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Afri-Exim Bank floats US$1B financing facility to support locals in oil sector
Kaieteur News- President of the Africa Exim Bank Benedict Okechukwu Oramah on Tuesday made an offer to the Guyanese Government to establish a US$1B financing facility to support the oil services sector here, allowing local banks to be able to lend money to citizens who are looking to penetrate the oil industry.
President of the Africa Exim Bank Benedict Okechukwu Oramah (Afri-Exim Bank floats)
Oramah told the Guyana Energy Conference and Supply Chain Expo that it is urgent that Guyanese entrepreneurs become active players within the oil value chain, by operating and owning oil assets, in turn providing essential services to the oil sector. He commended the enactment on Local Content Law saying it is appropriate for the sector.
“A deliverable Local Content Policy will help to increase the wealth of many Guyanese. We saw that in Nigeria, which led to the transfer of technology and also increase the wealth that are in individual hands in Nigeria, some values will also be acquired from that experience,’’ he said.
He further stated that, “Africa can help set up an oil service financing facility from Guyana of up to US$1billion because oil service is capital content, local people can only participate who have a source of capital and local content in the sector…but not stop at the oil and as the President mentioned earlier, the banking sector, the industrial sector, the other services, all come together to bring down some content more impactful.”
The Africa Exim Bank president explained to the audience that the money can serve as a guarantee which can allow the local banks to “more effectively lend”. The Government of Guyana must recognise that the commodity market is liable to volatility and cyclicality. In this regard he cautioned that “the reliance on crude revenues as a primary source of government funding could also expose the national economy to the volatile commodity markets, as oil prices could be high five to seven years and then drop for about two to three years before going back up.
A way out of this is for the government of an oil producing nation to enter into long term ‘day contracts’ with refiners. “As I stand here, I offer African traders and oil refineries as potential partners to enter into such long term contract. The benefit of that is, when you have a bust that will occur one day, the long term contract will actually guarantee you a market so that you don’t have to shut down fields… some African businesses, traders, refiners, are here, and we’ll be happy to partner with Guyanese to achieve this goal, Africa Exim Bank will be willing to back such partnership,” he assured.
Oramah said that there are oil companies not only from Nigeria but also Ghana, Egypt and South Africa who are ready and willing to support Guyanese to take control of their destiny.
He advised that such measure are necessary for “new entrants in the Caribbean and Africa to avoid the painful Dutch disease that oil rich economies normally face.” The suggestion was made based on the banks “three long decades of financing oil and gas activities across Africa, we have witnessed oil dependent economies transformed for better or worse through these periods” and this was all based on the policy choices the leaders made.
(Afri-Exim Bank floats US$1B financing facility to support locals in oil sector)
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