GEORGETOWN, Guyana – In a significant announcement at the Guyana Energy Conference and Supply Chain Expo being held from, February 18 – 21, Prof. Benedict Oramah, president and chairman of the board of directors of African Export-Import Bank (Afreximbank), declared the multilateral bank’s intention to establish a $1 billion oil service financing facility in Guyana. This initiative aims to enhance local participation in the country’s fast-growing oil industry, in alignment with the government’s local content policies. The bank will deploy the $1 billion facility directly to qualifying corporate clients or through a factoring line via local banks, enabling them to finance invoices from local contractors.
President Oramah highlighted the transformative potential of Guyana’s estimated 12 billion barrels of crude oil reserves. Emphasising the transformative power in proactive resource management, he advised Guyana to aggressively harness and build capital from its oil resources.
He said, “Given the level of oil production in Guyana and its offshore location, I estimate that the oil service sector would amount to 5 to 8 billion US dollars annually. But where will it go? Most of it would be paid to oil service companies abroad, if Guyana does nothing to avoid that. A 50 percent retention in Guyana would increase Guyana’s GDP by 29 percent to 47percent.” As such, he called for robust local content policies that would enable Guyanese entrepreneurs to become significant players in the oil value chain.
Based on Afreximbank’s rich history of supporting commodity-dependent economies, president Oramah shared insights to complement the ongoing efforts of the Guyanese government. He acknowledged the inherent risks associated with dependency on a single commodity and laid stress on the importance of diversification.
He cautioned: “The commodity market is prone to volatility and cyclicality; hence, the reliance on crude revenues as a primary source of government funding could expose the national economy to volatile commodity markets.” As such, he advised the government to secure long-term off-take contracts with oil service companies, which will enhance market access and price stability.
In the spirit of deepening Afri-Caribbean partnership, president Oramah remarked that skilled oil service companies from Ghana, Egypt, and South Africa, are “ready and willing to support Guyanese… And of course, Afreximbank is there to underwrite the marriage.”
He added that: “These measures are necessary if Guyana and other new entrants in the Caribbean and Africa are to avoid the painful “Dutch Disease. We make these suggestions based on the three long decades of financing oil and gas activities across Africa. We have witnessed oil-dependent economies transform for better or worse through these periods. In all these, the difference reflected the policy choices the leaders made.”
