Investors do not chase potential – they chase predictability. Africa has plenty of the former and is steadily building the foundations for the latter.
The downstream sector is at a make-or-break moment. Population growth, industrialisation and urbanisation are pushing fuel and LPG demand to unprecedented levels. The opportunity is immense – but it will remain theoretical unless the continent addresses regulatory fragmentation, infrastructure gaps and financing hurdles that continue to undermine investor confidence.
This is where the African Refiners and Distributors Association (ARDA) is taking the lead: building a modern, coherent ecosystem for Africa’s downstream industry – one where projects are structured, transparent, compliant and investment-ready.
Capital flows to discipline, bankability, and credibility—not uncertainty. That’s why, to turn Africa’s downstream potential into real investment, ARDA is advocating for concrete action: harmonised fuel standards, upgraded infrastructure, and a proven track record of delivering projects on time and within budget.
Africa’s Energy Demand: The Demographic Boom Demanding Investment
By 2050, one in every four people on earth will live in Africa. This demographic reality will either power prosperity or deepen dependence. The decisive factor will be investment in the continent’s downstream sector – refining, storage, distribution and end-use fuel systems.
Current trends make the opportunity impossible to ignore:
- Crude oil consumption in Africa is set to rise from 1.8 million barrels per day in 2024 to 4.5 million barrels by 2050. Yet downstream investment has stagnated even as upstream production grows, leaving Africa stuck in the costly paradox of exporting crude and importing refined products at a premium.
- OPEC estimates that Africa will need over $100 billion in refining investment between now and 2050 – a mix of upgrades, expansions and greenfield projects in order to meet the continent’s booming demand for petroleum products over the same period.
The opportunity is immense. But the barriers are equally real.
Why Downstream Projects Fail: The Bankability Gap
Across the continent, downstream projects rarely advance beyond the drawing board because they fail the first test applied by global investors: bankability.
Investors want clarity, not chaos. They look for predictable feedstock and offtake arrangements, stable regulation, enforceable contracts and credible technical and financial modelling. They expect realistic timelines, professional project preparation and ESG compliance that can unlock lower-cost capital. Instead, they often encounter inconsistent policies, market fragmentation, shallow ports, congested depots, inflationary pressures, exchange-rate volatility and mismatched fuel specifications.
Fuel Specifications: A Hidden Barrier to Investment
Across the 54 African countries, 46 maintain national fuel specifications, yet the continent still has 12 different gasoline grades with sulphur levels ranging from 10 to 2,500 ppm, and 11 diesel grades ranging from 10 to 10,000 ppm. Closing these gaps is essential: upgrading existing African refineries to meet cleaner fuel standards would require about $16 billion – an investment that would unlock regional trade, improve efficiency and create economies of scale.
Infrastructure Challenges: A Drag on Africa’s Energy Potential
A 2024 whitepaper by CITAC and Puma Energy, highlights major logistical constraints. Many African ports are too shallow for large vessels, berths are congested, storage capacity is often inadequate, and roads and pipelines are over-used, with widespread single points of failure. Collectively, these shortcomings add $20–30 per tonne to landed fuel costs and erode investor confidence in the system’s reliability.
Despite the expansion of refining capacity, with the Dangote refinery and others coming onstream, this alone will not close the supply shortfall or enable the continent to deliver cleaner fuels at scale.
Africa faces broader challenges in moving fuel efficiently across the continent, which results in inefficient and incomplete supply chains from coast to inland zones of consumption, including the mining sector, stifling economic growth.
Addressing Africa’s energy security challenges depends equally on transport infrastructure. Both coastal and land-linked countries require coordinated investment in pipelines, roads, and rail networks to ensure that petroleum products can reach markets reliably and at lower cost to the consumer.
Clean Cooking: A Massive Untapped Market
More than one billion Africans still rely on biomass for cooking, and the number has grown by 220 million since 2010. The health, environmental and social consequences are enormous – and so is the opportunity. The scale of unmet demand positions Africa as one of the most attractive markets for LPG investments globally.
The conclusion is unavoidable: Africa must modernise its downstream industry to attract global capital, and ARDA is leading this transformation.
ARDA’s Blueprint for Investment-Ready Downstream Markets
As the continent’s leading voice for the downstream sector, ARDA advocates for technical standard-setting, acts as an investment catalyst and partners on policy. Its mission for Africa is clear: build a bankable, future-ready downstream sector capable of attracting global capital at scale.
The association has identified five strategic priorities designed to create a fully investment-ready ecosystem.
1. Harmonising Fuel Specifications
ARDA is driving adoption of low-sulphur AFRI standards, including AFRI-6 (10 ppm), to enable regional markets, reduce supply-chain costs, improve public health, support refinery upgrades and align Africa with global norms. Through partnerships with the African Union Commission, IPIECA, UNEP, and regional economic communities, ARDA is advancing a continent-wide shift to cleaner fuels.
2. Rebuilding Infrastructure End-to-End
ARDA advocates a comprehensive upgrade of the downstream value chain – including deeper ports and modernised jetties, offshore SPMs and CBMs, expanded storage facilities with tanks exceeding 150,000 m³, new and rehabilitated pipelines, and multimodal logistics systems designed for redundancy. These improvements are essential for achieving economies of scale and giving investors the confidence that supply systems can perform reliably.
3. Embedding Regulatory and Investment Discipline
To ensure projects are fundable, ARDA promotes transparent, long-term regulatory frameworks; turnkey, fixed-price EPC contracts; bankable offtake agreements; and rigorous project preparation covering scope, cost, schedule, technology, economics and compliance. ARDA also advances ESG-aligned project design, enabling access to the sustainable finance instruments increasingly favoured by global capital markets.
4. Delivering Clean Cooking at Scale
Recognising LPG as both a health and climate priority, ARDA supports the rollout of large-scale LPG and bio-LPG infrastructure, advocates policy reforms that accelerate adoption, and drives partnerships such as the innovative ARDA-GLPGP drive to mobilise public and private sector capital into a $1 billion LPG Fund that will identify, conduct due diligence and finance bankable LPG projects to propel sustainable LPG market growth across Africa.
5. Building a Pipeline of Bankable Projects
Through seven thematic workgroups – Refining & Specifications, Storage & Distribution, LPG, Regulation, Sustainable Financing, HSE & Quality (HSEQ) and Human Capital – ARDA is promoting standardised frameworks, sharing best-in-class technical expertise and championing the building of a resilient workforce to achieve Africa’s energy transition ambitions.
A register of investable downstream projects is being built, with clearly defined feedstock, offtake structures and governance, while ARDA’s platforms – including high-level forums such as the recent Storage, Distribution & Jet Fuel Forum in Dakar, Senegal and the LPG Forum in Lusaka, Zambia – are used to highlight key bottlenecks and accelerate policy reforms that attract investment.
Additionally, a Training School – the Human Capital Centre-of-Excellence at ARDA’s Headquarters in Abidjan, Côte d’Ivoire – offers capacity-building programs for the ecosystem and maintains a database of pan-African industry professionals to support project execution across the continent. This initiative is helping to develop the leaders and professionals of tomorrow who will drive the industry’s growth and advance Africa’s energy transition.
The Bottom Line for Investors
Africa’s downstream sector is one of the world’s last large-scale, high-growth energy investment frontiers. The demand curve is defined by demographics. The supply deficit is structural. The capital requirement exceeds $100 billion. And the economic upside is transformative.
One thing is certain. For investors seeking long-term returns anchored in real demand, Africa’s downstream sector is not just an opportunity – it is the next frontier.
But capital will only flow where discipline is demonstrated, and that discipline is precisely what ARDA is building through a harmonised, integrated, ESG-ready downstream ecosystem designed for investment.
By: Anibor Kragha
Executive Secretary, African Refiners and Distributors Association (ARDA).
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