Afreximbank launches $3bn refining support plan to strengthen intra-African oil trade
Onome Amuge
The African Export-Import Bank (Afreximbank) has unveiled a $3 billion financing initiative aimed at boosting the trade of refined petroleum products within Africa and with the Caribbean. The Revolving Intra-African Oil Trade Financing Programme seeks to reduce the continent’s heavy reliance on costly oil imports from outside Africa, which the lender estimates at up to $30 billion annually due to insufficient domestic refining capacity.
While acknowledging Africa’s ongoing efforts to expand its refining capabilities, Afreximbank stated recently that the financing project is designed to encourage regional sourcing.
“We expect it to finance about $10 billion to $14 billion of Intra-African petroleum imports,” the bank said.
The $3 billion fund will facilitate the trade of key refined products, including Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Heavy Fuel Oil (HFO), jet fuel, and kerosene. Refineries operating across Africa are eligible to participate in the programme.
The initiative comes as Nigeria, the continent’s most populous nation, hosts the recently commissioned Dangote Refinery, the world’s largest single-train facility with a capacity of 650,000 barrels per day, which received funding support from Afreximbank.
Angola is also making strides in enhancing its refining capacity with the $6.6 billion Lobito refinery, set to become its largest at 200,000 barrels per day upon completion, building on the existing 60,000 barrels per day Cabinda Refinery. Further investments include the ongoing refurbishment of Nigeria’s Port Harcourt Refinery (210,000 bpd) and the recently approved BUA and Azikel refineries, also in Nigeria.
Afreximbank views these investments as strategic steps towards creating over 1.3 million barrels per day of refining capacity in the Gulf of Guinea, transforming the region from a crude oil exporter into a significant refining hub for the continent and beyond.
The revolving fund is structured to provide essential trade finance – in terms of tenure, pricing, and logistics support – to oil traders, financial institutions, and governmental bodies, including state-owned enterprises mandated to import refined petroleum products from African refineries.
Afreximbank emphasised that the project will foster industrialisation and create employment opportunities under the framework of the African Continental Free Trade Area (AfCFTA).
Benedict Oramah, President of Afreximbank, anticipates that the programme will have a direct impact on the volume of the refined petroleum products produced and consumed in Africa.
He also highlighted its potential to create a multiplier effect by boosting marine cargo insurance and the downstream petroleum value chain, thereby catalysing crucial investments in shipping and marine logistics for both intra- and extra-African trade in crude oil and refined products.
“We want to see an increased proportion of the about 4mbpd of crude oil produced in the Gulf of Guinea refined in Africa,” Oramah stated.
The president of the Republic of Malawi, Lazarus Chakwera, hailed the financing programme as a clear demonstration of Africa’s resolve to take charge of its own energy future. He believes the initiative will strengthen regional supply chains to Malawi and retain value within the continent, ultimately ensuring more stable and affordable access to essential refined petroleum products for its citizens.
Approved applicants will be able to access the global facility after completing Know Your Customer (KYC) checks and meeting other stipulated conditions. Access will be facilitated through structured trade finance instruments, including the issuance or confirmation of Letters of Credit (LCs) in favour of African refineries, the discounting of these LCs for faster supplier access to cash, and, in certain cases, direct prepayments or advances to eligible refineries on behalf of buyers.