Africa Energy Bank A giant in the making to revolutionize Africa’s hydrocarbon industry

The signing, on last June 3 in Cairo, of its creation documents marks a decisive turning point in the process of setting up the Africa Energy Bank. To achieve this most successful outcome, a long and exciting road has been travelled by the APPO Member Countries, in collaboration with their strategic partner in this project, Afreximbank. But what is Africa Energy Bank, who is part of it, how is it financed and who will be able to benefit from its services? This article tells you everything.

A paradigm shift

It all started with the 42nd session of the APPO Ministerial Council, held in Luanda, Angola on May 15, 2022. On this occasion, a resolution mandating the Secretary General of the APPO and the Director of the Africa Energy Investment Corporation (AEICORP) to negotiate with Afreximbank the modalities for the creation of the AEB was adopted. It must be said that this decision came following an awareness linked to the context of a global paradigm shift. Long dubbed in international bodies for their pivotal role in the industrialization of nations, and their development, fossil fuels are now decried by what is known as “the international community”. This disenchantment has crystallized around the concept called “Energy Transition”, which postulates the replacement of fossil fuels by renewable energies. If Western countries, after having long taken advantage of the energy sources they now revile to develop, can afford the luxury of abandoning them, this is not the case in Africa. Many economies are still largely dependent on oil and gas revenues. Better still, with a subsoil rich in more than 125 billion barrels of proven oil reserves and more than 600 trillion cubic feet of gas, Africa must make the most of it to ensure access to modern energy for nearly a billion of its population. To do this, the only solution lies in taking control of the industry, and particularly of its financing, because, as everyone knows, money is the sinews of war.

A Bank, the result of an unprecedented cooperation

The Ministerial Council resolution led to the establishment of a working group that worked for more than two years on the essential technical aspects of the Bank’s establishment. This work in the shadows was consecrated with the signing in Cairo on June 3, 2024 of the Bank’s establishment agreement and charter. Professor Benedict Okey Oramah, President of Afreximbank and Dr. Omar Farouk Ibrahim, Secretary General of the APPO, by signing the documents, are opening an unprecedented era in the energy adventure in Africa. Pending the ratification of the Bank’s founding documents by the Member Countries, the focus is now on the selection committee of the country that will host the Bank’s headquarters. There are a total of six countries in the running, namely Algeria, Benin, Côte d’Ivoire, Ghana, Nigeria and South Africa. The decision to designate the seat of the Bank should be taken shortly.

Member countries, first beneficiaries

Africa Energy Bank was created to finance the exploitation of the energy resources of the African continent. It aims to give priority to the domestic market to stem the threats that the Energy Transition poses to African economies. The priority beneficiaries of its services will be the States that have ratified its documents of establishment. National companies in the hydrocarbon and energy sectors, as well as any private or public entity, having an impact on the development of the industry in the Member Countries will also have access to the Bank’s services. The AEB is clearly positioned as a development bank whose leitmotif is to finance or assist economic development projects. To do this, the Bank is counting on an initial capital of $5 billion, which will be able to grow very quickly, because of the enormous needs of the sector. APPO Member Countries, alongside Afreximbank, are the main contributors. The Council of Ministers allocated to each Member Country the minimum amount of $83.33 million as a share in the Bank’s capitalization. Some countries have already started to pay. These are Nigeria, Angola and Ghana. The next steps also include the recruitment of key staff who will work with consultants for the Bank’s development.