Afreximbank, BSMART Technology Expand AACTGS to Cover Container Deposits and Customs Bonds in East Africa

The container guarantee facility ensures that container users' payments for their obligations to shipping companies related to the containers, such as damage and total loss, are covered.

Dr. Stephen Teang, Managing Director for BSMART Technology Ltd. exchanges the signed facility agreement file with Mrs. Kanayo Awani, Executive Vice President, Afreximbank. Looking on is the Bank's Manager, Client Relations East Africa, Ms. Farida Kasujja and Senior Manager, Legal, Joseph Ifebunandu

African Export-Import Bank (Afreximbank) has signed a facility agreement with BSMART Technology Ltd to extend the Afreximbank African Collaborative Transit Guarantee Scheme (AACTGS) to include the issuance of container deposit guarantees and customs bonds in the East African Community (EAC) region.

As per the terms of the agreement, signed during the recently concluded Afreximbank Annual Meetings (AAM2024) held in Nassau, The Bahamas, Afreximbank will provide container guarantees to shipping companies on behalf of BSMART Technology Ltd. In turn, BSMART Technology Ltd will process Bills of Lading and release containers to container users (importers and exporters) without requiring them to provide any security deposits, thereby offering capital relief which can be reinvested into the trade sectors.

The container guarantee facility ensures payments on behalf of container users for all obligations to shipping companies related to the containers, encompassing damage and total loss. Typically, shipping companies would demand cash deposits of up to $5,000 as collateral for each container.

Mrs. Kanayo Awani, Executive Vice President, Intra-African Trade and Export Development Bank, signed the agreement on behalf of Afreximbank while Dr. Stephen Teang, Managing Director, signed for BSMART Technology Ltd.

In her remarks on the accord, Mrs. Awani emphasized the strategic importance of container security for the East African region and its impact on the northern, central, and southern corridors. Annually, this region handles approximately 3,500,000 containers, necessitating deposits that tie up an estimated USD 14 billion from importers and exporters.

"Freeing up this immobilized liquidity could significantly bolster trade finance for businesses," Mrs. Awani explained.  “The release of these funds will, indirectly, finance trading merchants and inject liquidity back into their operations. The facility will also support numerous small-scale and informal traders who, otherwise, will lack access to direct financing, thereby playing an essential role in enhancing trade and economic activity in the region,” she added.

Mrs. Awani further stated that the facility will enhance competitiveness and create business opportunities by enabling the efficient movement of raw materials, manufacturing equipment, and intermediate inputs necessary for export manufacturing. This, in turn, will facilitate participation in regional and global value chains..

In his professional opinion, Dr. Teang observed that merchants situated in landlocked nations are disproportionately impacted, encountering the highest container deposit rates—approximately $5,000 per container—owing to extended turnaround times.

“According to my estimation, through Afreximbank's container guarantee initiative, about 2.6% of the region's container traffic will benefit, freeing up approximately US$375 million in container deposits,” Dr. Teang said.

Hosted by the Bahamian government, the African, Caribbean, and Pacific Group of States (ACP) Summit 2024, which was combined with the third AfriCaribbean Trade and Investment Forum (ACTIF2024), took place from June 12 to 15, 2024.