By Nosihle Shelembe
South Africa's strategic partnership with the African Export-Import Bank (Afreximbank) highlights a US$8 billion commitment to boost industrial growth, create jobs and strengthen the economy by adding more value to South Africa's natural resources.
The commitment paves the way for expanding local manufacturing and mineral processing, investing in critical infrastructure such as energy, developing industrial parks and special economic zones, and improving access to regional and continental markets under the African Continental Free Trade Agreement (AfCFTA).
South Africa's strategic partnership with the multilateral financial institution advanced further during the Instrument of Accession signing ceremony in Johannesburg earlier this month, when South Africa became a full sovereign member (Class A shareholder) of the bank.
This elevated status gives the country a stronger voice in the institution's governance, including greater influence over its strategic direction, institutional structure and leadership appointments.
In addition, sovereign membership provides access to the Bank's intervention facilities, which are often used to assist African member states and their private institutions in the event of market failure, global financial, economic and geopolitical crises.
Headquartered in Cairo, Egypt, the multilateral financial institution was established in 1993 to facilitate, promote and expand both intra-African and extra-African trade.
According to the bank, its programs, instruments and services are available to large corporates, governments, financial institutions and other clients, which is any other entity not necessarily classified as a government, large corporate or financial institution, which “can be supported if the underlying transaction or project fits with the Bank's mandate and meets the Bank's lending requirements and policies.”
The accession process followed legal and constitutional steps, including cabinet support and parliamentary approval, as outlined in section 231(2) of the Constitution, which deals with international agreements.
The Presidency confirmed that sovereign membership helps South African companies, banks and state-owned enterprises (SOEs) secure better trade finance.
It provides more funding for trade under the AfCFTA. It also encourages more cross-border projects and investments, stronger partnerships with other African financial institutions and access to various risk management tools.
Export Credit Insurance Corporation of South Africa said, “Afreximbank plays a vital role in promoting and financing cross-border trade within Africa, with AfCFTA as a key driver of its mission. By achieving Class A status, South Africa will be better positioned to leverage Afreximbank's network, resources and financing tools to support local businesses in accessing wider African markets.”
The corporation is a state-owned national export credit agency under the purview of the Department of Trade, Industry and Competition (DTIC).
South Africa became the 54th state to ratify the bank's establishment agreement, marking a historic milestone as both partners seek to unlock trade opportunities within a global financial architecture that is increasingly fragmented due to protectionist policies and changing trade blocs.
The agreement enables South Africa to take advantage of the bank's strong investment grade rating and preferred lender status. It offers more security than a standard commercial loan. It provides more competitive financing and risk coverage for South African exporters, state-owned enterprises and private companies.
provide assistance
Afreximbank President and Chairman of the Board of Directors, Dr George Elombi, said the bank looks forward to supporting South Africa.
“We have put together an important US$8 billion package for South Africa. We will do whatever it takes to support government and the private sector in building a local economy that serves all South Africans, and that sees the wider African continent as a natural source and destination of wealth,” Elombi said.
With a continental market of approximately 1.4 billion people, African countries can take advantage of the African Continental Free Trade Area to promote intra-African trade in manufactured goods while sourcing raw materials from within the continent.
“We don't have to re-invent the wheel. Let's look within the continent for sources of growth,” Elombie said.
Developing and supporting small businesses
The Bank plans to invest in the development of critical infrastructure, including energy generation and transmission, which are vital to industrial production.
In the energy sector, the Bank can co-finance projects that support just energy transitions, particularly through climate finance mechanisms.
According to the Presidential Climate Commission, a just transition to a low-carbon economy will benefit all South Africans by boosting economic growth, creating jobs and increasing our energy security, while addressing the serious threat of climate change.
The Bank's programs are also designed to support SMME growth in all strategic sectors such as automotive components, pharmaceuticals and agro-processing.
SMMEs can access Afreximbank-supported trade finance and training programs. AfreximBank funding can be leveraged to integrate SMMEs into regional supply chains, creating jobs and promoting industrial growth.
“The Bank has also taken initiatives to promote e-commerce readiness for SMMEs to enter digital trade across the continent. In the area of mineral beneficiation, funding assistance can target developing local smelters, refineries and processing plants for gold, platinum and battery minerals, including lithium,” a document from the DTC said.
In a drive towards private sector-led transformation of the South African and continent's economies, Afreximbank will work with institutions such as the Industrial Development Corporation (IDC), the Development Bank of South Africa (DBSA), the Public Investment Corporation (PIC), and commercial banks such as Rand Merchant and Standard Bank.
deepening trade
President Cyril Ramaphosa said the decision to join the bank reaffirms the government's commitment to African industrial development and deepening trade, investment and development across the continent.
“Accession brings us one step closer towards the emergence of the South African Export-Import Bank. Working closely with Afreximbank and building on our Export Credit Insurance Corporation experience, we are laying the foundation for a national institution that will support exporters, crowd in investment, and provide financing in line with our industrial priorities.
The President said, “This is a strategic investment in our ability to compete with and support South African companies across the export lifecycle. This will help ensure that our participation in African and global trade is sustainable, flexible and developmental.”
South Africa's strategic partnership with the Bank is expected to enhance the ability of the Export Credit Insurance Corporation to fulfill its mandate of facilitating South African exports, particularly in high-value sectors, while contributing to the broader continental agenda of economic integration and development.
The Export Credit Insurance Corporation provides insurance that enables South African exporters to present their services and products to the international market, with a particular focus on Africa's emerging markets that are considered too risky for traditional insurers.
The government has mandated the entity to make South African exporters attractive to international buyers to attract foreign income, stimulate domestic economic growth and create local jobs.
“As the continent’s largest regional contributor to intra-African trade – accounting for 19.1% of total African trade in 2024 – South Africa is well-positioned to leverage Afreximbank’s trade infrastructure, technical expertise and pan-African footprint to expand its export relationships across the continent,” Afreximbank said. –sanews.gov.za