Investors don’t chase possibilities; they chase predictability. Africa is rich in the former, but the foundations for the latter are steadily being built.
The downstream sector is at a critical moment. Population growth, industrialization and urbanization are pushing demand for fuel and LPG to unprecedented levels. The opportunity is enormous, but it will remain theoretical unless the continent addresses regulatory fragmentation, infrastructure gaps and funding hurdles that continue to undermine investor confidence.
This is where the African Refining and Distribution Association (ARDA) is taking the lead. We are creating a modern, consistent ecosystem for Africa’s downstream industries where projects are structured, transparent, compliant and investment-ready.
Capital flows to discipline, bankability, and reliability, not uncertainty. That is why, to turn Africa’s downstream potential into real investment, ARDA is advocating for concrete actions: harmonized fuel standards, infrastructure upgrades, and a proven track record of delivering projects on time and on budget.
Africa’s energy demand: Investment demand driven by population boom
By 2050, one in four people on the planet will live in Africa. This demographic reality either fosters prosperity or deepens dependency. A decisive factor will be investment in the continent’s downstream sector: refining, storage, distribution and end-use fuel systems.
Current trends make this opportunity impossible to ignore.
Africa’s crude oil consumption is expected to increase from 1.8 million barrels per day in 2024 to 4.5 million barrels per day by 2050. But even as upstream production increases, downstream investment has stagnated, leaving Africa stuck in a high-cost paradox of exporting crude oil and importing refined products at high prices.
OPEC estimates that Africa will need more than $100 billion in refining investment between now and 2050. This includes upgrades, expansions and greenfield projects to meet the burgeoning demand for petroleum products on the African continent over the same period.
The opportunities are immense. But the barriers are just as real.
Why downstream projects fail: The bankability gap
Across the continent, downstream projects rarely advance from scratch because they fail to pass the first test applied by global investors: bankability.
Investors want clarity, not confusion. They want predictable raw materials and supply arrangements, stable regulations, enforceable contracts, and reliable technical and financial modeling. They expect realistic schedules, professional project preparation, and ESG compliance that allow them to leverage lower-cost capital. Instead, they often encounter inconsistent policies, market fragmentation, shallow ports, crowded warehouses, inflationary pressures, exchange rate fluctuations, and mismatched fuel specifications.
Fuel specifications: a hidden barrier to investment
Although 46 of Africa’s 54 countries maintain national fuel standards, the continent still has 12 gasoline grades with sulfur levels ranging from 10 to 2,500 ppm and 11 diesel grades ranging from 10 to 10,000 ppm. Bridging these gaps is essential. Upgrading Africa’s existing refineries to meet cleaner fuel standards will require approximately $16 billion. This is an investment that unlocks the potential of regional trade, increases efficiency and creates economies of scale.
Infrastructure challenges: Holding back Africa’s energy potential
The 2024 White Paper by CITAC and Puma Energy highlights key logistical constraints. Many of Africa’s ports are too shallow for large ships, berths are congested, storage capacity is often inadequate, roads and pipelines are overused, and single points of failure are widespread. Together, these shortcomings add $20 to $30 per ton to landed fuel costs and undermine investor confidence in the reliability of the system.
Despite the expansion of refining capacity, with facilities such as the Dangote refinery coming online, this alone will not end the supply shortage or enable the continent to supply cleaner fuels at scale.
Africa faces widespread challenges in moving fuels efficiently across the continent, resulting in inefficient and incomplete supply chains from coasts, including the mining sector, to inland consumption zones, hindering economic growth.
Addressing Africa’s energy security challenges similarly relies on transport infrastructure. Both coastal and landlocked countries need concerted investment in pipeline, road and rail networks to ensure that petroleum products reach consumers at low cost.
Clean cooking: a huge untapped market
More than 1 billion Africans still rely on biomass for cooking, a number that has increased by 220 million since 2010. The health, environmental and social impacts are enormous, and so are the opportunities. The scale of unmet demand makes Africa one of the most attractive markets for LPG investment globally.
The conclusion is inevitable. Africa needs to modernize its downstream industries 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 the setting of technical standards and acts as an investment facilitator and policy partner. The company’s mission for Africa is clear. It’s about building a bankable, future-proof downstream sector that can attract global capital at scale.
The association has identified five strategic priorities designed to create a fully investment-ready ecosystem.
ARDA is promoting the adoption of low-sulfur AFRI standards, including AFRI-6 (10 ppm), to enable regional markets, reduce supply chain costs, improve public health, support refinery upgrades, and bring Africa in line with global standards. Through partnerships with the African Union Commission, IPIECA, UNEP and regional economic communities, ARDA is advancing the transition to cleaner fuels across the continent.
ARDA advocates for a comprehensive upgrade of the downstream value chain, including deeper ports and modernized jetties, offshore SPM and CBM, expanded storage facilities with over 150,000 m3 of tanks, new and refurbished pipelines, and a multimodal logistics system designed with redundancy in mind. These improvements are essential to achieving economies of scale and giving investors confidence that the supply system will function reliably.
To ensure project funding, ARDA promotes a transparent and long-term regulatory framework. Turnkey fixed price EPC contract. Bank-like offtake agreement. Rigorous project preparation covering scope, cost, schedule, technology, economics, and compliance. ARDA also promotes ESG-aligned project design and enables access to sustainable financial products, which are increasingly preferred in global capital markets.
Recognizing that LPG is both a health and climate priority, ARDA supports the deployment of large-scale LPG and bio-LPG infrastructure, advocates for policy reforms that accelerate deployment, and advances partnerships such as the innovative ARDA-GLPGP Initiative, which brings together public and private funding into a $1 billion LPG fund. The fund will identify, conduct due diligence and finance profitable LPG projects to drive sustainable LPG market growth across Africa.
Build a pipeline of profitable projects
Through seven thematic workgroups: Refining and Specifications, Storage and Distribution, LPG, Regulation, Sustainable Financing, HSE and Quality (HSEQ), and Human Capital, ARDA drives standardized frameworks, shares best-in-class technical expertise, and helps build resilient workforces to achieve Africa’s energy transition ambitions.
A registry of investable downstream projects with clearly defined feedstocks, extraction structures and governance is being built, while ARDA’s platforms, including high-level forums such as the recent Storage, Distribution and Jet Fuel Forum in Dakar, Senegal, and the LPG Forum in Lusaka, Zambia, are being used to highlight key bottlenecks and accelerate policy reforms to attract investment.
In addition, the Training School, a human capital center of excellence at ARDA headquarters in Abidjan, Ivory Coast, provides ecosystem capacity development programs and maintains a database of pan-African industry experts who support project execution across the continent. This initiative is contributing to the development of tomorrow’s leaders and professionals who will drive industry growth and drive Africa’s energy transition.
Africa’s downstream sector is one of the world’s last large, high-growth energy investment frontiers. Demand curves are defined by demographics. The supply shortage is structural. Capital requirements exceed $100 billion. And economic improvement brings about change.
One thing is certain. For investors seeking long-term returns based on real demand, Africa’s downstream sector is not just an opportunity, it’s the next frontier.
But capital will only flow where discipline is demonstrated. That discipline is what ARDA is building through a harmonious, integrated, ESG-enabled downstream ecosystem designed for investment.
• Kragha is the Executive Director of ARDA.
