African Countries Seek $5bn for New Energy Bank

Emmanuel Addeh in Abuja

A coalition of oil-producing African countries is seeking $5 billion to launch an “energy bank” that would fund projects on the continent, as frustration grows over the reluctance of western institutions to bankroll fossil fuel initiatives because of environmental concerns, FT has reported.

The 18-member African Petroleum Producers’ Organisation (APPO) hopes the lender can begin operating in early 2025, according to the Executive Vice President of global trade at the African Export-Import Bank, Haytham El Maayergi, a partner in the project.

Africa’s oil producers have encountered funding restrictions from traditional western backers, including multilateral institutions whose rules increasingly bar them from oil and gas investing.

The World Bank stopped financing upstream oil and gas projects in 2019 while the African Development Bank, which has the US as its number two shareholder, does not put money into fossil fuel projects.

El Maayergi, however, insisted that “Africa’s context is totally different from what you find elsewhere” because its resources had not been fully developed and it had made only a minimal contribution to climate change.

El Maayergi said there were other projects in Africa that were unconnected to fossil fuels, such as electricity infrastructure, that also needed funding.

Standard Chartered last year pulled out of a billion-dollar deal to finance a pipeline to carry crude from landlocked Uganda to the Tanzanian coast after the proposed project became a target for environmental activists.

Campaigners say such funding blocks serve to exacerbate energy poverty in Africa, a continent where 600mn people lack access to electricity and almost 1bn people still cook with dirty energy sources such as charcoal and firewood.

They argue that Africa should be allowed to exploit its oil and gas resources to kick-start industrialisation because it has hardly contributed to rising global carbon emissions.

The African Energy Chamber, an advocacy group, has argued that Africa has the “sovereign right” to develop its natural resources — which according to the group includes 125 billion barrels of oil and 620tn cubic feet of natural gas — in a “balanced and sustainable” manner.