Moscow — H.E. Mr. Dmitry Medvedev, Chairman of the Government of the Russian Federation; Mr. Mustapha Boss, Secretary to the Government of Nigerian Federation, representing the Government of the Federal Republic of Nigeria as Chair, of the General Meeting of Shareholders;
Mr. Albert Muchanga, Representative of the Chairman of the African Union Commission; Your Excellencies, former Presidents and Prime Ministers; Honourable Ministers; Your Excellencies, Ambassadors and Heads of Diplomatic Missions;
Mr. Pierre Guislain, representative of the President of the African Development Bank Heads of, and Representatives of International Organizations;
Members of the Board of Directors of the African Export-Import Bank; Former Presidents of Afreximbank, Messrs. Christopher C. Edordu and Jean-Louis EKRA; Executive Vice Presidents, Management and Staff of Afreximbank; My dear Wife, Chinelo;
Africa straddles the East and the West, constantly invigorated by the sun as it rises from the east and sets in the west. Today, the sun shines bright as it rises once again from the east. Russia joins the path well-trodden by China and India to forge a new partnership with Africa; a relationship built on trust and a felt need for mutual prosperity. In a world being torn apart by intense divisions, isolationism, and nationalistic instincts, any handshake across borders, across the seas must be applauded.
So today we applaud the people and the Government of the Russian Federation under the leadership of His Excellency, President Vladimir Putin for fostering a new Africa – Russia partnership; a partnership that will be driven by increased trade and investment relations. Annual General Meeting of Shareholders of Afreximbank to set the stage for the new journey the Russian Federation has decided to embark upon with Africa. We welcome the decision by the Government of Russia to host the first ever Russia-Africa Summit in Sochi in October this year. Together these two events will generate a confluence of ideas and partnerships that will form a solid foundation for a strong Russia-Africa economic cooperation. We thank His Excellency, Mr. Dmitry Medvedev, Chairman of the Government of the Russian Federation, for finding the time from his very busy schedule to join us here this morning. Your presence, Chairman, is a clear evidence of the seriousness the Russian Federation attaches to
Russia's relationship with Africa and Afreximbank. Moscow is a lovely and inspirational city. I am sure many of us will leave here with fond memories. As Aleksander Pushkin, the great Russian poet of African descent, electrified Russia with lines of love and affection, so will our visit be long remembered for the true friendships it will forge. Your Excellencies, distinguished Ladies and Gentlemen is the second time in 26 years that Afreximbank is holding its Annual meetings outside the shores of Africa, the first being in Beijing, China in 2011. While there are so many reasons why Moscow can be irresistible, the over-riding consideration was a shared appreciation across Africa and Russia that a revival of bilateral trade and investment relations would be of great mutual benefit. Your Excellencies, distinguished Ladies and
Gentlemen some 60 years ago, Africans began to roll back colonialism and independent African nation states began to emerge. With doggedness, courage, bravery and extraordinary personal sacrifices, Africans fought hard for their political emancipation and prevailed, such that today across the swathe of land called Africa, Africans can walk around in freedom, own properties and choose their leaders! In the struggle for independence, Africa relied on many friends. The Soviet Union was a solid supporter, providing both material and political support, especially at the United Nations. So, as we gather here today as proud representatives of independent African States, we must not forget the pivotal role of the Russian Federation in enabling the freedom we enjoy. It cannot be over when Africa lags behind in all measures of economic progress and human development. How can it be over when our youth are abandoning the vast riches and opportunities in Africa and departing in droves to Europe and elsewhere, sometimes at great risks to their lives? It is not a good sign that in the past, Africa was depopulated by slavery; that Africans were taken away by force.
But today, the same Africans are abandoning the land they shed sweat and blood to reclaim! Your Excellencies, distinguished Ladies and Gentlemen, political independence dawned, attaining economic independence and the prosperity many hoped for would be difficult. Africa emerged at independence as a fragmented continent of many states of varying sizes. Infrastructure and systems were designed to maintain trade and economic relations with the old colonial powers and not the neighbouring countries; trade relations were structured to perpetuate commodity dependence and to discourage intra-regional trade and investment relations. In many cases, the educational system was designed to make the Africans ready tools of the old system. In what he called the "mis-education of the Negro" the historian Carter Woodson wrote, and I quote: When you control a man's thinking, you do not have to worry about his actions. You do not need to send him to the back door. He will go without being told. In fact, if there is no back door, he will cut one for his special benefit. His education makes it necessary. It is the apparent difficulty of extricating itself from these pre-independence constructs that has kept Africa down. Sixty years post-independence the continent is still heavily commodity-dependent and accounts for a paltry 2.5 percent of global trade despite accounting for 16 percent of global population. Africa remains the continent that trades the least with itself with intra-African trade at juts about 16 percent of Africa's total trade.
It is obvious that these conditions are unsustainable and cannot be allowed to persist; not in a continent with an abundance of resources, namely: 90 percent of global cobalt deposits, a critical mineral in a world that will increasingly be battery driven; 50 percent of the world's gold; 60 percent of the World's usable arable land, positioning the continent as the future bread basket of the world; 75 percent of world cocoa; 60 percent of global coffee; 40 percent of the world's platinum; 30 percent of the uranium; the fastest growing youth population in the world, with 60 per cent of its population under 24; A rapidly growing middle class estimated at over 300 million by 2030; making it a future global power house in terms of consumption.
Captain Thomas Isidore Sankara, Former President of Burkina Faso, once said and I quote change without certain amount of madness. the courage to turn your back on the old formulas, the courage to invent the future African leaders have now begun to rise to the challenge, to reinvent the future, committing to an epic battle to take back control of the continent's economy. They have begun the process of reverse-engineering the construct that has for over five decades tethered the continent to the roots of poverty. A bold integration initiative, the African Continental Free Trade Agreement (AfCFTA) signed in March 2018, has gathered the requisite 22 ratifications and has now come into force. The AfCFTA represents the most consequential move that can place the continent on the path to economic prosperity as it will create an integrated market of 1.2 billion people and 2.5 trillion U.S. dollars in Gross Domestic Product. All of a sudden, the fragmentation and Balkanization that had been at the root of Africa's underdevelopment appears to be destined to the dustbin of history.
And even before the AfCFTA, many African economies have been investing in infrastructure; and across the continent, industrialization has assumed top priority.
So, distinguished Ladies and Gentlemen, a revolution is sweeping across the African continent without bloodshed or conflict. It is peaceful and will fundamentally alter our world, shatter old assumptions and reshape our lives.
It is easy to under-estimate as it is not accompanied by banners or fanfare.
The revolutionaries are of a different breed. Instead of being trained in military camps the freedom fighters for this new battle are being trained in technical schools and universities; instead of fighting in trenches, this battle will be fought in factory floors and tech incubation centres; instead of guns, the battle will be fought with ideas, hard work and investments. While bravery was required for the political struggle, courage is a necessity for the economic liberation struggle.
Tech, and not armed guerrillas; ideas and not brute force will represent the potent force for victory in this new struggle. And as with the political struggle, Africa needs partners that can support it to prevail. The partnership we seek is one beyond aid and grant, but one founded on mutual respect and trust, win-win economic cooperation and investments and pursuit of shared prosperity. encapsulated in African Union's bold Agenda 2063 - the Africa We Want.
Chairman, Your Excellencies, the Russian Federation represents one of such partners that Africa looks up to. Just as the famous Patrice Lumumba University in Russia, trained some of the engineers, teachers and scientists Africa needed at independence, Russian technical schools and universities can increase their intake of Africans beyond the current 15,000 at various Russian Universities; Chairman, Your Excellencies, the Russian Federation represents one of such partners that Africa looks up to. Just as the famous Patrice Lumumba University in Russia, trained some of the engineers, teachers and scientists Africa needed at independence, Russian technical schools and universities can increase their intake of Africans beyond the current 15,000 at various Russian Universities; Russia can be a source of investment goods that Africa needs to develop its infrastructure; Russia can transfer critical technology in digitization as well as in mining and processing of raw materials; Russia can be a source of non-debt creating investments that Africa needs in key areas, such as rail, aviation, healthcare, petrochemicals, and there is no reason why 2-way trade which at 2018 levels of about 22 billion U.S. dollars is far below potential, cannot be increased rapidly.
Chairman, Afreximbank believes that Russia-Africa bilateral trade flows can easily exceed 40 billion U.S. dollars by 2023. There are many factors and indicators that support our forecast. Since the past 3 years when Russia began to re-engage actively with Africa, trade values have risen rapidly, with 2-way trade rising by about 70 percent between 2017 and 2018; Russia is also making concerted efforts to promote trade and investment relations. In December 2017, Russia Export Centre joined the shareholding of Afreximbank providing an institutional platform for promoting Africa-Russia trade.
That partnership has seen Afreximbank and Russia Export Centre jointly supporting the import of critical fertilizer needs by Zambia and Zimbabwe. Our two institutions are collaborating in implementing mining projects with added processing capacities in Sierra Leone and Zimbabwe as well as in facilitating discussions for the establishment of a petrochemical plant in Angola and Nigeria under Joint Ventures between Russian and Angolan entities.
Your Excellencies, distinguished Ladies and Gentlemen, less than two years of our collaboration with Russia Export Centre, projects and trade deals amounting to over 5 billion US dollars have been supported or are under consideration. But this is just a tip of the iceberg! Under a Memorandum of Understanding Afreximbank entered into with Russia Railways, we see the active participation of Russia in rebuilding Africa's rail infrastructure just as Russian aviation companies are exploring new markets across Africa. I am pleased to say, Chairman, that the future of Africa-Russia trade and investment relations is very bright.
Your Excellencies, distinguished Ladies and Gentlemen, I will be providing Afreximbank Shareholders with a full report on the operations and financial performance of the Bank in 2018 at a closed session tomorrow. Permit me Your Excellencies, Distinguished Ladies and Gentlemen to share a few highlights this morning. In this regard, I am pleased to report that Afreximbank remains strong, profitable and relevant to the development aspirations of Africa. Intra-African trade and regional integration remained the arrow head of our effort in line with the Bank's current 5-year strategy, dubbed "Impact 2021: Africa Transformed."
As a result, the Bank worked closely with the African Union (AU) to deliver on the goals of the African Continental Free Trade Area Agreement (AfCFTA). We made this choice fully aware that it is an integrated Africa that can unleash the full potentials of the Continent. Through its various technology-driven initiatives, the Bank is working to reduce key constraints to intra-African trade and investments. Emphasis is on tackling the lack of a regional payment infrastructure that raises transactions costs in Intra-African trade, improving access to trade information, creating the infrastructure that will enable a seamless conduct of customer due diligence on African counterparties, and improving the efficiency of transporting goods across Africa's numerous land borders.
We have completed the development of a Pan African Payment and Settlement System that will enable intra-African trade to be paid for in African currencies. With that system, we will localize intra-African trade in terms of currency, reduce transaction costs in intra-regional payments and hopefully formalise a significant proportion of the 40-50 billion U.S. dollars in informal intra-African trade. We believe that the system will in 3 – 4 years add more than 40 billion U.S. dollars to annual intra-African trade flows. So, in the very near future, we hope that a small trader in Uganda can buy South African wine, paid for in Ugandan Shilling, while sitting in his small shop in Kampala while the South African exporter receives payment in Rand in the comfort of his or her shop in Cape Town; we expect that an Ivorian can pay for his holidays in the Seychelles in CFA Franc; that EgyptAir can sell its tickets to a Ghanaian in Ghanaian Cedi in confidence that it will receive Egyptian pounds.
We expect this platform to be transformative of the way Africa trades with itself. We have also completed the development of an Africa Customer Due Diligence Repository Platform (MANSA) which will make it possible for KYC (Know your customer) and AML (Anti Money Laundry) checks to be quickly done on counterparties thereby reducing risk perceptions that hinder trade and financial flows into Africa. Population of the platform is underway and with the help of Central Bank of Egypt, extensive training of African Central Banks and commercial banks is underway.
We expect that by the end of next year, the platform will hold over 500,000 data sets making it the largest repository of Customer Due Diligence Information on African entities globally. Very soon Mr. Prime Minister, a Russian business person interested in doing business in Africa can sit in the comfort of his or her home and conduct due diligence checks on all his African counterparties. In addition, Your Excellency, development of Artificial Intelligence – enabled Trade Information Portal as well as Trade and Investment Regulatory platforms are in progress. We believe that these will go a long way in breaking down the barriers to trade caused by the fragmentation of Africa. And because we know that access to trade information is crucial, Afreximbank launched an Intra-African Trade Fair series to be held biennially. The first held in Cairo, Egypt in December 2018 was a tremendous success, attracting over 1,000 exhibitors and 45 countries with 32 billion in deals generated.
The second in the series will be held in Kigali, Rwanda in September 2020. we hope that Russian businesses will take advantage of that opportunity To ensure that countries are supported to manage the fiscal revenue shock the AfCFTA may engender, we are in discussions with the African Union to arrange an AfCFTA Adjustment Facility in an amount of 1 billion U.S. dollars to be available to countries in need. This facility will make it easier for countries to comply with their commitments on tariff concessions and make the AfCFTA more impactful.
Under the Bank's Intra-African Trade Strategy, the Bank planned to disburse an amount of 25 billion U.S. dollars on a revolving basis in support of intra-regional trade between 2017 and 2021. I am pleased to report that in two years of implementation, about 8 billion U.S. dollars have been disbursed supporting trade and investment flows across borders. Afreximbank has committed significant resources towards creating the infrastructure that will support export manufacturing. A wood processing park supported by the Bank is already operational and contributing significantly to the economy of Gabon; a mineral processing park and port are also under development in Gabon as are industrial parks in Cote d'Ivoire, Nigeria, Malawi, Togo and Kenya. Credit facilities have been granted for the construction of Border
Markets in Southern Africa as well as for roads linking multiple countries in West Africa. We have made improving access to trade finance, especially trade services a key element of our work. We cannot meaningfully hope to realize the fruits of the AfCFTA if there are no banks providing L/C confirmation and other trade services in support of intra-trade; We cannot also sit on our palms and watch our member countries suffer because their banks are unable to access correspondent services. Afreximbank has therefore set itself the goal of granting trade finance and trade services lines amounting to 8 billion U.S. dollars to 500 African banks spread across the continent, by the end of 2021.
About 320 banks have so far been on-boarded into the Programme and work is continuing. Chairman, Your Excellencies, distinguished Ladies and Gentlemen, in the area of financial performance, I am pleased to report that total assets and contingent liabilities reached about 15 billion US dollars at the end of 2018, up 15 percent from 13 billion U.S. dollars as at December 2017. Despite the impact of IFRS 9 implementation on profit, net income rose by 26 percent from 220 million U.S. dollars in 2017 to 276 million U.S. dollars in 2018, driven by a 19 percent growth in net interest income and a contained rise in expenses.
Capitalization remained sound, with capital adequacy ratio at 25 percent, on the back of an increase of 20 percent in shareholders' funds to reach 2.6 billion U.S. dollars at the end of 2018, bringing shareholders funds and contingent equity (Callable Capital) to reach about 3.5 billion U.S. dollars.
And based on the strong performance and the transformative initiatives the Bank implemented in 2018, it was voted AFRICAN BANK OF THE YEAR by the African Banker a few days ago. We owe the performance reported to the strong support of shareholders and Board of Directors as well as the hard work and commitment of our staff members. We thank each and everyone of you for making it possible for Afreximbank to report another good year.
Permit me at this juncture to extend our appreciation to His excellency, President Vladimir Putin, under whose auspices these meetings are holding and to His Excellency Mr. Dmitry Medvedev, Chairman of the Government of the Russian Federation for honouring us with his presence despite his very busy schedule.
We thank Hon. Mr. Sergey Lavrov, Minister of Foreign Affairs and Hon. Mr. Denis Manturov, Minister of Industry and Trade of the Russian Federation. This event wouldn't have been possible without their strong support and leadership. We thank the Director General of Russia Export Center Mr. Andrey Slepnev and his very hardworking colleagues for the true partnership that enabled us overcome challenges and implement this event smoothly.
Our deep appreciations also go to Mr. Vitaly Machiskey, Chairman of VI holdings and Mr. Dmitry Manzepin, Vice Chairman of Uralkali /Uralkem, who have already started giving meaning and substance to the Russia-Africa trade and investment cooperation these meetings are hoping to foster. Our appreciation also goes to our invited guests, many of whom are also our business and development partners. We are grateful to you all for coming.
The great and respected Russian poet Aleksander Pushkin, once wrote and I quote "thus people - so it seems to me - become good friends for sheer boredom". As I close, Mr. Chairman, I will beg to modify that and say that from now on, Africa and Russia will deepen their friendship on the basis of business and more active interactions.
We look forward with hope for a brighter relationship between Africa and Russia, a relationship that will be built on trust and mutual respect, and most importantly relations that will bring economic prosperity to the African people and Russians alike.
I thank you for your kind attention.