Why Africa's downstream sector is the next global investment frontier

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.

That’s why, to turn Africa’s downstream potential into real investment, stakeholders are advocating for concrete action: harmonised fuel standards, upgraded infrastructure, and a proven track record of delivering projects on time and within budget.

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. For instance, 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.

Organisation of the Petroleum Exporting Countries (OPEC) estimates that Africa will need over $100 billion (Sh12.895 trillion) in refining investment between now and 2050 – a mix of upgrades, expansions and greenfield projects to meet the continent’s booming demand for petroleum products over the same period.

The opportunity is immense. But the barriers are equally real. 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 Environmental, Social, and Governance (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.

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 Parts Per Million (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 (Sh2.063 trillion) – an investment that would unlock regional trade, improve efficiency and create economies of scale. 

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 overused, with widespread single points of failure.

Collectively, these shortcomings add $20–30 (Sh2,579-Sh3,868.50) 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 a lower cost to the consumer.
 
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.

As the continent’s leading voice for the downstream sector, the African Refiners and Distributors Association (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 writer is Executive Secretary, African Refiners and Distributors Association (ARDA)