The African Export-Import Bank (Afreximbank) has agreed to provide a US$10 million-dollar revolving trade finance facility to Dorman Long Engineering (DLE) to facilitate the importation of steel pipes for threading.

Under the terms of the agreement, the Nigeria-based engineering, procurement, and construction (EPC) contractor is expected to utilise the proceeds of the facility for the issuance of letters of credits (L/Cs) and standby L/Cs to facilitate the importation of steel pipes and their onward supply to international oil companies.

Intra-African EPC initiative

Structured with a tenor of three years, the transaction falls under Afreximbank's Intra-African EPC initiative, which seeks to build up the technical and financial capacity of African EPCs so they can win more large infrastructure and EPC projects on the continent.

Thus far DLE has supplied Nigeria-based clients in the shipping, oil and gas sectors. This new Afreximbank facility will also enable DLE to provide services to clients in other African countries, helping to overcome some of the barriers limiting Africa's share of EPC contracts.

Foreign competition

Specifically, DLE will be better positioned to bid for and execute large infrastructure and EPC projects and contribute to addressing key energy security needs across the African continent.

International companies, typically not based in Africa, currently enjoy the lion's share of large EPC contracts on the continent.

Infrastructure funding gap

Launched in November 2023, Afreximbank's Intra-African EPC initiative is a platform that aims to tackle the significant challenges preventing Africa from reaching its potential in the provision of engineering services, including lack of funding, insufficient information and a skills gap.

Addressing those challenges is especially crucial to tackling the infrastructure funding gap across the continent, estimated at US$170 billion annually, which could be fixed by promoting international cooperation and attracting investment in infrastructure.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.