The president of the African Export-Import Bank (Afreximbank) is calling on African banks to reduce their reliance on European counterparties in letter of credit (L/C) transactions.

Benedict Oramah wants more intra-African cooperation in the banking sector, and says this is part of the bank's plans to seize upon continental political will, reverse-engineer the legacy of colonialism, and promote intra-African trade and integration.

African trade

Speaking at New York University at the invitation of Africa House, Oramah said a big challenge is to encourage African trade finance providers.

It is currently easier to finance trade with a European counterparty than with a neighbour he told delegates.

Similarly, an external provider must often be found to confirm L/C transactions between two African counterparties while many transactions are conducted in dollars or euros, all of which adds to costs.

Africa first

Such a fragmented system and having to deal in multiple currencies does not create a workable environment for growing local trade according to Oramah, who is calling for Africans to rid themselves of the colonial mentality of trusting European partners, but not fellow Africans.

The bank is emphasising an 'Africa First' strategy and has ongoing projects around correspondent banking, developing a payments and settlements programme, and supporting subregional bankers' associations with an aim of developing a pan-African alliance the bank's president concluded.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.