**Africa:** Afreximbank unveils a $3 billion revolving fund to finance intra-African refined petroleum imports, aiming to boost local refining capacity, reduce $30 billion annual oil import costs, support projects in Nigeria and Angola, and enhance energy security under the AfCFTA framework.
The African Export-Import Bank (Afreximbank) has recently announced the launch of a significant financing initiative named the ‘Revolving Intra-African Oil Trade Financing Programme,’ aimed at bolstering the purchase of refined petroleum products across the African continent and the Caribbean. This $3 billion programme seeks to alleviate Africa’s dependence on external oil imports, which currently costs the region approximately $30 billion annually due to a limited local refining capacity.
The initiative is projected to facilitate the financing of between $10 billion and $14 billion in intra-African petroleum imports as countries work towards enhancing their refining output. Key products slated for trade under this financing umbrella include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Heavy Fuel Oil (HFO), jet fuel, and kerosene. Refineries situated across Africa qualify for this financial support.
Nigeria, acknowledged as Africa’s largest economy, is home to the world’s largest single train refinery owned by billionaire industrialist Aliko Dangote. This facility boasts the capacity to refine 650,000 barrels of oil each day, with financial backing from Afreximbank. Further investment within the continent is indicated by Angola’s progression on the $6.6 billion Lobito refinery project, which, upon completion, will become the nation’s largest with a capacity of 200,000 barrels per day. This development will build upon the existing 60,000 barrels per day capacity of the Cabinda Refinery.
Additional refurbishments are planned for the Port Harcourt Refinery, which has a current capacity of 210,000 barrels per day, alongside newly approved BUA and Azikel refineries in Nigeria. Collectively, these initiatives target an increase in refining capacity in the Gulf of Guinea, aiming to shift the region from being an exporter of crude oil to a notable refining hub for not only Africa but potentially global markets.
The revolving fund aims to deliver essential trade finance tailored to the needs of oil traders, financial institutions, and governmental entities, including state-owned enterprises responsible for importing refined products from African refineries. Afreximbank has highlighted that this programme will not only foster industrialisation but will also create jobs as part of the framework established by the African Continental Free Trade Area (AfCFTA).
Benedict Oramah, President of Afreximbank, projected that the programme “will have a direct impact on the volume of the refined petroleum products produced and consumed in Africa.” He also noted the anticipated multiplier effect on the marine cargo insurance sector and the entire downstream petroleum value chain, facilitating critical investments in shipping and logistics for both intra-African and external trade of crude oil and refined products. Oramah expressed a desire to see a greater proportion of the roughly 4 million barrels per day of crude oil produced in the Gulf of Guinea refined within Africa itself.
In comments supporting the initiative, Lazarus Chakwera, President of the Republic of Malawi, described the funding as a “clear demonstration of Africa’s resolve to take charge of its own energy future.” He acknowledged that the programme is expected to enhance regional supply chains, thereby ensuring that monetary value remains within the continent and providing citizens with more stable and affordable access to petroleum products, which are critical for daily life and economic productivity.
Approved applicants for the financing will be able to draw from the global facility following completion of Know Your Customer (KYC) checks and compliance with stipulated conditions. Access to funds will be facilitated through structured trade finance instruments, which may include the issuance of Letters of Credit (LCs) in favour of African refineries, the discounting of these LCs for quicker cash access for suppliers, and in certain scenarios, direct prepayments to eligible refineries on behalf of buyers.
Source: Noah Wire Services
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