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 Fund will support African countries and the private sector to effectively participate in the new trading environment established under the AfCFTA.

The $10 billion fund, headquartered in Kigali, Rwanda, is a critical instrument in the realisation of the AfCFTA. It will help countries to implement agreed protocols and support African companies to retool for effective participation in the new trading regime.

The AfCFTA Adjustment Fund will support AfCFTA State Parties to adjust smoothly to the new liberalised and integrated trading environment established under the AfCFTA Agreement by mitigating the potential adverse impacts of AfCFTA-induced tariff revenue losses.

Also, the fund will help to address the infrastructure deficits and supply chain bottlenecks to the implementation of the African Continental Free Trade Agreement.

Established by the Afreximbank, AfCFTA Secretariat and the African Union Commission (AUC) following a mandate from the African Union (AU) Summit of Heads of State and Governments, the AfCFTA Adjustment Fund consists of three sub-funds, namely, the base fund, the general fund, and the credit fund.

The Adjustment Fund consists of a Base Fund, a General Fund and a Credit Fund. The Base Fund will consist of contributions from State Parties, grants and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated.

It will also support countries to implement various provisions of the AfCFTA Agreement, its Protocols and Annexes. The General Fund will mobilise concessional funding, while the Credit Fund will mobilise commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.

The resources required for the Adjustment Fund over the next 5-10 years are estimated at US$10 billion. Afreximbank has already committed $1 billion towards the AfCFTA Adjustment Fund.

Source: AFCFTA