ALCIF : Afreximbank has invested over $42bn in African enterprises in five years, says Oramah

 The African Export-Import Bank (Afreximbank) has invested more than $42 billion in support of African businesses including oil and gas between 2016 and 2020, according to Professor Benedict Oramah, the president of the organisation.

At the end of 2020, the bank’s total assets and guarantees stood at US$21.5 billion, and its shareholder funds amounted to US$3.4 billion. Afreximbank disbursed more than US$42 billion between 2016 and 2020.

 Oramah , who  spoke on Monday at the maiden edition of the African Local Content Investment Forum (ALCIF) in Lagos, stated that the continental multilateral institution was presently the largest lender to the multi-million dollar 650,000 barrels per day Dangote Refinery currently under construction at the Lekki Free Trade Zone, Lagos.

He was represented by Ibrahim Sagna, Director and Head , Advisory and Capital Markets , Afreximbank, who along with other speakers at the event spoke

On the theme:, “Evolving a Pan-African Strategy Towards Sustainable Funding of Africa Oil and Gas Projects,” targeted at oil and gas practitioners especially member nations of the African Petroleum Producers Organisation (APPO).

Oramah said Afreximbank had invested a total of $4 billion as of the third quarter (Q1) 2020 to support businesses in Nigeria, adding that  by Q3 2021, the number of funds invested in the country passed $5 billion. He said that in the last four months, the bank has supported the  Nigerian National Petroleum Corporation (NNPC) Limited with $1 billion.

Said the Afreximbank President:  “By the third quarter of 2020, our total investment is about $4 billion. By the third quarter of last year, the number has passed $5 billion. Over the last four months, we’ve given $1 billion for NNPC.

“We signed $5 billion agreement with NNPC. We signed an MOU of $5 billion with UTM Offshore. Also, the BOI which was mentioned, we provided over €700 million bond for them last week.

“In a bid to mobilise global financing to Africa, we have also lent some of the largest syndications in the sector. In fact, about the largest refinery in the world, which is the Dangote Refinery, we are today, the largest lender to that facility.”

Executive Secretary of  Nigerian Content Development Management Board (NCDMB), Mr. Simbi Wabote, who also  spoke at the occasion described Afreximbank as one bright spot in the continent mandated to finance and promote intra and extra-African trade.

Wabote recalled that Afreximbank signed a $1.04 billion facility with the NNPC Limited to finance the exploration of petroleum during the second intra-Africa trade fair which held in Durban, South Africa, few days after the completion of Climate Change Conference (COP-26) in Glasgow, Scotland.

He said, “In respect of African institutions, one bright spot is the African Export-Import Bank (Afrexim Bank), a pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade based in Cairo, Egypt.

“It is very instructive that Afreximbank signed a $1.04 billion facility with the NNPC Limited to finance the exploration of petroleum during the second intra-Africa trade fair which held in Durban, South Africa, few days after the completion of COP-26 event in Glasgow.

“For a bank that disbursed more than $42 billion between 2016 and 2020 in support of African enterprises, there is no doubt that Afreximbank is an institution of note in consideration of the quest for funding hydrocarbon development projects in Africa.”

The executive secretary said African Development Bank (AfDB) made similar financial support to African businesses in line with the bank’s objective to spur sustainable economic development and social progress in member countries thus contributing to poverty reduction.

According to Wabote, AfDB has the African Development Fund (ADF), which became operational in 1974 and has cumulatively invested $45 billion over its 44 years of operation on the African continent.

Noting that the fund had not been used much in the hydrocarbon sector, he said there was opportunity to engage AfDB to utilise part of the fund for gas development, which could be of interest to its largely Western donor countries against the backdrop of disruption in gas supplies in Europe.

At country level, according to Wabote, Nigeria represents a bright spot in the provision of funds that can be sourced for the execution of oil and gas projects. He explained that the funds included the Nigerian Content Intervention Fund (NCIF) and other funds that could be sourced from Development Financial Institutions (DFIs), like the Bank of Industry (BOI), Nigerian Export-Import Bank (NEXIM Bank) ,and other special funds managed by the Central Bank of Nigeria (CBN).

He cited the NCDMB partnered with BOI to establish the $300 million NCI Fund and the NCDMB partnership with NEXIM bank to create a$50-million fund for Working Capital and for Women in Energy.

In the area of research and development, Wabote said the NCDMB had sponsored the patent for some inventions, and had commenced the process of commercialising those inventions.

 In January 2021,Afreximbank disbursed US$250 million of the US$1.1 billion that supported the acquisition by TNOG Oil and Gas Limited (TNOG) of a 45% stake in OML 17 onshore oilfield.

 According to the bank “With this US$250-million Reserve Based Lending facility, Afreximbank was the largest lender, underwriting about a quarter of the financing that enabled TNOG to buy stakes in OML 17 from Shell Petroleum Development Company, Total E&P Nigeria Limited and ENI. Other participating lenders include Africa Finance Corporation, Union Bank, Shell, Hybrid Capital and Schlumberger, with TNOG advised by United Capital Plc.

The five-year US$1.1 billion facility, which was signed in December 2020, despite the economic headwinds caused by the COVID-19 pandemic, was led, as Mandated Lead Arrangers, by Afreximbank, Standard Chartered Bank and ABSA.

Following this acquisition, TNOG will now operate the OML 17 onshore oilfield on behalf of the Nigerian National Petroleum Corporation, which owns the remaining 55% working interest.

 Oramah said: “This transaction further underscores Afreximbank’s commitment to ensuring that indigenous African companies are able to play a more dominant role in the operations of specialized oil and gas assets in an industry hitherto dominated by the International Oil Companies. TNOG as the Operator of OML 17 will invest in an accelerated production ramp up thereby boosting foreign exchange earnings and employing more Africans. This resonates with our mandate. We congratulate Heirs Holdings for keeping the Africa flag flying.”

TNOG is a related company of Heirs Holdings Limited and Transnational Corporation of Nigeria Plc (Transcorp), a leading African conglomerate with interests in banking, insurance, real Estate, hospitality and power.