$6b financial package unveiled to empower African nations

South Korea's Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho on Wednesday announced a financial package of approximately $6 billion in support for Africa to be provided by 2025, at the 2023 Korea-Africa Economic Cooperation (KOAFEC) conference held in Busan.

This biennial conference, spanning four days from Tuesday to Friday, is jointly hosted by the African Development Bank, the Export-Import Bank of Korea (Eximbank) and Ministry of Economy and Finance.

The new financial package is a remarkable increase from the initial $800 million provided in 2006 when the conference was first held, underscoring Korea's commitment to African development.

The financial package is poised to offer substantial support across several key domains, including energy development and transition; agricultural innovation; and the enhancement of knowledge and skill sets.

The $6 billion will be provided through a variety of channels, including export financing through the Eximbank, the Economic Development Cooperation Fund and the Korea-Africa Economic Cooperation Trust Fund.

Among different channels, the EDCF, established in 1987, is noteworthy as the financial aid provided through this fund to African nations has exhibited steady growth, primarily due to the influence of the KOAFEC conference.

This loan program serves as a cornerstone of Korea's strategy to advance economic progress in developing nations. In 2005, the share of support allocated to African nations accounted for less than 10 percent of the total.

However, since the launch of KOAFEC meetings, this proportion has consistently increased, reaching an annual level of approximately 25-30 percent.

In addition, Korea’s cumulative contributions to empower African countries through the EDCF have surpassed a staggering $6.06 billion as of July.

Back in April 2006, KOAFEC made its debut as a small-scale gathering in Seoul, with representatives from some10 countries in attendance.

This year's 7th KOAFEC conference was a prestigious international event, attracting more than 38 African government delegations and over 400 individual participants.

The conference serves as a platform for Korea to share its experiences in economic development with African nations and explore opportunities for resource development projects.

The continent of Africa, with its population of 1.4 billion people and abundant renewable energy and natural mineral resources, has a potential market value of around $3.4 trillion. Furthermore, its significant youth demographic is poised to drive increased demand as the economy continues to develop.

The African Continental Free Trade Area (AfCFTA) was established by the African Continental Free Trade Agreement in 2018, with 44 out of 55 African Union members signing, increasing to 54 signatories as of 2023. AfCFTA aims to establish an intra-African free trade zone, focusing on abolishing tariffs on approximately 90 percent of traded goods among participating member countries, thereby expanding trade and strengthening economic cooperation.