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.
Following international oil company divestment and the shift in global investment trends, the bank comes at a particularly critical time for Africa’s energy sector.
The MoU was signed by Mr. Rene Awambeng, Director & Global Head, Client Relations, Afreximbank, and Dr Omar Farouk, Secretary General of APPO, in the presence of H.E. João Lourenço, President of the Republic of Angola, APPO Ministers and African Energy Chamber (AEC) Executive Chairman NJ Ayuk.
While the developed world calls for the end of fossil fuels due to climate change, Africa continues to face the crisis of energy poverty. Over 600 million lack access to electricity and 900 million lack access to clean cooking solutions, leading to stakeholders calling for the rapid expansion of the oil and gas sector, recognizing the role these resources play in making energy poverty history.
Despite these calls, global investors are shying away from hydrocarbons, leaving the continent without the investment it needs if it is to capitalize on its resources.
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 of 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 socioeconomic growth through the increase in access to energy. Accordingly, the role this bank will play is pivotal.