African Export-Import Bank (Afreximbank) has highlighted the significance of a Dangote-backed oil refinery planned for Kenya's coastal town of Lamu, stating that it will play a crucial role in conserving the country's foreign exchange reserves. The 700,000 barrel-per-day Dangote East Africa Petroleum Refinery & Petrochemicals SEZ is expected to strengthen regional energy security and reduce the continent's exposure to distant supply chains amid global energy disruption.
According to Afreximbank President and Chairman of the Board of Directors, Dr George Elombi, the refinery represents a landmark shift in how Africa processes and trades its natural resources. He noted that the investment demonstrates Africa's capacity to conceive, finance and build major industrial assets that respond directly to the needs of its economies.
The project, being developed by Aliko Dangote's Dangote Group, is expected to create approximately 60,000 jobs and process crude sourced from African producers, including Uganda, while supplying refined petroleum products to Kenya and the wider regional market. This development comes at a critical moment for Kenya, whose foreign exchange reserves have come under sustained pressure from a surge in global oil prices linked to conflict in the Middle East.
Central Bank of Kenya (CBK) data shows that reserves stood at Sh1.95 trillion (15.25 billion) earlier in the month. The shilling has remained relatively stable at around Sh129.48 per dollar, but analysts say that stability has required active intervention.
By refining crude locally rather than importing finished products, the Dangote-backed Lamu plant is expected to reduce Kenya's exposure to global refined product markets, lower the import bill and ease demand for dollars to pay for fuel shipments, a key source of pressure on the current account.
Afreximbank has been a long-standing partner of the Dangote Group, investing approximately Sh1.94 trillion (2.5 billion) of a Sh517.9 billion ($4 billion) senior syndicated term loan for the refinery, the largest participation in the syndicate.
Afreximbank, headquartered in Cairo, is a Pan-African multilateral financial institution mandated to finance and promote intra- and extra-African trade. The bank has been a strong supporter of the African Continental Free Trade Agreement (AfCFTA) and has launched several initiatives to support African economies, including the Pan-African Payment and Settlement System (PAPSS) and a Sh1.29 trillion ($10 billion) Adjustment Fund.
Key points
- The Dangote-backed refinery in Lamu will help conserve Kenya's foreign exchange reserves and strengthen regional energy security.
- The project is expected to create approximately 60,000 jobs and process crude sourced from African producers.
- Afreximbank has invested approximately Sh1.94 trillion (2.5 billion) in the Dangote Group's refinery project.
