African Energy Bank (AEB) Established to Address Financing Crisis in African Oil and Gas Industry
The African Export-Import Bank (Afreximbank) and the African Petroleum Producers' Organization (APPO) have signed an agreement to create the African Energy Bank (AEB), a pan-African energy development bank with an initial capital of $5 billion. This ceremony marks the culmination of two years of negotiations and preparations between the two parties, which signed a protocol agreement in May 2022 to establish the AEB.
Addressing the Financing Crisis
The primary objective of the AEB is to address the financing crisis in the African oil and gas industry, triggered by the global energy transition. Traditional financiers, who have supported Africa for decades, are withdrawing their support, citing climate change concerns as the main reason, according to APPO. The organization stated, "The AEB aims to fill the imminent gap that could be caused by the withdrawal of financing for oil and gas projects in Africa by traditional financiers."
African Energy Reserves
With over 125 billion barrels of proven oil reserves, over 600 trillion cubic feet of proven gas reserves, and new discoveries being made regularly, it is essential for Africa to harness these energy resources, especially since a significant proportion of the global population lacks access to modern energy.
Financing Renewable Energy Projects
While the AEB will focus on financing oil and gas projects, it will not exclude renewable energy projects. "The bank will strive to exploit all forms of energy to ensure the eradication of energy poverty in Africa," APPO emphasized. Although initiated by Africa, the bank's ownership is open to all investors who share its mission and vision.
Next Steps
Following the signing of the creation documents by the founding institutions, at least two member countries must now sign and ratify the documents for the bank to take off.
Related Reading: Prochainement une banque africaine de l'énergie?
