South Africa accedes to Afreximbank, unlocking $8 billion Country Programme

Stephen Grootes speaks to Willem van der Spuy, Acting Deputy Director General of Exports at the Department of Trade, Industry and Competition; about South Africa’s accession to the Bank and what the $8‑billion Country Programme means for trade, industrialisation and economic integration across the continent.     

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Episode Transcript

Speaker 1 (00:00):
Big events sort of involving other countries and our economy.
Today our official inclusion in the African Export Import Bank,
and then the news overnight that a go has been extended. Well,
I suppose we should start rarely with the ceremony today
to launch our inclusion at the African Export Import Bank,
the President speaking there earlier today. The bank now says
we qualify for lending of up to eight billion US dollars.

(00:23):
Villain funder spe is the acting Deputy Director General of
Exports at the Department of Trade, Industry and Competition. Villain,
good evening and thanks for your time, taking quite a
long time to get to this point. What advantages do
we now get from being a part of the bank.

Speaker 2 (00:40):
Thank you and good evening and thank you for having
us well. The overall program will aim to inject capital
into our priority industrial projects. It will support export diversification.
It will also support with infrastructure development as well as
transformation initiatives. If we look in terms of deepening so
Africa's industrialization projects will be targeted that contributes to the

(01:02):
national industrial policy areas of decarbonization, diversification and digitization. Examples
of projects for example which could include it includes advanced manufacturing,
green industries, critical minerals, beneficiation, pharmaceuticals and the digital economy.
So I think that is in terms of deepening our
industrial projects. Support will also be sought for projects in

(01:24):
and development of special economic zones and industrial parks. I
think that's an important area for us in terms of
our industrial policy. And then a very important element was
also mentioned is that the Bank will provide support through
its what it's called Inclusive Development Support Program which will
fund that transformation in the country. And we'll look at

(01:48):
allocating funding for projects to enable black businesses and entrepreneurs
to access finance, both assets and participate in strategic sectors
of our economy.

Speaker 1 (01:56):
There are lots of projects and we all know there
are lots of parts of our economy that needs the money.
Three billion dollars of the eight billion goes straight to
the Transformation Fund. Why there specifically, I mean it's a
big chunk.

Speaker 2 (02:09):
I think that's a big element. But I think that
was also an important contribution of the AFFIX and Bank
to contribute to the issue of transformation in South Africa
and to make a practical contribution in terms of making
funding available to black businesses to really support entrepreneurships and

(02:29):
as well as to as indicated, build their assets and
participate in strategic sectors of the economy. And that will
be then linked in with broader funding initiative linked to
the Transformation Fund and initiative, So it will be one
of the components which I think contributes to the Transformation
Funds overall framework of funding and support that it will provide.

Speaker 1 (02:51):
Does the fund have the people who will make the
decisions about where the money goes yet, as I understand
that they're going to be appointed by the Minister. Does
it have the machine to do all of this? I mean,
I realized it's early days for both our inclusion in
the Bank and the Transformation Fund, but does it have
all of the machinery to do that?

Speaker 2 (03:08):
The Transformation Fund, the process in terms of the preparations
for the launch bit is underway, and I think it
is it an advanced stage and I think we should
probably be communicating we'll look further details in the near
future around that. I think what is important though, is
that the trans in terms of the Transformation Fund, that
the Effects and Bank has put its hand up and
that it is allocating funds for that, and that it

(03:31):
is already I think engaging certain aspects of the Transformation
Funds preparations and readiness. So as indicated, I think the
prison of the Efficts and Bank indicated in terms of
the country program that they were not just waiting for
the launch. They started preparations so that practical implementation can start.

Speaker 1 (03:52):
Really, student, I do have to get to this point,
philm and I'm sorry, but I just want to make
sure I understand it. The money goes the three billion
round that goes in the Transformation Fund. Is the board
of that fund going to be appointed by the minister
and will they decide which projects get funding? Is that
how it's going to work at this point.

Speaker 2 (04:11):
So the indications are that the Transformation Funds, once it's
launched and the relevant government structures have been put in
place by the Minister, that they will then be assessing
various projects and that they will then be linking those
projects with potential funders such as the Effects and Bank

(04:31):
is one of the options. And they will also look
at various options in terms of whether there blended instruments
for example, that might be used and those kind of
elements of it. So that is the understanding at the
moment but I must also speak under correction that I'm
not a specialist on the transformation fund.

Speaker 1 (04:48):
No, sure, I understand, all right, thank you. We've also
brought shares in the bank, or we have shares. I'm
talking now about the African Export Import Bank. We have
shares in the bank. We have to put money in
to get those shares. It would make sense if we did.

Speaker 2 (05:04):
So originally several years ago through the Export Credit Insurance
Corporation of South Africa, which is one of the TTIC
entities in that South Africa's insurance enterprise, which supports political
and commercial risk cover for key projects and for exporters
that buy what was called Class B shares into the

(05:28):
Afflicts and Bank, and those shares have remained with the
Affects and Bank, and through our accession which took place today,
those shares will be converted to Class A shareholding, which
is sovereign shares which have a greater say in the
management of the bank. That process that does not require
us to buy any additional shares. The conversion of those

(05:50):
shares does not require additional costs associated with that. So
in many ways, what we're doing is the existing shares
that we have will just basically have more more valuable
meaning to them, so to speak. So in many ways
it's a very positive utilization of our existing shares within

(06:11):
that organization.

Speaker 1 (06:12):
The Bank's been operating for a long time, and I
realized obviously there was a very important reason we didn't
join it for a long time, because it was during
the Aparthe eight era. We're now the fifty fourth member,
which fillam basically makes us the last member on the continent.
Why did it take us so long to get to
this point?

Speaker 2 (06:31):
I think what is important about it is that I
think there was various developments which took place through the years.
But I think what is very important is that, particularly
under the current seventh administration, that it became a strong
parity for us to become a member of the African Bank.
And I think through the various initiatives which was undertaken
and supported by both the Minister and eventually Cabinet and

(06:55):
then supported by Parliament as or, we will managed to
finalize our accession process.

Speaker 1 (07:01):
Will thank you very much indeed, for the time. Villain
Funder of Spee is the Acting Deputy Director General for
Exports of the Department of Trade, Industry and Competition