ADDIS ABABA – The African Export-Import Bank (Afreximbank) on Tuesday signed a memorandum of understanding with the African Petroleum Producers Organization (APPO) to create a multi-billion-dollar energy bank.
The agreement comes at a critical time for Africa’s energy sector following global oil companies divestment and the shift in global investment trends.
The proposed bank aims at scaling up private sector investment in African oil and gas projects, and provide critical financing for new and existing projects.
The MoU was signed by Rene Awambeng, Director of Afreximbank and Omar Farouk, Secretary General of APPO in a ceremony attended by the President of Angola João Lourenço, and APPO Ministers.
Eyes Just Energy Transition
Africa continues to face the crisis of energy poverty while the developed world calls for the end of fossil fuels due to climate change,
Over 600 million lack access to electricity and 900 million lack access to clean cooking solutions despite having untapped energy resources – some estimate at 130 billion barrels of proven crude oil reserves and over 15 trillion standard cubic meters of natural gas.
Experts say turning backs on the untapped resource “to pursue expensive, unreliable energy sources, would not be a wise course of action”.
However, international investors are shying away from hydrocarbons, leaving the continent without the investment it needs to capitalize on its resources, which estimates.
According to the AEC’s Q1 2022 Report, the State of African Energy, from the peak in 2014 at $60 billion, capital expenditure in Africa declined to $22.5 billion in 2020.
In a communique issued after signing the MOU, the Afreximbank and APPO acknowledged the impact of climate change on Africa.
They, however, said the transition to renewable energy should take place “in an orderly and just” manner that protects the environment and enhances living standards.
Seeks Balanced Solution
The two African institutions also expressed their concern about the threat posed to the African oil and gas industry and its economic development, by coordinated withdrawal of international trade and project financing from Africa’s oil and gas industry,
“The two institutions have committed to taking necessary actions to promote a sustainable and balanced solution to the challenge of financing the oil and gas industry in Africa during the energy transition,” the two said in the joint communique issued on the day they agreed to create the African Energy Transition Bank.
The bank, they said, will be “dedicated to supporting an Africa-led Energy Transition strategy that is consistent with the goal of preserving the environment and livelihoods”.
Based in Africa, the bank will operate as an independent entity, regulated and led by experienced professionals that know and understand Africa’s energy needs, they said.