Afreximbank says Dangote refinery key to conserving Kenya's foreign reserves

Dangote Group Chairman Aliko Dangote gestures during the groundbreaking ceremony as Afreximbank President and Chairman of the Board of Directors Dr George Elombi looks on. [File, Standard]

Africa's trade bank has said a Dangote-backed oil refinery planned for Kenya's coastal town of Lamu will help conserve the country's foreign exchange reserves.

African Export-Import Bank (Afreximbank) said the 700,000 barrel-per-day Dangote East Africa Petroleum Refinery & Petrochemicals SEZ will further strengthen regional energy security and reduce the continent's exposure to distant supply chains amid global energy disruption.

According to the bank, the refinery whose groundbreaking was led by President William Ruto last week represents a landmark shift in how Africa processes and trades its natural resources.

"The significance of this investment extends well beyond the construction of a refinery. It demonstrates Africa's capacity to conceive, finance and build major industrial assets that respond directly to the needs of our economies," said Dr George Elombi, President and Chairman of the Board of Directors of Afreximbank in a statement.

"By refining more of what we produce on the continent, we retain greater value from our natural resources, create jobs and strengthen the trade links between African economies."

Elombi added that recent disruptions to global energy and shipping routes had reminded African economies of the cost of dependence. "Africa has the capital, the enterprises and the markets to reduce that exposure. Investments such as this give us the productive capacity to shorten supply chains, conserve foreign exchange, strengthen regional energy security and build greater resilience into our 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.

The Dangote-backed refinery 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 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.

Murban crude oil prices rose to Sh12,606 (94.70) a week earlier, as supply concerns tied to the Middle East conflict persisted. Diesel and kerosene prices have climbed sharply in recent months, feeding through to transport and food costs.

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. Since 2015, the bank has invested approximately Sh1.94 trillion (2.5 billion) of a Sh517.9 billion ($4 billion) senior syndicated term loan for that refinery, the largest participation in the syndicate.

Headquartered in Cairo, Afreximbank is a Pan-African multilateral financial institution mandated to finance and promote intra- and extra-African trade. For more than 30 years, it has deployed innovative structures to support the transformation of Africa's trade, accelerate industrialisation and boost intra-regional trade.

The bank has been a strong supporter of the African Continental Free Trade Agreement (AfCFTA). It launched the Pan-African Payment and Settlement System (PAPSS), which was adopted by the African Union as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the bank has set up a Sh1.29 trillion ($10 billion) Adjustment Fund to support countries participating in the agreement.

At the end of December 2025, Afreximbank's total assets and contingencies stood at over Sh6.28 trillion (8.4 billion). It holds investment-grade ratings from China Chengxin International Credit Rating (AAA), GCR (A), Japan Credit Rating Agency (A-), Moody's (Baa2) and S&P Global Ratings (BBB+).

In Kenya, Afreximbank launched a Sh388.4 billion (800 million) Kenya Climate Change Adaptation Facility supporting irrigation and agricultural productivity.

The bank is also supporting the development of the Dongo Kundu Integrated Industrial Park in Mombasa and the Naivasha Special Economic Zone II, with approximately Sh129.5 billion ($1 billion) earmarked for the two projects. Government projections associate the developments with roughly 140,000 jobs once fully developed.

In 2025, Afreximbank and KCB Group announced Sh103.6 billion (500 million) from Afreximbank and Sh38.8 billion (40 million) from KCB Group towards the development of the zone.

The Dangote-backed Lamu refinery is expected to process crude from African producers and supply refined products across East Africa, reducing the region's reliance on imports from the Middle East and Asia. Recent disruptions affecting the Strait of Hormuz and continuing instability around the Red Sea and Bab el-Mandeb have exposed the vulnerability of African economies dependent on distant supply chains for strategic commodities.

Afreximbank has also moved to build an African market for African-refined petroleum. In 2025, it established Sh388.4 billion (10 billion to $14 billion) in intra-African petroleum imports and enabled African buyers to source more refined products from refineries operating on the continent.

"The decision to extend that industrial footprint into East Africa is important because Africa's transformation will increasingly depend on African enterprises investing across our borders, African financial institutions supporting them and governments creating the conditions in which those investments can succeed," Elombi said.

The bank said investments such as the Dangote-backed Lamu refinery, alongside Kenya's emerging industrial parks and special economic zones, could help shift the continent from dependence on the export of unprocessed commodities and the import of manufactured products towards an African economy that increasingly produces, processes and trades for itself.