The African Export–Import Bank (Afreximbank) has committed $3 billion to finance the trade of refined oil products within the continent and reduce Africa’s dependence on fuel imports.
An Executive Vice-President at Afreximbank, Kanayo Awani disclosed this on Monday, while speaking at an energy conference in Cape Town, South Africa.
As reported by Reuters, Awani said the investment bank is committed to boosting Africa’s refining capacity and encouraging the trade of refined oil products within the continent.
He said the initiative will support the trade of key products such as premium motor spirit, automotive gas oil, heavy fuel oil, jet fuel, and kerosene under a revolving intra-African oil importing financing scheme.
“The time has come for Africa to take control of its energy destiny,” Awani declared, highlighting the continent’s reliance on external markets despite being rich in crude oil and natural gas.
He noted that Africa currently exports about 80% of its crude oil and 45% of its natural gas, as the continent lacks the infrastructure and capacity to refine much of it locally.
He added that most of sub-Saharan Africa’s refineries are outdated and operate below capacity, forcing countries to spend approximately $30 billion annually on petroleum product imports.
Afreximbank’s recent investment in Africa’s oil and gas sector
Afreximbank is a key investor in Africa’s oil and gas sector and has backed major projects like the 650,000 barrels-per-day Dangote refinery and Angola’s Lobito and Cabinda refineries.
Reuters reported that the bank’s investments have helped Nigeria alone develop its refining capacity to1.3 million barrels per day, while also transforming the Gulf of Guinea into a strategic refining hub for the continent.
“Our goal is to support 3 million barrels per day of refining capacity in the near to medium term — that is our ambition,” Awani told Reuters.
Meanwhile, as Africa’s population grows and economies expand, the demand for cleaner fuels is also set to rise. A joint report by energy consultancy CITAC and Puma Energy projected a 56% increase in demand for cleaner fuels by 2040, reaching 142 million metric tons from 2022 levels.
What you should know
- Afreximbank’s new financing pledge could reshape Africa’s energy future and reduce the continent’s vulnerability to global supply chain shocks and price volatility.
- Nairametrics reported that Nigeria is becoming a refining hub in West Africa with the coming on stream of the Dangote Petroleum Refinery FTZ and the increasing number of new refineries under construction in the country.
- However, analysts say Nigeria can only gain from this development if the country increases crude oil production. The country currently struggles to maintain a daily output of 1.5 million barrels, despite the government’s target of 2.06 Mbpd.
