- May 26, 2025
- Posted by: admin
- Category: Blog
WHAT YOU SHOULD KNOW ABOUT THE AfCFTA ADJUSTMENT FUND
The African Continental Free Trade Area (AfCFTA) Adjustment Fund is a crucial financial mechanism established to support African countries and businesses in navigating the transitional challenges and harnessing the opportunities presented by the AfCFTA. The AfCFTA Secretariat and Afreximbank were mandated by the African Union (AU) Summit of Heads of State and Government and the AfCFTA Council of Ministers responsible for trade to establish the AfCFTA Adjustment Fund to support AfCFTA State Parties to adjust to the new liberalised and integrated trading environment established under the AfCFTA Agreement. The establishment of the AfCFTA has marked a historic turning point for the African continent because it establishes mechanisms to remove tariffs and non-barriers to trade across Africa, which has positioned Africa as the world’s largest single trading bloc by participating countries.
However, the transformation of the trade and investment architecture in Africa would not occur without a cost, which includes[1]:
- Declines in tariff revenues;
- Changes in industrial policies;
- Restructured supply chains;
- Unexpected job dislocations and many more.
Who are the contributors to the Fund?
The AfCFTA Adjustment Fund is financed through a combination of sources:
- African Export-Import Bank (Afreximbank): Afreximbank has committed $1 billion of its funds to support State Parties and has also approved a $10 million grant as seed funding to kick-start the Base Fund[2].
- AfCFTA State Parties (Member States): Contributions from member states are expected, particularly for the Base Fund.
- Development Partners and Other Stakeholders: The Fund seeks contributions from various development partners and other stakeholders to reach its estimated funding requirement.
What is the process of applying for the Fund?
While a detailed step-by-step application process is not explicitly outlined in publicly available information, the Fund operates through three sub-funds, each with specific objectives and likely different access mechanisms:
- Base Fund supports AfCFTA State Parties, through grants and technical assistance, to address tariff revenue losses and support countries in implementing AfCFTA provisions. Access for governments would likely involve proposals for support based on demonstrated needs.
- General Fund offers concessional funding to finance the development of trade-enabling infrastructure and industrial projects. Access would likely involve project proposals from governments or public-private partnerships.
- Credit Fund mobilizes commercial funding to support both the public and private sectors in adjusting and taking advantage of AfCFTA opportunities[3]. This suggests a more commercial lending approach, likely involving applications through financial institutions or directly to the Fund Manager for eligible projects.
Who Will Benefit from the Fund?
- AfCFTA State Parties (Governments): To address potential tariff revenue losses, support the implementation of various AfCFTA protocols and annexes, and facilitate a smooth transition to the new trade regime. By providing financial resources to offset tariff revenue losses, support capacity building, infrastructure development, and institutional strengthening to adapt to new trade rules.
- Vulnerable Sectors and Groups: By mitigating negative impacts from increased competition and supporting initiatives that promote inclusivity, job creation, and social welfare.
- Businesses: By enabling them to upgrade their industrial capabilities, diversify their economies, and access financing for projects that foster innovation, entrepreneurship, and the development of value-added industries. Especially Small and Medium Enterprises (SMEs), women, and youth-led businesses, to support their adjustment to the liberalised environment, enhance competitiveness, and seize new trade opportunities.
- The Continent as a Whole: By ensuring that the benefits of the AfCFTA are shared equitably and sustainably across African countries, fostering economic resilience, and enhancing trade facilitation.
The National AfCFTA Coordination Office in state parties, such as Nigeria, are working on facilitating the development and implementation of readiness interventions to develop production and service capacities, improve competitiveness, and coordinate adjustment programs. They will likely play a role in guiding domestic entities on accessing the Fund[4].
What is the Tenor of the Fund?
The tenor of the AfCFTA Adjustment Fund loans is “Not Stated” in general overviews. However, the overall estimated requirement for the Fund to eliminate adjustment costs is $8-10 billion over the next six to ten years, suggesting a medium-term focus. Specific loan tenors would likely depend on the type of funding (concessional vs. commercial) and the nature of the project. For instance, some syndicated loan facilities Afreximbank participates in can have a three-year tenor with quarterly repayments[5].
Who has Drawn Down from the Fund?
Specific public information detailing which countries or entities have officially “drawn down” from the AfCFTA Adjustment Fund is not readily available as of May 2025. The Fund’s operationalization involves various stages, and while the legal entities and governance structures are in place, the active disbursement to a wide range of beneficiaries may still be in its early phases [2]. However, the Guided Trade Initiative (GTI), which the Fund supports, has seen countries like Rwanda and Kenya initiating trade under AfCFTA.
Who Manages the Fund?
The Fund manages the AfCFTA Adjustment Fund for Export Development in Africa (FEDA), which is the impact investment arm of Afreximbank. FEDA was appointed as the Fund Manager for the Adjustment Fund, in collaboration with the AfCFTA Secretariat[6]. An AfCFTA Adjustment Office, an integral part of the AfCFTA Secretariat, also oversees the Fund[7].
What is the Contact Information for the Manager of the Fund?
The Fund for Export Development in Africa (FEDA) is the manager. As an investment platform under Afreximbank, their contact details would typically be through Afreximbank channels.
- Afreximbank Website: https://www.afreximbank.com
For specific inquiries regarding the AfCFTA Adjustment Fund, it would be advisable to consult the official AfCFTA Secretariat website or the Afreximbank website’s dedicated section for the Adjustment Fund, which may have contact information or an inquiry portal.
In conclusion, this Fund, which the Afreximbank established in collaboration with AfCFTA, was to ensure that no African country falls behind as the AfCFTA reshapes the future of intra-African trade. Therefore, now is the time to use this fund for innovation, and turn challenges into opportunities, as it is all about resilience and not simply about opening markets
Please feel free to share your thoughts and comment in the comments section.
[1] https://www.afreximbank.com/afcfta-secretariat-and-afreximbank-sign-an-agreement-for-the-management-of-the-afcfta-adjustment-fund/
[2] Afreximbank board approves US$10m grant for AfCFTA adjustment funds – Businessday NG. Retrieved from https://businessday.ng/news/article/afreximbank-board-approves-us10m-grant-for-afcfta-adjustment-funds
[3] https://au-afcfta.org/operational-instruments/the-afcfta-adjustment-fund/
[4] About – NG-AFCFTA – African Continental Free Trade Area | Nigeria. (n.d.). Retrieved 23rd May 2025 from https://ngrafcfta.gov.ng/about-us
[5] AfCFTA Financing Initiatives. (n.d.). Retrieved 23rd May 2025 from https://www.afreximbank.com/afcfta-secretariat-and-afreximbank-sign-afcfta-adjustment-fund-host-country-agreement-with-the-republic-of-rwanda/
[6] Financing Africa’s Trade Potential: Exploring the AfCFTA Adjustment Fund. (n.d.). Retrieved on 22nd May, 2025 from https://researchdesk.consulting/unlocking-africas-trade-potential-exploring-the-afcfta-adjustment-fund/
[7] Background – Adjustment Fund Portal. (n.d.). Retrieved on 22, May, 2025 from https://microsite.peaqock.com/about-us
