Closing supply gaps for African energy self-sufficiency

April 30, 2026

Ibitola Ukabam, vice-president of the Energy Resources Group at Africa Finance Corporation, talks to The Energy Year about strategies to strengthen Nigeria’s refining capacity and innovative financing structures to support indigenous upstream and gas midstream projects.

Africa Finance Corporation is a pan-African multilateral institution that invests in infrastructure to drive industrialisation and economic growth across the continent.

• As IOCs divest assets, structured financing tools such as reserve-based lending and syndications are helping to indigenous oil and gas operators acquire oil and gas blocks and reinvest in production growth.
• Gas monetisation hinges on building out midstream infrastructure. As demand from the industrial sector grows, reducing import dependency and extracting more value from Nigeria’s gas reserves will require investment in processing and transport infrastructure.
• New refining capacity and integrated energy infrastructure are already closing supply gaps in fuel, reducing reliance on imports and supporting energy security in Nigeria and West Africa.

What strategy is Africa Finance Corporation (AFC) following to support energy infrastructure in Nigeria and the continent?
At AFC, our role is to be a solution provider for Africa’s infrastructure challenges. We promote infrastructure that drives industrialisation because we see industrialisation as the most sustainable pathway to long-term development. But no meaningful economic activity can be sustained without reliable, affordable and sustainable energy.
We approach energy from a dual perspective by addressing the urgent energy deficits of today while ensuring our projects are future-proof and considerate of environmental impact. In Nigeria, focusing particularly on the supply of refined petroleum products is an important part. Despite decades of upstream activity, Nigeria has long depended on imports for its refined product needs, due to historical underinvestment in the midstream.
Over time, this reliance has widened the supply gap. In the past decade, local players have started responding by building out refinery projects. An example is Waltersmith’s first 5,000-bpd modular refinery and its subsequent expansion to 10,000bpd, for which we were the main lender. We are involved in a few other small refining projects across the country. The most prominent refining project has been the 650,000-bpd Dangote Refinery, in which we also played a key role.
AFC is committed to backing these initiatives to bridge the gap between upstream production and downstream demand. We see them as strategic investments that will shift the continent away from a dependency on imports and towards regional self-sufficiency and even net exports of refined products in the long run.

How is AFC supporting upstream players, particularly indigenous companies?
We are very active in the upstream space across Africa. Our primary focus is supporting disciplined, long-term investments by indigenous players acquiring assets from IOCs. As the majors reframe their portfolios and divest from assets deemed less economic or emissions-heavy, local players are stepping up. In Nigeria, many indigenous companies are ramping up their upstream exposure.
Our engagement goes beyond financial support. When we lead or structure, we build a relationship with an upstream operator, we assess the philosophy of the company and their long-term development plan. It’s not just about production volumes but also development impact in terms of jobs, capex and economic growth.
We’ve been involved in syndications for acquisitions and are also actively supporting reserve-based lending and production enhancement facilities. We favour facilities where the funding is channelled into capex for asset development. These mechanisms are effective in turning existing production into financing tools for growth.

 

How are you addressing opportunities in gas development?
Gas is a strategic priority for economic and environmental reasons. Many upstream assets across Africa have significant associated gas that has not been fully commercialised. We are backing projects that focus on gas treatment and processing to monetise this gas, particularly midstream projects that help capture gas at the wellhead and put it to productive use.
This area is still evolving. Often, the party interested in building the midstream gas facility doesn’t own the upstream asset, which poses challenges for financing, especially when the upstream asset is already leveraged. So, we’re working through innovative structuring to support these third-party-led gas projects.
Much of the available gas in Nigeria is going to NLNG, which is currently underutilised. Its Train 7 is coming on line soon, and that presents a clear opportunity. NLNG’s pricing structure can support upstream development economics, but we also want to see domestic gas use scale up.
Exports alone won’t create sustainable development. There’s a broader development opportunity in building out domestic gas use for industries, which creates more viable pathways for upstream monetisation.

What role do you see for gas in industrialisation across Africa?
Gas can be the backbone of African industrialisation, but the geographies of gas availability and industrial activity often don’t align. There may be gas-rich areas in one part of West Africa and mining clusters in another, but they don’t currently connect.
This creates a compelling case for cross-border infrastructure and intergovernmental collaboration. We are advocating for this and planting the seeds of those conversations. If we can connect industrial power demand to deep offshore gas supply, we unlock a huge volume of reserves that are currently stranded due to lack of offtake.
This also creates a case for large-scale gas-to-power or industrial feedstock supply strategies that could drive a new era of heavy industry and regional trade in energy-intensive materials.

What is AFC’s approach to renewables?
Renewables are a core part of our energy strategy. We don’t see renewables and traditional energy as competitors. Both are essential to meeting Africa’s growing energy demand while transitioning to lower-emission sources.
We have invested in solar and wind projects across the continent, including solar in Nigeria and wind in Cape Verde. As we look ahead, our goal is to scale both capacity and system readiness to absorb more renewable energy.
In Nigeria, there is strong solar potential, especially in the north. However, the commercial-scale solar segment remains underdeveloped compared to rooftop solar. We see this as an area of opportunity and are actively pursuing investments that can help mature this space.

How important is Nigeria in AFC’s broader energy strategy?
Nigeria is AFC’s host country, while also being a key energy deposit in Africa, so it is key to our energy strategy. We view our work here as both a responsibility and an opportunity. Nigeria’s challenges are complex and significant, particularly in energy and infrastructure, but so is its potential.
Our ambition is to have real impact across sectors, especially in power, energy resources and industry. We want to support local value creation, job growth and sustainable energy supply. While the challenges are large, we are committed to doing our part to address them with the tools we have – financial, technical and strategic.

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