The African Export-Import Bank (Afreximbank) has announced the launch of a $1 billion oil service financing facility in Guyana, marking a major step towards enhancing local participation in the country’s rapidly expanding oil industry. The announcement was made by Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, at the Guyana Energy Conference and Supply Chain Expo (February 18 – 21, 2025).
The financing facility aims to support Guyana’s local content policies, ensuring that domestic businesses benefit from the country’s oil boom. Funds will be deployed directly to qualifying corporate clients or through a factoring line via local banks, allowing them to finance invoices from local contractors and bolster homegrown oil service enterprises.
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“Given the level of oil production in Guyana and its offshore location, I estimate that the oil service sector would amount to $5 to $8 billion annually. But where will it go? Most of it would be paid to oil service companies abroad if Guyana does nothing to avoid that. A 50% retention in Guyana would increase Guyana’s GDP by 29% to 47%,” President Oramah stated.
Leveraging Oil for Economic Diversification
With proven oil reserves of 12 billion barrels, Guyana stands on the brink of an economic transformation. However, President Oramah urged the country to proactively harness its resources and diversify its economy to avoid the pitfalls of commodity dependence.
“The commodity market is prone to volatility and cyclicality; hence, the reliance on crude revenues as a primary source of government funding could expose the national economy to volatile commodity markets,” he cautioned.
He advised the Guyanese government to secure long-term off-take contracts with oil service companies, which would enhance market access and price stability.
Afreximbank’s Call for Stronger Afri-Caribbean Cooperation
Reinforcing the Afri-Caribbean partnership, President Oramah announced that skilled oil service companies from Ghana, Egypt, and South Africa are prepared to support Guyana’s oil and gas industry.
“These measures are necessary if Guyana and other new entrants in the Caribbean and Africa are to avoid the painful ‘Dutch Disease.’ We make these suggestions based on three long decades of financing oil and gas activities across Africa,” he said.
He highlighted Afreximbank’s experience in financing oil-dependent economies, noting that policy choices determine whether resource wealth leads to economic prosperity or stagnation.
Afreximbank’s Commitment to Economic Transformation
Afreximbank has played a pivotal role in financing and promoting intra- and extra-African trade for over 30 years. The institution has been instrumental in accelerating industrialisation, supporting the African Continental Free Trade Agreement (AfCFTA), and developing financial mechanisms like the Pan-African Payment and Settlement System (PAPSS).
At the end of December 2023, Afreximbank’s total assets and contingencies stood at over $37.3 billion, with shareholder funds amounting to $6.1 billion. The bank maintains investment-grade ratings from Moody’s, Fitch, and Japan Credit Rating Agency (JCR).
What This Means for Guyana
- Stronger Local Content in Oil & Gas – The financing facility ensures that Guyanese businesses play a key role in the oil value chain, reducing reliance on foreign service providers.
- Economic Growth & Job Creation – Increased local participation could boost GDP by up to 47%, according to Afreximbank.
- Enhanced Financial Stability – The initiative will diversify Guyana’s economy and reduce exposure to commodity price volatility.
- Strategic Global Partnerships – Strengthening ties with African oil service firms ensures Guyana benefits from decades of expertise in managing resource wealth.
The Road Ahead
Afreximbank’s $1 billion commitment marks a significant milestone in Guyana’s economic transformation. However, effective implementation, transparent policies, and strong institutional oversight will be crucial to ensuring that oil wealth translates into sustainable development.
With its vast reserves and strategic partnerships, will Guyana avoid the resource curse and emerge as a leading oil-driven economy, or will it face the challenges of volatility and external dependency? The coming years will shape the nation’s trajectory in the global energy landscape.
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Source: Afreximbank
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