AFRICA – Pan-African multilateral trade finance institution, the African Export-Import Bank (Afreximbank), has signed a Memorandum of Understanding (MoU) with the African Petroleum Producers Organization (APPO) for the creation of a multi-billion-dollar energy bank.
Aimed at scaling up private sector investment in African oil and gas projects, the bank will provide critical financing for new and existing oil and gas projects, as well as energy developments across the entire value chain.
The MoU was signed by Mr. Rene Awambeng, Director & Global Head, Client Relations, Afreximbank, and Dr. Omar Farouk, Secretary-General of APPO.
The proposed African Energy Bank will operate in the same way as the APPO-created Africa Energy Investment Corporation – a developmental financial institution created to channel resources towards the development of Africa’s energy sector.
In addition to ensuring capital is made available for African oil and gas, the bank will serve as a vessel for mobilizing African-sourced finance.
Rather than utilizing international banks for pension funds, the bank will serve as an investment corporation that will channel these funds into African projects, thus, ensuring high returns on investment as well as the development of Africa’s energy sector.
The benefits will be two-fold: the funds will help drive oil and gas development while the oil and gas projects will drive socio-economic growth through the increase in access to energy.
“This is a practical strategy for prosperity and a pragmatic vision that must be embraced by all who want to make energy poverty history and fight climate change,” states NJ Ayuk, Executive Chairman of the AEC.
This has led to stakeholders calling for the rapid expansion of the oil and gas sector, recognizing the role these resources play in making energy poverty history.
According to the AEC’s Q1 2022 Report, the State of African Energy, from its peak in 2014 at US$60 billion, capital expenditure in Africa declined to US$22.5 billion in 2020.
At the end of 2020, the Afreximbank’s total assets and guarantees stood at US$21.5 billion, with shareholder funds amounting to US$3.4 billion.
Other institutions including the African Development Bank – with an active portfolio of projects upwards of US$12 billion – also represent critical providers across the African energy landscape.