Africa Energy Bank Signed into Implementation, Signaling New Era of Hydrocarbon Growth

Peter Uzoho

The African Petroleum Producers Organisation and Afreximbank have signed the document establishing the Africa Energy Bank in Cairo, a pivotal step towards improving project financing in Africa.
The signing ceremony was held in Cairo on Monday June 3, and marked the official creation of the institution.

According to a statement, the African Energy Chamber (AEC) commended efforts by APPO and Afreximbank to not only establish such an important financial institution but to fast-track its creation.
“The AEC believes that the Africa Energy Bank will play a central role in strengthening energy access and growth in Africa by providing the financing needed to get large-scale projects off the ground.

“The signing ceremony comes ahead of the continent’s biggest energy event – African Energy Week (AEW): Invest in African Energy – which aims to drive new investment across the continent’s energy value chain.
“Uniting investors and projects developers with African energy projects, the event has long-advocated for the establishment of an Africa Energy Bank, and in 2024, the conference will further unpack the role the institution will play across the continent,” it added.
According to the statement, despite the role oil and gas plays in Africa, global efforts to transition to alternative sources of fuel have created a significant investment gap worldwide.

It noted that in recent years, fossil fuel funding had been declining rapidly, while IOCs divest their oil and gas assets, favoring more strategic investments. “At the same time, Africa still faces an energy crisis, with more than 600 million lacking access to electricity and over 900 million lacking access to clean cooking solutions.
“The International Energy Agency estimates that delivering modern energy to the entire continent will require up to $25 billion in annual spending until 2030, highlighting a significant opportunity for financiers.

“The Africa Energy Bank aims to directly address funding challenges by providing an African solution to financing energy projects. With $5 billion in initial capital raised from African signatories, the institution aims to close the funding gap by providing capital to oil and gas projects across the continent.
“In a relatively short period of time, the institution has garnered substantial interest from African governments and development financial institutions, all of which recognise its role in funding future projects.”

APPO Secretary General Omar Farouk Ibrahim, had announced in March 2024, that the bank had already started receiving funds from APPO member states – underscoring the level of interest in supporting its establishment.
The bank is seeking approximately $83 million from each of APPO’s 18 signatories, amounting to almost $1.5 billion.
With the establishment of the bank, African countries would not only be able to benefit from a new source of financing but would be able to reduce their reliance on foreign capital.