GEORGETOWN, Guyana – A pivotal development was announced at the Guyana Energy Conference and Supply Chain Expo, taking place from February 18 – 21. Prof. Benedict Oramah, president and chairman of the board of directors of African Export-Import Bank, revealed plans to establish a $1 billion oil service financing facility in Guyana. This strategic initiative is designed to boost local involvement in the burgeoning oil sector, in line with government policies aimed at enhancing local content. The funding will be allocated directly to qualifying corporate clients or through local banks via a factoring line, allowing them to finance invoices from local contractors.
President Oramah underscored the transformative potential of Guyana’s estimated 12 billion barrels of crude oil reserves, stressing the need for proactive management of these resources to generate capital. He stated, “With the current level of oil production in Guyana and its offshore location, the oil service sector could reach between 5 to 8 billion US dollars annually. However, without strategic intervention, most of these earnings may benefit foreign oil service companies. Retaining 50 percent of this revenue in Guyana could increase the country’s GDP by 29 percent to 47 percent.” He called for strengthened local content policies that empower Guyanese entrepreneurs within the oil value chain.
Drawing on Afreximbank’s extensive history of supporting economies reliant on commodities, President Oramah offered insights to aid the Guyanese government’s initiatives. He emphasized the risks tied to dependence on a single commodity and highlighted the crucial need for economic diversification.
He warned: “The commodity market is inherently volatile and cyclical; thus, relying primarily on crude oil revenues for government funding could expose the economy to market fluctuations.” He recommended that the government secure long-term contracts with oil service companies to improve market access and ensure price stability.
In line with fostering partnerships across Africa and the Caribbean, President Oramah indicated that skilled oil service companies from nations like Ghana, Egypt, and South Africa are “ready and willing” to assist Guyana, with Afreximbank prepared to facilitate these collaborations.
He remarked, “Implementing these strategies is essential for Guyana and other emerging economies in the Caribbean and Africa to avert the adverse effects of the ‘Dutch Disease.’ Our recommendations stem from three decades of financing oil and gas projects throughout Africa, where we have observed how oil-dependent economies can thrive or falter based on the policy decisions made by their leaders.”
