreximbank and the African Development Bank to drive infrastructure growth in the country.
IOL Business