The African Export–Import Bank (Afreximbank) has set aside $3bn to support the purchase of refined petroleum products across Africa. The initiative is part of a broader strategy by Afreximbank, a key investor in oil and gas projects, to reduce the continent’s dependence on imported refined products.

The funding from the development finance institution is expected to boost Africa’s refining capacity and support the purchase of refined petroleum products within Africa, according to a senior Afreximbank executive, Reuters reported on April 7.

In a joint report last year, energy consultancy CITAC and Puma Energy estimated that the demand for cleaner fuels in Africa was set to rise by 56% from 2022 levels to reach 142mn metric tonnes by 2040.

Currently, Africa exports about 80% of its crude oil and 45% of its produced natural gas, according to Afreximbank and energy analysts. This means the continent’s rapidly growing population depends heavily on importing refined fuels. In Sub-Saharan Africa, the downstream oil and gas sector is marked by outdated refineries with limited capacity and a shortage of storage facilities.

Africa’s oil and gas industry has long been driven by the needs of external markets rather than local demand, according to African Petroleum Producers’ Organisation (APPO) secretary-general Omar Farouk Ibrahim.

Speaking at the African Refiners and Distributors Association (ARDA) conference in Cape Town, South Africa, Ibrahim mentioned that the continent’s current estimates of 120 million barrels of oil and 632 trillion cubic feet (17.89 trillion cubic metres) of gas reserves were “grossly conservative”. Owing to recent advancements in exploration technology, these figures could double or even more, he said.

According to Kanayo Awani, executive vice-president at Afreximbank, Africa spends an estimated $30bn in annual petroleum import costs due to inadequate refining capacity.

“The time has come for Africa to take control of its energy destiny,” Awani told the ARDA conference participants, as cited by Reuters. She explained that the $3bn revolving intra-African oil import financing initiative will be used to purchase refined petroleum products such as premium motor spirit, heavy fuel oil, automotive gas oil, kerosene and jet fuel, among others.

“Our goal is to support 3mn barrels per day of refining capacity in the near to medium term, that is our ambition,” Awani told Reuters.

Afreximbank, a key investor in the 650,000 barrels per day (bpd) Dangote refinery in Nigeria, as well as the Lobito and Cabinda refineries in Angola, has historically supported the financing of refined fuel imports into Africa from outside the continent. In Nigeria, for instance, growing investment has led to the development of 1.3mn bpd in refining capacity, positioning the Gulf of Guinea as an important refining centre for the continent.