Dangote refinery eased forex pressure, stabilised naira, says Afreximbank president

The Dangote Petroleum Refinery helped stabilise the naira by cutting Nigeria’s reliance on imported fuel, according to the President and Chairman of the Board of Directors of the African Export-Import Bank, George Elombi. He spoke during a Mid-Year Media Roundtable in Abuja on Wednesday, where he also disclosed that Afreximbank had committed $2.5bn towards the refinery’s expansion.

Refinery shielded Africa from Gulf crisis

Elombi said the refinery proved its strategic value during the recent Middle East tensions, when disruptions in the Gulf failed to cause shortages of refined petroleum products across Africa. “The crisis in the Gulf has happened; oil prices fled, but Africa didn’t lack in its refined petroleum products,” he said.

He added that the refinery eased pressure on Nigeria’s foreign exchange market by reducing fuel imports and enabling crude-for-naira transactions. “It wasn’t believed, but the currency stabilised because of that,” Elombi said. He described the refinery as an investment whose benefits extend beyond Nigeria and called it a model for other African countries.

Afreximbank backs expansion, other African projects

Elombi disclosed that Afreximbank was supporting the expansion of the refinery after approving $2.5bn out of the $4bn financing requested by the company. The bank is also supporting refinery and storage infrastructure projects in Ethiopia, Kenya, Tanzania, Uganda, Angola, Chad, the Republic of Congo and Namibia to strengthen Africa’s energy security and reduce vulnerability to external supply shocks.

He added that the Dangote Group’s fertiliser business had become a major export platform, shipping products to Germany, Brazil and other markets. However, he said Afreximbank wanted a greater share of such exports directed to African countries to deepen intra-African trade.

Nigeria is Afreximbank’s most strategic market

Elombi described Nigeria as Afreximbank’s largest and most strategic market. “It’s the heartbeat of the African continent, and Dangote is demonstrating that it is indeed the heartbeat of the continent. When you stop the energy, everything comes to an end. The heart stops beating,” he said.

PAPSS reduces forex pressure, connects 190 banks

Beyond energy, Elombi highlighted the role of the Pan-African Payment and Settlement System in reducing pressure on foreign exchange markets. He explained that PAPSS enabled the Dangote Group to swap its Ethiopian birr holdings with Ethiopian Airlines’ naira balances, eliminating the need for both parties to source scarce foreign exchange.

PAPSS currently connects more than 190 commercial banks and fintechs across 28 African countries. Elombi described it as critical infrastructure for the African Continental Free Trade Area. He said the platform would soon introduce a payment card that would allow Africans to spend their local currencies across participating countries without first converting them into dollars.

Although adoption had been slower than expected because many central banks initially misunderstood the system, Elombi said the platform was gaining momentum and attracting interest from global payment companies. He said Afreximbank viewed stablecoins as complementary rather than competitive to PAPSS, arguing that payment systems would remain necessary as long as African countries maintained separate currencies.

Afreximbank shifts focus to value addition

Elombi reiterated the bank’s shift towards financing value addition rather than the export of raw materials. Drawing from a recent visit to China, he said Africa must seize opportunities in electric vehicle battery production by processing its abundant mineral resources locally. “We’re no longer interested in anyone who is going to just mine Africa. We only want people who will mine and process at home,” he said.

He also criticised global credit rating agencies for unfairly penalising African institutions because of negative perceptions of the continent. He argued that Afreximbank’s loans were well collateralised and performed strongly despite operating in Africa. According to him, such perceptions increase borrowing costs, discourage investment and limit access to cheaper financing.

Elombi challenged African journalists to tell more balanced stories about the continent by highlighting development successes alongside governance challenges. He maintained that Afreximbank would continue deploying African capital to finance African development rather than parking funds abroad. “You cannot say there are no seaports, no power transmission lines and no manufacturing units, and then you take the money and keep it abroad,” he said.

He added that despite concerns raised by some rating agencies, Afreximbank’s shareholders had remained confident in the institution, noting that the bank continued financing governments and private sector projects across the continent.

PUNCH Online recently reported that Afreximbank had underwritten $2.5bn out of a $4bn senior syndicated term loan for Dangote Petroleum Refinery and Petrochemicals, in a move aimed at strengthening the refinery’s financial position and supporting its long-term growth. The bank’s Senior Executive Vice President, Mr Denys Denya, recently said the bank is financing three additional refineries in Nigeria as part of efforts to cut the country’s dependence on imported petroleum products.

For the naira, the refinery’s continued operation and expansion mean reduced demand for dollars to pay for imported fuel, which should help keep the currency more stable. For Nigerian businesses and consumers, less forex pressure could translate into more predictable fuel prices and lower import costs over time.