
The African Export-Import Bank (Afreximbank) has launched a $3-billion financing platform to help countries in the continent and the Caribbean bridge the cost of importing refined petroleum products.
The Revolving Intra-African Oil Trade Financing Program only supports importation from African refineries. Afreximbank expects the program to back about $10-14 billion of imports.
The Cairo-based bank said refined products have accounted for $30 billion of annual oil import costs in Africa, driven by inadequate refining capacity.
“This program seeks to leverage the growing refining capacity that Afreximbank has helped establish across the continent, while aligning with the objectives of the African Continental Free Trade Area agreement, which includes facilitating intra-African trade, promoting industrialization, and creating jobs on the continent”, it said in an online statement.
“Afreximbank is on its way to creating over 1.3 million bpd refining capacity and helping to convert the Gulf of Guinea from an exporter of crude oil into an important refining hub for the continent and the world”, the bank said. It said it has financed refineries in Angola, Cote d’Ivoire and Nigeria, including the Dangote refinery, which started production last year as Africa’s biggest refinery with a capacity of 650,000 barrels per day (bpd).
The funding program will “mainly provide critical trade finance to oil traders (both African and international), banks, and Governments – represented by their Ministry of Finance or Ministry of Petroleum Resources/Energy – and state-owned enterprises mandated to import refined petroleum products, who seek to source refined products from African Refineries for onward consumption within the continent and export opportunities as may be applicable”, the bank said.
Afreximbank president and chair Benedict Oramah said, “Whilst the program will have a direct impact on the volume of the refined petroleum products produced and consumed in Africa, it will also have a multiplier effect on the downstream petroleum value chain as it will catalyze critical investments in shipping and marine logistics for intra and extra African trade of crude oil and refined products”.
“The multiplier effect will also be seen in marine cargo insurance and other ancillary businesses within the sector”, Oramah added.
“We want to see an increased proportion of the about 4 mbpd of crude oil produced in the Gulf of Guinea refined in Africa”.
“This program is a clear demonstration of Africa’s resolve to take charge of its own energy future”, said Malawi President Lazarus Chakwera. “We commend Afreximbank for this timely intervention, which stands to benefit African countries like Malawi by reducing import dependency, strengthening regional supply chains, and keeping more value within the continent”.
“Most importantly, it will deliver real impact to our citizens by ensuring more stable and affordable access to refined petroleum products, which are essential to Malawians’ daily life and economic productivity”, Chakwera added.
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