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Merchants in landlocked countries face the highest container deposit rates, typically around US$5,000 per container, due to extended turnaround times
ANALYSIS | ISAAC KHISA | Africa’s multi-lateral lender, the African Export-Import Bank, has forged a partnership with BSMART Technology Ltd to extend the Afreximbank African Collaborative Transit Guarantee Scheme (AACTGS) to cover container deposit guarantees and customs bonds across the East African Community region.
The agreement, finalized during the Afreximbank Annual Meetings (AAM2024) in Nassau, The Bahamas recently, enables Afreximbank to issue container guarantees on behalf of BSMART Technology Ltd. This initiative allows BSMART to streamline the release of containers to importers and exporters, eliminating the need for upfront security deposits, thereby injecting liquidity back into the trade sectors.
Under the scheme, Afreximbank will manage payments for container users, covering all obligations to shipping companies, including damages and losses. Typically, shipping companies require cash deposits of up to US$5,000 per container as collateral.
Kanayo Awani, Executive Vice President of Intra-African Trade and Export Development at Afreximbank, emphasized the strategic importance of the container guarantee for enhancing trade across the northern, central, and southern corridors of East Africa. It is estimated that the region handles approximately 3,500,000 containers annually, tying up an estimated US$14 billion in deposits from importers and exporters.
“Unlocking this immobilized liquidity could significantly bolster trade finance for businesses,” Awani said.
“By releasing these funds, we indirectly support trading merchants and inject liquidity into their operations. This facility will particularly benefit small-scale and informal traders who often lack direct financing, thereby stimulating economic activity in the region.”
Awani also highlighted that the expanded facility will promote competitiveness and business opportunities by facilitating the movement of raw materials, manufacturing equipment, and intermediate inputs necessary for export manufacturing, thus fostering participation in regional and global value chains.
Dr. Stephen Teang, Managing Director of BSMART Technology Ltd, pointed out that merchants in landlocked countries face the highest container deposit rates, typically around US$5,000 per container, due to extended turnaround times.
“Through Afreximbank’s container guarantee initiative, approximately 2.6% of the region’s container traffic stands to benefit, releasing an estimated US$375 million in container deposits,” Dr. Teang estimated.
