NAIROBI, June 18 (Reuters) - The African Export-Import

Bank has been thrust into the spotlight due to a dispute over

whether its loans to African countries now in default should be

subject to writedowns in debt restructuring deals.

Here are more details about the Cairo-based lender:

WHAT IS AFREXIMBANK'S ROLE?

Afreximbank was set up by African governments in 1993 to

provide trade finance when their economies were reeling from a

debt crisis resulting from a crash in commodities prices.

Its balance sheet has since grown to $35 billion.

Though mandated to promote trade, it has also helped

economies weather shocks like West Africa's 2014 Ebola outbreak

and the COVID-19 pandemic through a $3 billion stabilisation

facility.

Crisis lending has turned Afreximbank into an important

source of hard currency for cash-strapped governments.

It launched a central bank deposit programme in 2014

modelled on a Banco Latinoamericano de Comercio Exterior

initiative to raise capital from regional central banks to fund

development.

From just $75 million in initial deposits, this has now

mobilised $37 billion cumulatively, or 40% of Afreximbank's

sources of financing.

WHO OWNS AFREXIMBANK?

Afreximbank has four shareholder categories.

Class A is made up of African governments, which hold more

than 50% of shares spread among 53 member states.

The African Development Bank, Africa's biggest development

lender, and other sub-regional financial institutions are also

category A shareholders.

African financial institutions and private funds hold Class

B shares - about a quarter of the total. Class C shares are

reserved for overseas investors.

Afreximbank created Class D shares for general investors in

2017, listing them on the Mauritius Stock Exchange, and is

considering a secondary listing.

WHAT IS AFREXIMBANK'S STATUS?

The current debate focuses on whether Afreximbank enjoys

Preferred Creditor Status - a widely accepted principle giving

multilateral development banks priority if a borrower faces

distress.

Though accepted by convention rather than awarded by an

entity, the status would insulate Afreximbank's lending from

painful haircuts during the kinds of sovereign restructurings

recently carried out by Ghana and Zambia.

Afreximbank says its founding treaty confers it with

Preferred Creditor Status, precluding it from engaging in debt

restructuring talks with its member states.

Critics, however, point out that some of Afreximbank's

lending is done on commercial terms - or market rates - rather

than the concessional terms the International Monetary Fund or

World Bank employ to extend loans and grants. Its ownership

structure also includes commercial investors.

WHAT DISPUTES IS AFREXIMBANK FACING?

Afreximbank is in a dispute in English courts with South

Sudan over a claim of around $650 million across three

facilities from 2019 and 2020.

Ghana, struggling to conclude its debt overhaul, said it has

invited the lender for talks on how to restructure its

Afreximbank debt.

Zambia has stated that its Afreximbank loan, estimated by

think tank ODI Global to be $45 million, will be restructured

due to its commercial nature.

Malawian officials quoted in domestic media outlets say they

want to engage Afreximbank to restructure and lighten the

country's debt service burden.

Afreximbank has repeatedly said it is not in restructuring

talks with any of its member states.

WHAT ARE THE IMPLICATIONS OF THE STATUS DEBATE?

Afreximbank's two main dollar bonds suffered their worst

daily drop in over a year this month after Fitch downgraded it

to BBB-, from BBB, citing emerging credit risks. Afreximbank

blamed the downgrade on an "erroneous" interpretation of its

founding treaty.

Given the negative outlook from Fitch, Afreximbank is at

risk of further downgrades, which could raise its borrowing

costs and trigger some forced selling of its bonds.

Some investors think the outcome of the standoff could have

a bearing on the successful conclusion of current and future

debt restructurings.

For Afreximbank, this is a sensitive time. It is expected to

pick a new president during its annual meeting later this month,

replacing Nigerian economist Benedict Oramah, who is set to step

down after a decade in charge.