The African Export Import Bank (Afreximbank) and the African Finance Corporation are investing roughly $16 billion in oil and gas projects throughout Africa (AFC).
The African Refiners and Distributors Association (ARDA) convention, which is now taking place in Cape Town, South Africa, made this information public yesterday.
This occurs as conference participants urged Africans to keep money on the continent in order to support the roughly $190 billion in annual energy investments required on the continent.
Afreximbank is investing $15 billion of the banks’ investment, while AFC has already made over $800 million in investments and is expecting to finalize over $200 million more.
Rene Awembeng, Global Head, Client Relations at Afreximbank, claimed that the company has an oil and gas portfolio worth more than $15 billion and a strong pipeline that spans the entire continent.
Speaking on the sideline of the conference, he stated that the continent must focus on shared infrastructure and be ready to finance itself or predicted progress may stay illusive.
According to Awembeng, the continent is in a precarious situation where the demand for energy keeps rising against the backdrop of an expanding population.
Awembeng stated that large infrastructure development, including refineries that would meet demand on the continent, must be prioritized and supported because the continent relies primarily on importation of petroleum products at a time when foreign exchange demand is hovering at $100 billion annually and required energy investment annually stands at $190 billion.
According to Awembeng, the establishment of the Africa Energy Bank to finance the continent’s energy transition and fossil fuel agenda is still sacred.
Concerned over the escalating prices of imported petroleum products, Awembeng said it was regretful that Africa remained an importer of all refined products.
“Africa has not invested in its refineries or refining capacity. We’ve not invested in our storage facilities. We’ve not invested in our pipelines sufficiently to meet the demand. So with the COVID crisis, and now the Ukraine crisis we are now in a very difficult position.”
“A lot of the international banks and some of the banks that were financing oil and gas transactions have retreated from Africa for a number of reasons; leaving the burden on African financial institutions and some of the development financiers like the African Export Import Bank to look into the problem.”
“The challenge now is we have significant capacity to meet the demand of $190 billion every year to finance oil and gas requirements in Africa. Do we have capacity on the continent to support the $15 billion of rehabilitation of refining capacity required in North Africa, West Africa and East Africa. I don’t think we are.”
“So we are going into a crisis where if you look at also what is happening with food security in terms of fertilizers and grain, we have to import plus the high costs of importation of refined products. We are in a very challenging situation as a continent to be able to finance oil and gas,” Awembeng concluded.
Senior Investment Associate, AFC, Shayo Olumide stated that AFC has disbursed $800 million towards aiding Africa’s refinery sector and has an additional $210 million in its near-term pipeline when speaking on Funding Infrastructure Projects to Accelerate Africa’s Energy Revolution.
Noting the importance of sustainable finance, he stated that financial considerations must prioritize the environment, sustainability, and governance.
