The African Export-Import Bank (Afreximbank) has launched a US$3 billion Revolving Intra-African Oil Import Financing programme aimed at reducing Africa's dependency on imported refined petroleum products and enhancing intra-African trade.

This initiative is particularly significant for letter of credit (L/C) business, as it seeks to streamline and secure the trade financing of oil imports across the continent.​

Leveraging African capacity

This programme seeks to leverage the growing refining capacity that Afreximbank has helped establish across the continent.

Afreximbank is the largest financier of Nigeria's Dangote refinery which commenced operations in January 2024 and is also supporting the financing of other Nigerian refineries.

The bank is also supporting the financing of several refineries in Angola.

Limited refining capacity

Africa currently spends approximately US$30 billion annually on importing refined petroleum products due to limited refining capacity. Afreximbank's programme is designed to finance the purchase of African products by African and Caribbean oil buyers, thereby addressing their energy security challenges.

The revolving nature of the facility is expected to support between US$10 billion and US$14 billion in intra-African petroleum imports over time. ​

L/Cs and other facilities

A key component of the programme is the utilisation of L/Cs and other trade instruments to ensure secure and efficient transactions.

Approved applicants can request utilisation under the global limit upon know your customer clearance and satisfactory completion of certain conditions, which include the issuance or confirmation of L/Cs with African refineries as beneficiaries.

This mechanism not only facilitates trade but also enhances the credibility and reliability of transactions within the oil import sector.​

Leveraging L/Cs

This facility represents a strategic effort to enhance energy security, promote intra-African trade, and strengthen the continent's economic resilience.

By leveraging L/Cs and other trade instruments, the programme not only facilitates secure transactions but also reinforces the role of African refineries in meeting the continent's energy needs.

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