Afreximbank, BSMART Technology Expand Trade Facilitation in East Africa

Samuel Mobolaji

African Export-Import Bank (Afreximbank) and BSMART Technology Ltd have signed a significant facility agreement to expand the Afreximbank African Collaborative Transit Guarantee Scheme (AACTGS). This expansion will now cover the issuance of container deposit guarantees and customs bonds within the East African Community (EAC) region.

Managing Director, Dr Stephen Teang of BSMART Technology Ltd exchanged the signed facility agreement file with the Executive Vice President, Mrs Kanayo Awani of Afreximbank. Witnessing the exchange were the Bank’s Manager, Client Relations East Africa, Ms Farida Kasujja, and the Senior Manager, Legal, Mr Joseph Ifebunandu.

The agreement, signed during the recently concluded Afreximbank Annual Meetings (AAM2024) in Nassau, The Bahamas, stipulates that Afreximbank will issue container guarantees to shipping companies on behalf of BSMART Technology Ltd. BSMART Technology Ltd, in turn, will handle the processing of Bills of Lading and the release of containers to importers and exporters without requiring security deposits. This arrangement provides significant capital relief, allowing funds to be reinvested in trade activities.

The container guarantee facility will cover payments for all obligations to shipping companies, including damages and total losses, on behalf of container users. Typically, shipping companies demand cash deposits of up to US$5,000 as collateral for each container.

Executive Vice President, Mrs Kanayo Awani of Intra-African Trade and Export Development Bank highlighted the strategic importance of this initiative for the East African region. Annually, around 3.5 million containers requiring deposits immobilize an estimated US$14 billion from importers and exporters in this region.

“Freeing up this immobilized liquidity could significantly bolster trade finance for businesses,” Mrs Awani explained. “The release of these funds will, indirectly, finance trading merchants and inject liquidity back into their operations. The facility will also support numerous small-scale and informal traders who, otherwise, lack access to direct financing, thereby playing an essential role in enhancing trade and economic activity in the region.”

Mrs Awani further noted that the facility will boost competitiveness and business opportunities by facilitating the movement of raw materials, manufacturing equipment, and intermediate inputs essential for export manufacturing. This, in turn, will enhance participation in regional and global value chains.

Managing Director, Dr Stephen Teang remarked that merchants in landlocked countries face the highest rates for container deposits, approximately US$5,000 per container, due to prolonged turnaround times. “Through Afreximbank’s container guarantee initiative, about 2.6% of the region’s container traffic will benefit, freeing up approximately US$375 million in container deposits,” Dr Teang said.

AAM2024, combined with the third AfriCaribbean Trade and Investment Forum (ACTIF2024), was hosted by the government of The Bahamas from 12 June to 15 June 2024.