Afreximbank launches $3 billion Revolving Oil Trade Financing Programme to boost
Intra-African, Caribbean petroleum trade.
This initiative, aimed at boosting the purchase of refined petroleum products between African and Caribbean countries is designed to address Africa’s significant reliance on imported refined petroleum products from outside the continent, which currently costs approximately $30 billion annually due to insufficient local refining capacity.
Key aspects and expected impacts of the program include:
- Promoting Intra-African and Caribbean Trade: The program specifically finances the purchase of refined petroleum products by African and Caribbean oil buyers from refineries operating in Africa. This is expected to facilitate trade flows within these regions, reducing dependency on extra-regional imports.
- Leveraging Growing Refining Capacity: Afreximbank has been a major financier in developing refining capacity across Africa. This program aims to leverage these investments, such as the Dangote Refinery in Nigeria, the Lobito and Cabinda Refineries in Angola, and the refurbishment of the Port Harcourt Refinery, among others. The bank aims to help create over 1.3 million barrels per day (bpd) of refining capacity in Africa, transforming the Gulf of Guinea into a significant refining hub.
- Revolving Facility: As a revolving facility, the $3 billion is expected to finance a much larger volume of trade, estimated between $10 billion and $14 billion in intra-African petroleum imports over time.
- Targeted Beneficiaries: The program will primarily provide critical trade finance to oil traders (both African and international), banks, and governments (including their ministries of finance or petroleum/energy and state-owned enterprises) mandated to import refined petroleum products.
- Product Focus: The key products covered include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Heavy Fuel Oil (HFO), Jet Fuel, and Kerosene.
- Alignment with AfCFTA: This initiative strongly aligns with the objectives of the African Continental Free Trade Area (AfCFTA) agreement, aiming to facilitate intra-African trade, promote industrialization, and create jobs.
- Energy Security and Economic Resilience: By strengthening regional value chains and reducing import dependency, the program seeks to advance energy security and foster economic resilience within Africa and the Caribbean.
- Multiplier Effect: Beyond direct trade, the program is anticipated to have a multiplier effect on the downstream petroleum value chain, catalyzing investments in shipping, marine logistics, cargo insurance, and other ancillary services.
Afreximbank continues to play a significant role in promoting trade and economic integration across Africa and with the Caribbean through various initiatives, including the Pan-African Payment and Settlement System (PAPSS) and the AfriCaribbean Trade and Investment Forum.