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Afrexim Bank; Driving Transformation in Africa’s Oil & Gas Landscape

Afreximbank, a Pan-African multilateral financial institution, has been mandated for three decades to finance and facilitate intra- and extra-African trade. Throughout this period, the Bank has consistently employed innovative financial structures to provide solutions that contribute to reshaping Africa’s trade landscape, promoting industrialization, fostering intra-regional trade, and ultimately fueling economic growth across the continent.

Notable among its initiatives to drive oil and gas in Africa is the Fund for Export Development in Africa (FEDA). FEDA serves as the impact investment arm of the African Export-Import Bank (Afreximbank). Established with the primary objective of addressing the substantial funding gap, particularly in equity, FEDA provides financial support in the form of equity, quasi-equity, and debt capital. The overarching goal is to catalyze the transformation of the trade sector in Africa, which requires multi-billion-dollar investments.

In October of this year, FEDA disclosed an investment in the Cabinda Oil Refinery, a comprehensive modular oil refining platform in Angola through a Joint Venture with Gemcorp Holdings and Sonangol.

This investment by FEDA is a dedication to advancing Africa’s industrialization and economic development while prioritizing environmental sustainability.

The transaction by FEDA is poised to facilitate Angola’s energy transition, contributing to the production of cleaner, high-value refined products that can meet approximately 20% of domestic demand. Additionally, it aims to reduce emissions by minimizing the necessity for transportation in both the exportation of locally produced crude oil and the importation of refined products.

Offering a significant contribution to Africa’s evolution, Afreximbank in November last year, entered into an agreement with the African Petroleum Producers Organization (APPO) to establish an energy bank. The urgency for establishing the energy bank is emphasized by the recent enactment of the Petroleum Industry Act (PIA), signalling the necessity for a dedicated financial institution, an African energy bank, to spearhead the development of the oil and gas sector, especially given the global trend of reduced investments.

Also, in September this year, The African Energy Chamber (AEC) applauded the recent actions taken by the African Export-Import Bank (Afreximbank) in extending a US$300 million financial facility to Trident OGX Congo.

The agreement holds the potential to not only boost the Republic of Congo’s crude oil output by approximately 30% but also to make substantial contributions to the nation’s industrialization, trade development, and overall economic advancement.

In summary, Afreximbank’s multifaceted initiatives underscore its commitment to driving transformative change in Africa’s oil and gas sector, promoting sustainability, and fostering economic development across the continent.

By: Esther Adwoa Gyanwah Karikari / Instinct Business Magazine

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