Afreximbank Introduces Oilfield Financial Instrument for African Operators

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By Ndubuisi Micheal Obineme

Afreximbank has moved into an era of a structured financial model to support both upstream and downstream operators in Africa’s oil and gas industry. The Bank’s current strategic plan is a success story in terms of financing African Content projects worth billions of dollars.

Afreximbank Regional Chief Operating Officer for Southern Africa, Humphrey Nwugo, who spoke with our correspondent in an exclusive interview, confirmed that the Bank’s financial instruments have evolved from the initial corporate finance principles to the introduction of Afreximbank’ s structured Oilfield services financing and more recently to reserve-based lending and borrowing base financing for upstream activities.

According to him, Afreximbank has come a long way in bringing structured finance approaches in support of African entities operating in both upstream and downstream.

“Financing of African operators seeking to develop marginal Oilfields, for instance, was initially considered unattractive by lenders. But Afreximbank’ s activities in the sector helped to revive interest from international banks in the financing of local firms.

“The Bank recently introduced a Project Preparatory Facility (PPF) in support of early-stage expenses in project finance. This product has been very attractive to those entrepreneurs who have bold ideas but may not have enough capital in the beginning to finance their project,” he added.

Speaking about Financing Infrastructural projects, Humphrey explained that Afreximbank is very active in supporting infrastructure that is both trade enabling and trade facilitating. The Bank has supported and continues to support networks that enable cross border movement of goods and services in line with the Bank’s Intra African trade focus.

“We are therefore focused on facilities such as ports (seaports, dry ports, airports etc) as well as regional roads and railways as we see these as trade enablers.

“In the oil and gas sector, we are also busy with some pipeline projects, barges, jetties, storage terminal and distribution points and storage facilities in different countries in Africa.”

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