KEY POINTS
- African oil producers raise 45% of the initial $5 billion.
- Traditional financiers withdraw support over climate concerns.
- Africa Energy Bank aims to address the oil funding crisis.
Oil-producing nations in Africa have raised 45% of the initial $5 billion in seed capital for the planned Africa Energy Bank, which will fund oil projects on the continent amid a crunch in international financing.
Africa Energy Bank secures $2.25 billion in seed funding
Early supporters of the Africa Energy Bank include major oil producers Nigeria, Angola, and Ghana, according to Omar Farouk Ibrahim, secretary general of the African Petroleum Producers Organization.
“I believe we are the first development bank to progress from conceptualization to near fruition in just over two years,” Ibrahim said on the sidelines of the Angola Oil & Gas conference, according to Bloomberg. The African Petroleum Producers Organization and the African Export-Import Bank signed initial agreements to establish the Africa Energy Bank in 2022.
The new bank has been structured as an independent, supranational, pan-African energy development bank with an initial capital of $5 billion.
In June, the African Export-Import Bank and the African Petroleum Producers Organization signed the Establishment Agreement and Charter of the Africa Energy Bank at a ceremony in Egypt. The signing concluded two years of negotiations and preparations to establish the bank.
Oil producers seek independence from traditional global financiers
The African oil producers decided to create the Africa Energy Bank to address a funding crisis in the continent’s oil and gas industry, triggered by the global energy transition.
“Traditional financiers, on whom Africa has relied for decades, are withdrawing support, particularly in Africa, citing climate change concerns as the primary reason,” the African Export-Import Bank said in June.
“For too long, Africa’s oil and gas industry has been dependent on extra-African funding,” Ibrahim said. “We came to take foreign financing of our oil and gas projects for granted until the advent of energy transition made us realize that those on whom we have depended for many decades have decided to abandon us.”
Africa cannot afford to swiftly move away from fossil fuels when it has the largest share of the global population without access to energy, Ibrahim said.
