By Adedapo Adesanya
The African Petroleum Producers Organization (APPO), and the African Export-Import Bank (Afreximbank), have signed the requisite documents for the establishment of a $5 billion Africa Energy Bank.
The proposed bank is an institution set up to facilitate, promote, and finance the development of Africa’s hydrocarbon deposits of oil and gas, and condensates and support energy energy transition and net zero 2060 commitments.
The signing ceremony was held in Cairo, Egypt on Monday, marking the official creation of the institution. It concludes two years of negotiations and preparations by the two parties having signed a Memorandum of Understanding in May 2022 towards the establishment of the AEB.
The bank is also seeking approximately $83 million from each of APPO’s 18 signatories, amounting to almost $1.5 billion, while Afreximbank’s board on the other hand, has committed to invest $1.250 billion.
The $5 billion bank is expected to grow its assets to over $120 billion in seven years, thus becoming a source of sustainable FDI for Nigeria, which is seeking to host the headquarters.
The Africa Energy Bank is expected to directly address funding challenges by providing an African solution to financing energy projects.
According to a statement on Wednesday, the signing of the Establishment Documents by the two founding institutions, at least two Member Countries now need to sign and ratify the Establishment Documents for the Bank to take off.
The proposed bank has started receiving substantial interest from African governments and development financial institutions, with the APPO’s Secretary General, Mr Omar Ibrahim, announcing that the bank had started receiving funds from APPO’s member states.
“For too long Africa’s oil and gas industry has been dependent on extra-African funding. We came to take foreign financing of our oil and gas projects for granted until the advent of energy transition made us realize that those on whom we have depended for many decades have decided to abandon us,” he noted.
The Secretary-General argued that Africa cannot afford to abandon oil and gas in a hurry when it has the largest proportion of its population living without access to energy.
Commenting on the event, Mr Benedict Oramah, Afreximbank President noted that “These are challenging times when we must strive to find the right balance between the imperatives of mitigating climate change and the urgency of averting social upheavals as a result of increasingly difficult economic and financial conditions in Africa.
“For us at Afreximbank, we are enormously proud to be co-investing in this new vehicle and for taking the lead role in advising on the management and implementation process with the operational launch set to commence in July.”
The Executive Chairman of the African Energy Chamber, Mr NJ Ayuk also said with the establishment of the bank, African countries will not only be able to benefit from a new source of financing but will be able to reduce their reliance on foreign capital.
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Dipo Olowookere