Table of contents 1 EXECUTIVE SUMMARY LIST OF TABLES 9 1.1 The Operating Environment 2.1 Developments in Global Output 1.2 The Bank’s Operations and Activities 2.2 Africa: Real GDP Growth 1.3 Development Impact 2.3 Africa: Inflation 2.4 Reserve Position of African Countries 2.5 Africa: Exchange Rate Developments 2 THE OPERATING ENVIRONMENT 2.6 Commodity Prices 2.1 The Global Economic Environment 15 2.7 Real Commodity Prices 2.2 The African Economic Environment 2.8 Africa: Merchandise Trade 2.9 Intra‑African Trade 3. OPERATIONS & ACTIVITIES 3.1 Afreximbank Distribution of Loan Approvals and 51 3.1 Operations Outstandings by Type of Product/Programme 3.2 Activities 3.2 Afreximbank Distribution of Loan Approvals and Outstandings by Sector 3.3 Afreximbank Distribution of Loan Approvals and 4. TRADE DEVELOPMENT IMPACT Outstandings by Type of Beneficiary Institution 91 OF THE BANK’S OPERATIONS 3.4 Afreximbank Distribution of Loan Approvals and AND ACTIVITIES Outstandings by Trade Direction 4.1 Intra‑African Trade 4.2 Industrialization and LIST OF FIGURES Export Development 2.1: Global Output and Inflation 4.3 Trade‑Enabling Infrastructure 2.2: Average GDP Growth of African Net Oil 4.4 Trade Finance Leadership Exporters and Importers 4.5 Trade Development 2.3: Africa: Output by Region Impact Assessments 2.4: Africa: Inflation by Region 2.5: Trends in Africa’s Merchandise Trade 5. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL YEAR 2.6: Trends in Intra‑African Merchandise Trade 105 ENDED 31 DECEMBER, 2017 3.1: Afreximbank Facility Approvals 3.2: Afreximbank Credit Outstanding 5.1 Introduction 3.3: Afreximbank: Distribution of Outstanding Loans, by 5.2 Statement of Comprehensive Income Type of Product/Programme 5.3 Statement of Financial Position 3.4: Afreximbank Distribution of Loan Approvals by Sector 3.5: Afreximbank Number and Average Size of 6. FINANCIAL STATEMENTS FOR THE Approved Transactions YEAR ENDED 31 DECEMBER, 2017 3.6: Average Maturity and Standard Deviation of 115 Approved Transactions 3.7: Syndications and Club Deals Arranged or Co‑Arranged 7. INVESTOR INFORMATION by the Afreximbank 165 LIST OF BOXES 2.1 Rising Global Interest Rates and Lending Spreads: Implications for Africa 2.2 African Continental Free Trade Area and Intra‑African Trade Prospects 3.1 Countering the Effects of De-Risking on African Entities 3.2 Afreximbank’s Depository Receipts Issuance 4.1 Trade Development Impact Framework 1 Afreximbank Annual Report 2017 1 Vision Mission To stimulate a consistent expansion, To be the diversification and development of African trade while operating as a first class, profit-oriented, socially Trade Finance responsible financial institution and a centre of excellence in African Bank for Africa trade matters. 2 Afreximbank Annual Report 2017 3 Transmittal Letter 17 March, 2018 The Chairman General Meeting of Shareholders African Export-Import Bank Cairo, Egypt Dear Mr Chairman, In accordance with Article 35 of Afreximbank Charter, I have the honour, on behalf of the Board of Directors, to submit herewith the Report of the Bank’s activities for the period 1 January, 2017 to 31 December, 2017, including its audited Financial Statements covering the same period. The Report also contains a review of the international and African economic environments under which the Bank operated and highlights the trade developmental impact of some of the Bank’s operations and activities during the period. Mr Chairman, please accept the assurances of my highest consideration. Dr Benedict Oramah President and Chairman of the Board of Directors 4 Afreximbank Annual Report 2017 5 Board of directors External Auditors Management team Dr. Benedict Okey Oramah Deloitte & Touche Dr. Benedict Okey Oramah Dr. Robert Tomusange President & Chairman President and Chairman Director (Administration) KPMG of the Board of Directors Dr. George Elombi Mr. Elias Kagumya Executive Secretary Mr. Denys Denya Director (Risk Management) Executive Vice‑President Mr. Stephen Tio Kauma (Finance, Administration & Banking Services) Director (Human Resources) Members of the Board of Directors Dr. George Elombi Ms. Gwen Mwaba Class A Executive Vice‑President Director (Trade Finance) (Governance, Legal & Corporate Services) Dr. Mohammed Mahmoud Issa-Dutse Mr. Irfan Afzal Mr. Amr Kamel Dr. Louis Kirangwa Kasekende Director (Syndications and Agency) Executive Vice‑President Mr. Stefan Luis Francois Nalletamby (Business Development & Corporate Banking) Mr. Rene Awambeng Director (Client Relations) Mr. Gamal Mohamed Abdel-Aziz Negm Ms. Kanayo Awani Managing Director Ms. Samallie Kiyingi (Intra‑African Trade Initiative) Director (Legal services) Class B Dr. Philip O. Kamau Mr. Ibrahim Sagna Dr. John Panonetsa Mangudya Senior Director (Finance) Director (Advisory & Capital Markets) Mr. Jean Marie Benoit Mani Mr. Samuel Loum Mr. Kwabena Ayirebi Director (Credit Assessment) Director (Operations) Mr. Victor Jerome Nembelessini-Silue Dr. Hippolyte Fofack Mr. Obi Emekekwue Mr. Kee Chong Li Kwong Wing Chief Economist & Director Director (Communications) (Research & International Cooperation) Mr. Chandi Mwenebungu Class C Dr. Robert Ochola Director (Treasury) Director (Strategy & Innovation) Mr. Anil Dua Mr. Kofi Adomakoh Ms. Xu Yan Director (Project and Export Development Finance) Independent Directors Mr. Andrew Gamble Mr. Ronald Sibongiseni Ntuli 6 Afreximbank Annual Report 2017 7 1Chapter One Executive summary Chapter One Executive summary 1.1 THE BANK’S OPERATING 1.2 THE BANK’S OPERATIONS This Annual Report for 2017 US$ ENVIRONMENT AND ACTIVITIES Global economic activity continued to firm up in The Bank’s total facility approvals stood at 7. 9 3 bn 2017, with world GDP growth quickening to 3.7 US$7.93 billion in 2017, down by 34.08 percent percent from 3.2 percent in 2016. This mainly relative to the US$12.03 billion recorded in 2016; presents the operational and 2017 approvals up 57.35% compared with 2015 reflected firm recovery in domestic demand nevertheless, at US$5.04 billion, approvals in in advanced economies and in China as well as 2017 were 57.35 percent higher than in 2015. The improved performance in other large developing decrease in the level of facility approvals in 2017 financial performance of the countries. Higher levels of investment at the is mainly attributed to a scale-down in the Bank’s global level coupled with stronger international interventions under the Countercyclical Trade trade activity also contributed to improved global Liquidity Facility (COTRALF), as planned at the African Export-Import Bank economic performance. inception of the facility. The COTRALF, a two-year emergency intervention, was approved by the In Africa, GDP growth is estimated to have Board of Directors in 2015 to support the Bank’s accelerated to 3.7 percent in 2017, up from 2.8 member states coping with the negative impact (“Afreximbank” or “Bank”), percent in 2016. Key factors that contributed to of the commodity counter-shock as well as the this rebound included strong and firm commodity impact of terrorism activities on many African prices; a faster-than-anticipated growth recovery, countries. The COTRALF was the main driver of the especially among non-resource–intensive one full year since the launch Bank’s balance sheet in 2017, raising total assets to economies; a positive reversal of economic more than US$14 billion as at June 2017 when the fortunes of the continent’s two largest economies COTRALF was at its peak, and gradually lowering – Nigeria and South Africa, and an improvement of its fifth Strategic Plan, them as the facility scaled down. Accordingly, in macroeconomic fundamentals in a number of outstanding loans decreased by 17.79 percent countries, underscoring Africa’s resilience. to US$8.48 billion at the end of 2017 as a large IMPACT 2021 – Africa The volume of global merchandise trade is proportion (about US$3.2 billion) of the COTRALF estimated to have grown by 3.6 percent in 2017, was repaid in November up from 1.3 percent in 2016. This significant and December. improvement in trade growth was supported Transformed. Line of Credit, Syndications, and Direct Financing by the synchronous upturn in global output and Programmes were the main lending programmes recovering global demand. Robust growth in China used by the Bank in 2017 to support member and the partial recovery in oil and other commodity countries, financial institutions, and corporate prices also lent support to the recovery of global The Bank’s operations and activities were carried entities in Africa. During the year, the Bank trade in 2017. In Africa, total merchandise trade out in line with the approved Budget and Work approved more than US$4 billion, and about US$2.31 grew by 2.1 percent to US$833.94 billion in 2017 Programme of 2017, and the Annual Report billion and US$1.32 billion, respectively, under the following an 11.9 percent contraction in 2016; the was prepared in line with the Bank’s reporting Line of Credit, Syndications and Direct Financing steady recovery in global prices for commodities, requirements and corporate best practices that Programmes. In terms of outstanding loans, these particularly those of export interest to Africa, were were in effect during the year. three programmes accounted for about 85 percent the main drivers of this impressive growth. of the Bank’s total loans portfolio in 2017. The Annual Report is organised as follows: Chapter 2 provides an update on major global and African economic and trade developments of the year that affected the business