Afreximbank rolls out $3-B credit line to cut Africa's fuel imports
- Aim to reduce Africa's $30-B annual fuel import bill
- Program supports regional processing capacity, refineries
African Export-Import Bank has rolled out a $3-B revolving credit line that will enable African and Caribbean buyers to source petrol, diesel, jet fuel and other products from refineries on the continent more easily.
The bank expects the facility to provide $10 B–$14 B of trade finance over its first three years and help chip away at the region's roughly $30-B annual fuel import bill, it said.
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% since mid-January on supply dynamics and on fears that a global trade war will sap demand.
Meanwhile, insurance costs for ships using the Red Sea have climbed again after renewed Houthi attacks prompted U.S. airstrikes on Yemen in March, adding hundreds of thousands of dollars to a typical fuel cargo.
By shifting purchases to nearby refineries 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 processing capacity.
The Cairo-based lender is the largest financier of Nigeria’s 650,000-bpd Dangote refinery. It has also helped overhaul Nigeria's Port Harcourt oil complex and is arranging funding for plants in Angola and Ivory Coast too.
These ventures could add around 1.3 MMbpd of refining capacity.
"The program will galvanize efforts towards making the Gulf of Guinea a key refining hub," Afreximbank President Benedict Oramah said in a statement on Monday.
Afreximbank will issue or confirm letters of credit, discount trade instruments and provide advances to energy ministries, state fuel importers and private traders that buy from African refineries.
The credit line also serves as a practical test bed for the African Continental Free Trade Area, which seeks to deepen regional commerce and industrialization.
Afreximbank will also be a controlling shareholder of Atmin, a new trading house set up by former Shell oil traders to focus on African oil trading, two trading sources said.
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