Professor Benedict Okey Oramah uses the story of the bitter-sweet story of cocoa as a metaphor for Africa’s weak and untenable position in global trade and investment. The native Ethiopian plant, he says in his deceptively shy mien, undergirds an industry whose value-chain racks up $140 billion yearly in revenues. Cocoa beans are transformed into such end products as chocolates, beverages and cosmetics, the delight of billions of consumers all over the world. That is the bitter side of the tale.
Flipside. African countries, notably Cote d’ Ivoire, Nigeria and Ghana, produce massive 77 percent of the beans but account for a measly three to seven percent of global trade along the value-chain. African producers mainly export raw, unprocessed beans to developed industrialized countries who transform them into delectable finished goods.
Now, this gets Prof. Oramah all riled up. The scandalously low level of value addition to agricultural and mineral resources cause Africa to “export jobs and capital overseas”, he laments. Africa gets little from its exports but bear the effects of uncertainty in the markets while processors in Western economies who add value gain commensurately more. A solutions man to the core, Oramah led the African Export-Import Bank (Afreximbank), where he has been President and Chairman since 2015, to initiate the African Cocoa Initiative (AFRICOIN), to intervene in Africa’s cocoa industry, as per the institution’s mandate. Over time, the Bank has helped to build Africa’s cocoa processing capacity such that Cote d’Ivoire overtook the Netherlands in cocoa processing capacity a few years ago. The goal is to make Africa more involved in the entire value-chain of all agricultural and mineral-based resources where it has comparative advantage, thereby procure fairer deals and more stable income for sustainable development. Greater entrenchment in global trade at all levels, Prof. Oramah explains, would enable the continent to avoid the “classic cobweb” cycle which afflicts commodity trading as prices yoyo inversely with volume.
This in a nutshell, is the essence of Prof. Oramah’s job at Cairo-based Afreximbank. The pan-African multilateral trade finance institution is mandated to help grow its trade profile, especially intra-Africa trade, and assist in the diversification of African economies away from raw commodities.
The Bank’s main vehicle for achieving this commission is its five-year strategic plan — Impact 2021: Africa Transformed. This details how it goes about financing African trade and hopes to disburse over $25 billion on a revolving basis by its terminal date of 2021. Part of its strategy is the staunch support it is giving to the development of Industrial Parks and Export Processing Zones across the continent complete with Testing, Inspection and Certification Centers to upgrade standards and ensure the competitiveness of products they churn out.
In the trade finance expert’s opinion, it’s time for Africa to achieve economic independence in addition to the political sort. He considers the African Continental Free Trade Agreement (AfCFTA) which he helped to birth to be indispensable for economic emancipation. His institution matched words with action by setting aside $I billion to help participating countries deal with the sudden loss of tariff revenue that compliance may cause.
In collaboration with the African Union and the Egyptian government, Afreximbank organized the first ever Intra-African Trade Fair (IATF2018) in Cairo, Egypt in December 2018. The fair recorded deals valued at $32.6 billion. Its success has made the second fair scheduled to take place in Kigali, Rwanda in 2020 inevitable.
Dissatisfied with the state of Africa’s payment system, Prof. Oramah’s team at Afreximbank is working on a Pan-African Payment and Settlement Platform to reduce the foreign currency content in intra-African transactions to complement ease-of-doing business measures in the AfCFTA project. It is contemplating a notional currency which may be a precursor to a common African currency. Other innovative products of the Bank include the Counter-cyclical Trade Liquidity Facility which is helping African countries and producers to weather prevailing harsh conditions in global finance and the commodity super cycle.
The love for trade finance came to Oramah early in his academic career. He first learnt of it as a young agricultural economics student in the University of Ibadan in the early 1980s.The work of Exim Bank of US in trade finance and facilitation fascinated him as Nigeria had not yet had an Export-Import bank. He was so impressed that he resolved he would work in an Export-Import bank later in life, if he got the chance. Close to four decades on and armed with a PhD, Oramah directs the affairs of Africa’s foremost export-import finance institution contemplating African trade and envisioning its ascent.
The results of these initiatives are telling. African Trade Report 2019 indicates that intra-African trade increased steadily in 2018 and grew 17 percent to $I59 billion. Afreximbank for its part, pushed up revenues by 24 percent in 2018 to $806 million while net income rose by 36 percent to $276 million.
Ever ready to engage and be engaged, Prof. Oramah is at home anywhere in Africa as he builds relationships that have moved participating shareholder states to 51 of the 55 countries on the continent without prejudice to friendly countries outside the region. The holding of the Bank’s 2019 Annual Meetings in Moscow, in the Russian Federation is a testimony. And so are the numerous awards that he has had the honour to accept starting from the richly deserved distinguished title of Professor of International Trade and Finance from Adeleke University, Ede, Nigeria for his powerful peer-reviewed articles and papers on Africa’s economy and contribution to knowledge on global economics in general. Small wonder then that JeuneAfrique, a pan-African French language publication ranked Prof. Oramah among the top 100 influential persons of the Year 2018.
All the honour and more are certainly appropriate for a supposed policy wonk who challenges us to contemplate how much better the world would be if Africa’s per capita GDP is enabled to double its current figure.