Africa’s oil nations are making progress on creating a $5 billion energy bank

Africa’s oil-producing nations have raised 45 percent of the $5 billion initial seed capital for the planned Africa Energy Bank (AEB), which is set to finance oil projects on the continent amid a funding crisis in international markets.

Early financial backers of the African Energy Bank include major oil producers Nigeria, Angola and Ghana, according to Omar Farouk Ibrahim, secretary general of the African Petroleum Producers Organization (APPO).

“I think we are the first development bank that has progressed from conceptualization to almost fruition in just over two years,” Ibrahim said on the sidelines of the Angola Oil & Gas conference presented by Bloomberg.

APPO and the African Export-Import Bank (Afreximbank) signed initial agreements in 2022 on the establishment of the African Energy Bank.

The new bank was structured as an independent and supranational pan-African energy development bank with an initial capital of $5 billion.

In June this year, Afreximbank and APPO signed the Establishment Agreement and Charter of the African Energy Bank at a ceremony in Egypt. The signing ceremony concluded two years of negotiations and preparations by the two sides for the establishment of the AEB.

African oil producers decided to create the AEB “to address the impending financing crisis in Africa’s oil and gas industry triggered by the global energy transition”.

“Traditional financiers, which Africa has relied on for decades, are withdrawing their support, particularly in Africa, citing climate change concerns as the main reason,” Afreximbank said in a statement in June.

APPO Secretary General Ibrahim commented: “For too long Africa’s oil and gas industry has been dependent on extra-African funding. We came to rely on external financing of our oil and gas projects, until the advent of the energy transition made us realize that those we have depended on for many decades have decided to abandon us.”

Africa cannot afford to quickly move away from fossil fuels when it has the largest part of the population living without access to energy, Ibrahim noted.

By Charles Kennedy for Oilprice.com

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