…With FEDA instrument, country can attract FDI
Ben Eguzozie, in Port Harcourt
The Republic of Guinea, West African and ECOWAS’s struggling nation, with a $12.3 billion GDP and a per capita income of $962.84 as of 2019, has signed into the African Export-Import Bank’s (Afreximbank) Fund for Export-Development in Africa (FEDA), a development impact-oriented subsidiary of the pan-African financial institution.
The FEDA would enable the ECOWAS member-country to draw from Afreximbank’s influence to attract foreign direct investment into its economy, thereby develop its harried economy.
Guinea had been scorched by France in 1958, following its complete rejection of France’s partial independence granted to its former African colonies, which came with French ‘apron strings’. Ahmed Sekou Touré’s rejection of de Gaulle’s ‘French association’ had angered the towering French president, ordering the removal of all investments in the tiny West African country, including rail tracks.
The FEDA Establishment Agreement was signed by the Guinean Minister for Foreign Affairs, Ibrahima Khalil Kaba, on behalf of his country. Guinea becomes the third signatory of the establishment agreement after Rwanda in November 2020 and Mauritania in January 2021.
To complete the FEDA Legal Establishment process, two Afreximbank member states are required to sign and ratify the Establishment Agreement. The signing of the agreement by Guinea is a highly significant step as it enables FEDA’s Legal Establishment procedures to progress towards completion.
The Establishment Agreement grants FEDA legal capacity to conduct business in its own name as an international organisation with privileges and immunities accorded to other multilateral financial institutions (MFIs) on the continent.
According to Benedict Oramah, president of Afreximbank, and board chairman of FEDA, “the signature of the FEDA Establishment Agreement by the Republic of Guinea marks another major milestone in the FEDA Establishment process. This notable action has added the required momentum in support of the establishment of FEDA as a new multilateral development platform on the continent.”
FEDA was established by Afreximbank to catalyse Foreign Direct Investment (FDI) flows into Africa’s trade and export sectors, and to fill the equity funding gap that amounts to US$110 billion per annum in the areas of Intra-African trade and Export Development.
FEDA aims to provide equity financing to companies operating in key industries and sectors to significantly increase the likelihood of success in delivering on Afreximbank’s development priorities and meeting the Bank’s strategic goals under the main pillars of the intra-African Trade Strategy and the Industrialisation and Export Development Strategy.