IN a significant development for Africa’s energy sector, plans for the Africa Energy Bank (AFE) are swiftly advancing, with operations slated to commence by the end of this year. The bank, focused on investing in oil and gas projects across the continent, is set to kick off with an initial authorised capital base of $5bn, according to a senior official.
Zakaria Dosso, Managing Director of Africa Energy Investment Corporation (AEICORP), the investment arm of the African Petroleum Producers Organisation (APPO), highlighted the rationale behind the initiative amid mounting pressure on major banks to divert investments away from climate-warming oil and gas ventures.
‘Africa should set up its own financing capability so that we can still develop this strategic sector, that is the rationale,’ stated Dosso, emphasising the importance of indigenous financial resources for the continent’s energy development.
Dosso revealed that Ghana recently made a significant deposit of just over $20 million to AEICORP, joining Nigeria and Angola, Africa’s top two crude oil producers, which each deposited $10 million last year to support the bank’s funding.
‘The Africa Energy Bank is on the verge of becoming a reality and should be operational during the second half of 2024,’ affirmed Dosso, signalling progress towards the bank’s establishment.
The financing model of AFE entails each African member country contributing a minimum of $83 million, totalling approximately $1.5bn. Afreximbank and APPO, as the founding members, are expected to match this amount. The remaining $2bn will potentially be sourced from other investors, including Middle Eastern sovereign wealth funds.
Six countries – Algeria, Benin, Cote d’Ivoire, Ghana, Nigeria, and South Africa – are currently vying to host the headquarters of AFE. Dosso disclosed that the selection process involves assessment by member countries and Afreximbank, with a final decision to be made by ministers after thorough deliberation.
Egypt, initially a contender, withdrew its application from consideration, leaving the selection committee to evaluate the remaining applicants and present their recommendations for a final decision.
As preparations for the Africa Energy Bank gather momentum, stakeholders anticipate its role in catalysing sustainable energy investments across the continent, fostering economic growth and energy security.