Multilateral trade financing institution the African Export-Import Bank (Afreximbank) has launched a $3-billion revolving intra-African oil trade financing programme to finance the purchase of refined petroleum products by African and Caribbean oil buyers.

The financing programme aims to address Africa's persistent reliance on imported refined petroleum products, which accounts for about $30-billion a year in petroleum import costs owing to inadequate refining capacity.

Key products to be traded under the programme are refined petroleum products that include, among others, premium motor spirit (PMS), automotive gas oil (AGO), heavy fuel oil (HFO), jet fuel and kerosene.

The eligible exporters for the programme are refineries operating in Africa, the finance institution says.

The Revolving Intra-African Oil Import Financing Programme is intended to mainly provide trade finance to African and international oil traders, banks, governments and State-owned enterprises mandated to import refined petroleum products that are aiming to source refined products from African refineries for onward consumption within the continent, or to explore export opportunities.

“The programme will galvanise efforts towards making the Gulf of Guinea a key refining hub. While the programme 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 catalyse critical investments in shipping and marine logistics for intra- and extra-African trade of crude oil and refined products, says Afreximbank president and chairperson Professor Benedict Oramah.

“The multiplier effect 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 4 000 bl/d of crude oil produced in the Gulf of Guinea refined in Africa,” he says.

Further, as a revolving facility, the finance institution expects to finance about $10-billion to $14-billion of intra-African petroleum imports.

This 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 (AfCFTA) Agreement, which includes facilitating intra-African trade, promoting industrialisation and creating jobs on the continent, Afreximbank adds.

Specifically, Afreximbank is the largest financier of the Dangote refinery, which started operations in January 2024, and is also supporting the financing of the 200 000 bl/d Lobito Refinery development, building on the progress made on the 60 000 bl/d Cabinda Refinery.

Additionally, it has financed the refurbishment of the 210 000 bl/d Port Harcourt Refinery, and recently approved financing in support of the development of Bua Refinery and Azikel Refinery, all of which are in Nigeria.

Through these investments, and the continual trade finance support for Société Ivoirienne de Raffinage, in Cote d'Ivoire, Afreximbank is on its way to creating more than 1.3-million barrels a day 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.

“This programme demonstrates Africa’s resolve to take charge of its own energy future. This timely intervention stands to benefit African countries like Malawi by reducing import dependency, strengthening regional supply chains and keeping more value within the continent,” says Malawi President Dr Lazarus Chakwera.

“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.”

Afreximbank's affiliated trading entity ATDC Minerals will also participate actively in the trading and financing activities of the leading African oil trading companies with long-term relationships with Afreximbank that are also expected to support this effort.