African Export-Import Bank has rolled out a $3bn revolving credit line that will enable Nigerian, African, and Caribbean buyers to source petrol, diesel, jet fuel, and other products from refineries on the continent more easily.
In a statement, the bank expects the facility to provide $10bn to $14bn of trade finance over its first three years and help reduce the region’s roughly $30bn annual fuel import bill.
Both oil-export and import-dependent economies have been whipsawed this year by a sharp fall in crude prices and a jump in freight costs.
Brent crude is down more than 20 per cent since mid-January on supply dynamics and on fears that a global trade war will sap demand.
According to Reuters, insurance costs for ships using the Red Sea have climbed again after renewed Houthi attacks prompted US airstrikes on Yemen in March, adding hundreds of thousands of dollars to a typical fuel cargo.
By shifting purchases to nearby refineries (within the continent) and locking in bank credit up-front, governments can limit the budget shock from such external swings.
The Revolving Intra-African Oil Import Financing Programme is rooted in Afreximbank’s recent push to boost regional refining capacity.
The programme 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 industrialisation, and creating jobs on the continent.
By deploying innovative trade finance and supply chain solutions tailored to key stakeholders’ needs in terms of tenure, price format, and logistics requirements, Afreximbank stated this programme aligns with its goals of advancing energy security, strengthening regional value chains, and fostering economic resilience within the continent and the Caribbean.
“Afreximbank is the largest financier of the Dangote refinery, which commenced operations in January 2024 and is also supporting the financing of the 200,000 bpd Lobito Refinery development, building on the progress made on the 60,000 bpd Cabinda Refinery, which it also supported. In addition, the Bank has financed the refurbishment of the 210,000 bpd Port Harcourt Refinery, and recently approved financing in support of the development of BUA Refinery and Azikel Refinery, all in Nigeria.
“Through these investments, and the continual trade finance support for Société Ivoirienne de Raffinage, Cote d’Ivoire, 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.
“Key products to be traded under the programme are refined petroleum products, including but not limited to Premium Motor Spirit, Automotive Gas Oil, Heavy Fuel Oil, Jet Fuel, and Kerosene. The eligible exporters are refineries operating in Africa,” the bank said.
It added that the $3bn Revolving Intra-African Oil Import Financing Programme is intended to 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.
Commenting on the launch, the President and Chairman of the Board of Directors, Afreximbank, Professor Benedict Oramah, said the programme “would galvanise efforts towards making the Gulf of Guinea a key refining hub.”
While saying the programme will have a direct impact on the volume of the refined petroleum products produced and consumed in Africa, he said it will also have a multiplier effect on the downstream petroleum value chain as it will catalyse critical investments in shipping and marine logistics for intra and extra African trade of crude oil and refined products.
The multiplier effect, he added, will also be seen in marine cargo insurance and other ancillary businesses within the sector.
“We want to see an increased proportion of the about 4 mbpd of crude oil produced in the Gulf of Guinea refined in Africa,”
Also commenting on the initiative, the President of the Republic of Malawi, Dr. Lazarus Chakwera, said, “This programme is a clear demonstration of Africa’s resolve to take charge of its own energy future. 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.”