Dialogues on ‘The COVID-19 crisis and its aftermath’

Benefiting from the presence of 10 members, held on 23 September 2020, the 3rd COVID-19 dialogue started with the introduction of 3 guests: African Biofuels and Renewable Energy Company (ABREC), National Bank of Investment (BNI), and VEB.RF.

It focused on two key issues:

  • Measures to address the immediate socio-economic impacts of the pandemic.
  • Initiatives and strategic priorities beyond the COVID-19 crisis.

As the COVID-19 crisis has impacted severely nearly all economies (economic recession, unemployment rise, and fall of trade and investment flows), this Dialogue follows two similar events conducted by G-NEXID (23 April and 23 June 2020).

1. African Export-Import Bank

Launched in March 2020, the US$3 billion Pandemic Afreximbank’s Trade Impact Mitigation Facility (PATIMFA) was designated to assist member countries of the African Export-Import Bank (Afreximbank) in managing the adverse impact of financial, economic, and health shocks caused by COVID-19.

Afreximbank has so far disbursed a gross amount of US$5.8 billion and expects to reach US$6.5 billion by the end of the year. The Bank is conducting assessments on a case by case level and is working with the African Union Commission and other stakeholders to think about additional measures that could be introduced. In this context, a continental-wide survey has been launched to see how COVID-19 affects the trade financing activities of commercial banks in Africa. This research is expected to provide specific information for evaluating the needs for further support from Afreximbank. Similar research is conducted with the Arab Bank for the Economic Development of Africa (BADEA).

Referring to a recent press release (24 August), Afreximbank highlighted the Bank’s strong performance in H1 2020, as “the Bank saw its Net Income rose by 10% from US$137.63 million in June 2019 to US$150.75 million in June 2020, mainly as a result of strong growth in net fee and commission income, which rose by 134%.”

2. Development Bank of Zambia

The Development Bank of Zambia (DBZ) is actively restructuring the facilities provided to clients through the COVID relief package, notably through interest relief to some clients and acceleration of capital repayment for performing clients. This approach is designed to facilitate the return to the economic viability of a business that was previously viable.

In the framework of Post-COVID-19 measures, research from the implementation of the new Strategy is essential.

3. Eastern and Southern African Trade and Development Bank

The Eastern and Southern African Trade and Development Bank (TDB) has set up a COVID-19 Emergency Response Programme (CERP) to mitigate the impact of the COVID-19 crisis on its member states. In addition to the financial interventions the Bank provides directly to its clients, TDB is collaborating with local government institutions and other multilateral institutions including the African Union’s Africa Centre for Disease Control and Prevention (Africa CDC). Through the COVID-19 Emergency Response Programme (CERP), TDB donated to its member states locally-procured personal protective medical equipment.

In 2020, TDB won the African Bank of the Year award. Also, the Bank received a record-long term project finance facility from the World Bank and the Multilateral Investment Guarantee Agency (MIGA) to support sustainable projects in the region. The Board of Governors of TDB has also increased the currently authorized capital stock of the Bank from US$ 3 billion to US$ 6 billion, and approved a record capital increase programme of US$ 1.5 billion. Thus, TDB is well-positioned to support its member states in addressing the socioeconomic impact of the COVID-19 crisis and building a resilient and integrated region.

4. Export-Import Bank of India

The COVID-19 pandemic has been deeply affecting the Indian economy. Against the impact of the pandemic across sectors, the Export-Import Bank of India presented key measures taken by the Government of India which will help the Indian economy amidst the ongoing situation. Some of these measures include :

  • Collateral-free loan of ₹ 3 trillion for MSMEs with a turnover up to ₹ 1 billion. This will benefit 4.5 million units so that they can resume work and save jobs. This scheme can be availed till 31 October 2020.
  • For stressed MSMEs, a subordinate debt provision of ₹ 200 billion has been announced for 200,000 MSMEs.
  • Equity infusion worth ₹ 500 billion through a special fund for MSMEs that have viable operations but need handholding due to COVID-19.
  • A fund of funds with a corpus of ₹ 100 billion will be set aside to assist the capacity expansion of these units, including enabling them to get listed on the market should they choose that.
  • Global tenders are not allowed for government procurement of up to ₹ 2 billion.
  • To compensate for canceled trade fairs, the Indian government will set up online market linkages.
  • A reduction of 25% on the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) from 14 May 2020 to 31 March 2021.
  • All pending refunds to charitable trusts and non-corporate businesses and professions, including proprietorship, partnership, LLP, and co-operatives to be issued immediately.

5. Indonesia Eximbank

As a policy bank from Indonesia, Indonesia Eximbank plays an active role in the National Economic Recovery Programme.

By injecting additional capital, the Government assigns Indonesia Eximbank to provide guarantees to commercial banks so that they can allocate working capital to the affected industries and corporations allowing them to continue business and avoiding lay-offs. Moreover, through the National Interest Account Program, it provides facilities to corporates that are deemed important for the government to help.

6. Islamic Corporation for the Insurance of Investment and Export Credit

Through its risk mitigation solutions, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) calibrates risk exposure in member states. In this context, the contribution of the institution is in support of medical equipment, pharmaceutical, and strategic commodities.

In partnership with the Islamic Solidarity Fund for Development (ISFD), its measures contribute to lowering the costs of funding of medical equipment.

Through high-level collaboration with multilateral and DFIs, it can mitigate risks and facilitate investments, as shown by the recent construction of two hospitals in Abidjan.

While trade and investment flows are declining due to the pandemic, ICIEC positions itself to continue its support and is eager to collaborate with other G-NEXID members.

7. Ghana Export-Import Bank

While the government of Ghana launched the Coronavirus Alleviation Programme (CAP) GHS 600 million Stimulus Package to SMEs (managed by the National Board for Small Scale Industries), key priority sectors for the Ghana Export-Import Bank (GEXIM) are garments, textile, and pharmaceutical.

Immediate measures taken by the Bank consist of a moratorium on payments from clients and a restructuring of loans overall. It has also provided working capital to purchase sanitizers.

8. Nigerian Export-Import Bank

The Nigerian Export-Import Bank (NEXIM) took the following measures to alleviate the financial constraints on its clients: payment moratorium from March 2020 to February 2021, and interest rate reduction from 9% to 5% from March 2020 to February 2021.

Benefiting from the support of Afreximbank through PATIMFA, NEXIM has also engaged with the Export-Import Bank of India and the Export-Import Bank of China.

In the aftermath of the crisis, key priorities will be building capacity in medical production and food security.

9. Saudi Export Program

Presenting key initiatives from the government of Saudi Arabia, the Saudi Export Program (SEP) indicated that the government has pledged US$ 500 million to “relevant international organizations in combating the COVID-19 pandemic”. The funds are expected to pay for emergency and preparedness response, developing and deploying new diagnostics, therapeutics, and vaccines, fulfilling unmet needs for international surveillance and coordination, and ensuring sufficient supplies of protective equipment for health workers.

The Kingdom of Saudi Arabia will chair the Virtual G20 Leaders’ Summit on 21 and 22 November 2020.

Moreover, it is expected that the Saudi Exim Bank will be launched in the next couple of years.

10. VEB.RF

VEB.RF (Russia’s leading development finance institution) delivered the statement focusing on 3 core issues:

  1. The online Conference “From Pandemic to Recovery” was held on 9 September 2020.
  2. Large-scale support programme for the Russian business provided by VEB.RF in the period of the COVID-19 pandemic
  3. The participation of the Chairman of VEB.RF to the Pan-European Commission on Health and Sustainable Development

1. Together with IDFC (International Development Finance Club), VEBR.RF held an Online Conference on “From Pandemic to Recovery” aligned with the “Finance in Common” Summit, the first global meeting of all Public Development Banks, co-organized by IDFC, was held on 9 September 2020.  The Summit is going to take place in Paris and will be accessible online on 10-12 November 2020.

The Conference was aimed at highlighting the significant role of development banks in striking the right balance between short-term incentives and long-term vision to support national economies in this turbulent period.

The Conference focused on two main issues that are at the core of every after-shock recovery: Small and Medium Enterprises and Sustainable Infrastructure. The main speakers were:

  • Mr António Guterres, United Nations Secretary-General
  • Mr Ángel Gurría, Secretary-General of the OECD
  • Dr. Bandar Hajjar, Head of the Chairs of MDBs for 2020, President of the Islamic Development Bank Group (IsDB)
  • Mrs Amina J. Mohammed, Deputy Secretary-General of the United Nations and Chair of the United Nations Sustainable Development Group
  • Mr Rémy Rioux, IDFC Chairperson, Chief Executive Officer of the Agence Française de Développement (AFD)
  • Mr Igor Shuvalov, Chairman of VEB.RF

2. In the first half of the year VEB.RF actively participated in the large-scale support programme for the Russian business in the period of the COVID-19 pandemic. This participation was assigned and at the same time assisted by the government of the Russian Federation

In the same period VEB.RF issued guarantees in favor of commercial banks, under preferential loans to entrepreneurs with a zero or reduced rate, in the amount of about 500 billion rubles (US 6,6 billion).

The results for the first half of the year show that VEB.RF has dynamically implemented plans to support projects in infrastructure, industrial development, export, and urban economy.

In March, Russia imposed lockdown measures; the government promptly reduced the tax rates and introduced tax holidays.

The government instructed VEB to cooperate with commercial banks to provide guarantees in case of default. VEB will provide liquidity and will be responsible for the financial gap. The demand for funding is huge, and it might be the first time in our modern history that the state corporation has supported SMEs on this scale.

The current idea is to lend more support to the biggest Russian banks which, in their turn, will provide loans at rates lower than the market price.

Urban development is a crucial issue for VEB, where SMEs will feel a new life renaissance.

The idea is to involve SMEs in the development of local businesses and local communities.

The first item on the agenda, which was explored, is infrastructure. There were discussions on how to develop modern infrastructure, which is currently considered to be the basis for modern sustainable development.

The second one was devoted to SMEs. The issues were raised on how to support and promote SMEs to change the lives of people dramatically.

The agenda of VEB so far is to provide liquidity, lend support to SMEs, concentrate our capital with commercial banks, to develop infrastructure, to raise funds by issuing green bonds. All in all, we speak about the agenda of sustainable development which is aimed at changing our lives in the next 4-5 years. That is about how we work.

3. The Chairman of VEB.RF Mr Shuvalov joined the Pan-European Commission on Health and Sustainable Development – an advisory body of the World Health Organization established at the initiative of the Director of the Regional Office for Europe of the World Health Organization (WHO/Europe), Dr. Hans Henri P. Kluge.

During the First online session of the Pan-European Commission on Health and Sustainable Development “Rethinking policy priorities in the light of pandemic”, which took place on August 26, the Chairman of VEB.RF Mr Shuvalov said that right from the start of the pandemic outbreak, VEB.RF had been deeply involved in fighting against COVID-19 and implementing many of the measures adopted by the Government to support the economic and social system. The commission is chaired by the former Italian Prime Minister Mr Mario Monti.

The main areas of work will be:

  • Health systems resilience in the face of increased workload;
  • Digital health;
  • Economic, social, and political sustainability and the role played in it by the health sector;
  • Inter-generational solidarity in financing health care;
  • Multilateralism – connection of this industry with the economic development of states;
  • The Chairman mentioned some other points during his speech, in particular:
  • During the pandemic VEB.RF launched a new telemedicine program, which allowed millions of people to have access to the best medical service without leaving their houses and putting themselves at risk of contagion.
  • Russia will be glad to share its experience in the fight against the pandemic, its method of measures to early detect the virus, to track positive cases, to reduce the fatality rate, to develop new therapies, and register a vaccine.

[1] Headquartered in Lomé, ABREC is a West African institution backed by 15 African states (14 from the Economic Community of West African States and Chad) and financial institutions with the mandate to promote renewable energy projects in Sub-Saharan Africa.

[2] As a State-owned enterprise, BNI is a financial institution dedicated to the economic development of Côte d’Ivoire.

[3] VEB.RF is a Russia’s national economic development institution. It is a state corporation established by Russian federal law exclusively for the public good. It is a non-commercial, non-profit organization with no shareholders. VEB.RF’s charter capital comprises funds and other property contributed by the Russian Federation; it also receives direct contributions from the Federal Budget. However, it is not a ministry or a state agency, but a special entity, tasked with facilitating a wide range of socioeconomic development activities. https://вэб.рф/en/about-us/