Bankable energy: Why Africa’s downstream sector is emerging as the next global investment frontier

KAMPALA, December 26, 2025 — Africa’s downstream energy sector is standing at a critical turning point, with its vast growth potential increasingly attracting global attention. However, as investors weigh opportunities, predictability, not promise, remains the decisive factor, according to Anibor Kragha, Executive Secretary of the African Refiners and Distributors Association [ARDA].

Kragha notes that while Africa possesses enormous energy potential, translating this into tangible investment will depend on the continent’s ability to overcome persistent regulatory, infrastructure and financing challenges that continue to undermine investor confidence.

“The downstream sector is at a make-or-break moment, explaining that rapid population growth, urbanisation and industrialisation are driving unprecedented demand for fuel and liquefied petroleum gas [LPG]. The opportunity is huge, but it will remain theoretical unless Africa addresses regulatory fragmentation, infrastructure deficits and weak project bankability.” he said,

He stressed that capital gravitates toward discipline, transparency and credibility rather than uncertainty. In response, ARDA is positioning itself at the centre of efforts to create a modern, coherent and investment-ready downstream ecosystem—where projects are well-structured, compliant with global standards and capable of attracting long-term financing.

Rising demand driven by demographics

Africa’s demographic trajectory underscores the urgency of investment. By 2050, the continent will be home to one in every four people worldwide. Whether this population growth fuels prosperity or deepens dependency will largely depend on the strength of downstream infrastructure, including refining, storage, distribution and end-use systems.

Projections indicate that crude oil consumption in Africa will increase from 1.8 million barrels per day in 2024 to about 4.5 million barrels per day by 2050. Yet downstream investment has lagged behind upstream production, perpetuating the costly cycle of exporting crude oil while importing refined products at premium prices.

The Organisation of Petroleum Exporting Countries [OPEC] estimates that Africa will require more than $100 billion in refining investments by 2050 to meet rising demand. This includes refinery upgrades, expansions and new greenfield projects. While the opportunity is significant, the barriers to unlocking it remain substantial.

The bankability challenge

A key reason many downstream projects fail to progress beyond planning stages is the lack of bankability. Global investors demand clarity—stable regulations, predictable feedstock and offtake arrangements, enforceable contracts and credible technical and financial models. They also expect realistic timelines, professional project preparation and adherence to environmental, social and governance [ESG] standards.

Instead, investors often encounter fragmented markets, inconsistent policies, shallow ports, congested storage facilities, volatile exchange rates and mismatched fuel specifications. These factors combine to erode confidence and raise project risk.

Fuel standards and infrastructure gaps

Fuel specifications remain a hidden but significant barrier. Although 46 African countries have national fuel standards, the continent still operates with multiple gasoline and diesel grades, with sulphur levels varying widely. Harmonising standards and upgrading refineries to cleaner fuels would require an estimated $16 billion investment, an amount that could unlock regional trade, improve efficiency and generate economies of scale.

Infrastructure constraints further compound the challenge. Studies highlight shallow ports, congested berths, insufficient storage and overburdened road and pipeline networks. These inefficiencies add between $20 and $30 per tonne to fuel costs and weaken the reliability of supply chains.

While new refineries, including the Dangote Refinery, are expanding capacity, refining alone will not resolve Africa’s energy security challenges. Efficient transport networks—pipelines, roads and railways—are equally vital to move products from coastal hubs to inland markets, including mining regions, at lower cost.

Clean cooking: A Major untapped opportunity

Beyond transport fuels, Africa’s clean cooking market presents a vast investment opportunity. More than one billion Africans still rely on biomass for cooking, a figure that has risen significantly since 2010. The health, environmental and social costs are severe, but so is the potential for LPG and bio-LPG investments. This unmet demand positions Africa as one of the most attractive clean cooking markets globally.

ARDA’s investment-ready blueprint

As the leading voice of Africa’s downstream sector, ARDA is spearheading reforms aimed at making markets investment-ready. Its strategy focuses on harmonising fuel standards, rebuilding infrastructure, embedding regulatory discipline, scaling up clean cooking solutions and developing a pipeline of bankable projects.

Through partnerships with the African Union Commission, UNEP and regional bodies, ARDA is promoting low-sulphur fuel standards aligned with global norms. It is also advocating comprehensive infrastructure upgrades—from deeper ports and modern storage facilities to expanded pipelines and multimodal logistics systems.

To strengthen project credibility, ARDA supports transparent regulatory frameworks, bankable offtake agreements, fixed-price engineering contracts and ESG-aligned project designs. The association is also driving initiatives such as a proposed US$ 1 billion LPG Fund to mobilise capital for clean cooking projects across the continent.

Capacity building remains central to this vision. ARDA’s Human Capital Centre of Excellence in Abidjan is training industry professionals and supporting project execution, while high-level forums across Africa are helping to fast-track policy reforms and investment decisions.

The investment case

Africa’s downstream energy sector represents one of the last major high-growth investment frontiers globally. Demand is driven by demographics, supply gaps are structural, and capital needs exceed US$ 100 billion. For investors seeking long-term, demand-backed returns, the sector offers transformative potential.

However, as Mr Kragha emphasises, investment will only flow where discipline is evident. By building a harmonised, integrated and ESG-ready downstream ecosystem, ARDA aims to ensure that Africa’s energy potential is no longer just promising—but truly bankable.

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