Why Africa imports fuel despite vast oil reserves

Analysts say there is no single explanation. Instead, the trend reflects a complex interplay of structural, financial and market-related factors.

Agricultural trade economist at the University of Dodoma, Mr Lutengano Mwinuka, says attributing the situation to a lack of political will oversimplifies the problem.

“African countries import most of their refined fuel primarily due to structural economic and technical barriers, not simply a lack of investment commitment,” he said.

He cited Angola as an example, noting that despite being one of Africa’s largest crude producers, the country still imports about 70 percent of its refined fuel needs.

“This shows that the presence of oil does not automatically translate into refining capacity,” he added.

Across much of the continent, domestic markets remain relatively small and fragmented, limiting the economies of scale needed to sustain large refinery operations. Policy inconsistencies and political divisions in some countries further complicate long-term industrial planning.

High investment costs

Beyond structural constraints, the cost of establishing refineries remains a major hurdle.

Financial analyst Christopher Makombe said refinery projects require substantial capital investment and long implementation periods, often running into billions of dollars.

“Many countries face high borrowing costs and limited access to long-term financing, making it difficult to initiate such projects,” he said.

Even when financing is secured, profitability is not guaranteed. Government interventions, including fuel subsidies and price controls, can distort market dynamics and deter private investment.

“In environments where fuel prices are regulated or policies shift unpredictably, investors remain cautious due to uncertain returns,” Mr Makombe added.

Refining also depends on a broader ecosystem, including pipelines, storage facilities, ports and reliable electricity—areas where many African countries still face infrastructure deficits.In addition, limited technical expertise means countries often rely on foreign specialists, increasing operational costs.

“These challenges are interconnected and collectively raise the risk profile for investors,” Mr Makombe said.

Global market pressures

Africa’s refining ambitions are also shaped by global market realities.

Large-scale refining hubs in Europe, Asia and the Middle East operate with greater efficiency and lower production costs, creating incentives for African countries to export crude and import refined products.

“From a purely economic standpoint, it can sometimes be cheaper to import fuel than to refine it locally,” Mr Makombe noted.

This dynamic places African economies in a difficult position—balancing industrialisation goals with the cost advantages of established global suppliers.

Regional solutions under debate

Regional integration has been proposed as a solution, with calls for shared refineries and cross-border pipeline networks to address scale limitations. However, finance and investment expert at the University of Dar es Salaam, Dr Tobias Swai, argues that competitiveness ultimately outweighs geography.

“Some countries achieve better economies of scale than others, which is why it can be cheaper to import even basic manufactured goods than to produce them locally,” he said.

Others, however, point to coordination challenges as a key constraint.

Renewable energy advocate Winstone Nnko recently argued that Africa’s problem lies less in resource availability and more in fragmented systems.

“The issue is not scarcity. The issue is coordination,” he noted, suggesting that better alignment in refining and distribution could improve intra-African supply.

Yet intra-African trade remains low, infrastructure networks are uneven and regulatory frameworks differ widely, limiting the effectiveness of regional supply chains.

Large-scale projects such as the Dangote Refinery highlight both the potential and complexity of boosting domestic refining capacity.

A complex equation

Taken together, these perspectives underscore the complexity of Africa’s fuel import dependence.

For some analysts, the issue stems from financing constraints and infrastructure gaps. Others point to global market structures, while some highlight policy uncertainty and fragmented regional markets.

In practice, it is the interaction of these factors that sustains the current model—where exporting crude oil and importing refined fuel remains the norm.

For now, Africa’s oil wealth has yet to translate into widespread refining capacity and bridging the gap will require more than simply building refineries.