TheCable

The African Export-Import Bank (Afreximbank) says it is set to inaugurate the African Energy Bank in June 2024 to mitigate the crisis in the continent’s energy sector.

According to NAN on Wednesday, the bank disclosed this during a session on ‘Africa’s Energy Transition and Financing’, at the ongoing Inter-African Trade Fair (IATF) 2023 trade conference in Cairo, Egypt.

Speaking at the event, Rene Awambeng, director of client relations at Afreximbank, said the bank had partnered with over 700 banks in Africa and its partners to chart a profitable pathway for the African energy sector.

“In addition to what the bank is doing with its partners, the management of Afreximbank, working on the sidelines with APPO, has decided to create another agency that will engage in financing the energy Africa requirement,” Awambeng said.

“We are in the final stage of getting all the approvals and it is going to be an organisation set off by treaties.

“We will have three classes of shareholders, the first will be the African oil-producing countries, national oil companies, and African investors as well as the international investors from all walks of life.”

Awambeng said the budgeted share per capital would be $5 million.

“There will be a process to identify these establishment agreements on the charter to engage in fundraising and commence operations by June 2024,” he added.

“The AEB will then be able to help African oil-producing member-states to take advantage of the over 125 billion barrel reserves of oil and that of the over 75 trillion cubit scuff of gas that we have on the African continent.

“This will not only help in raising the much needed foreign exchange from trading, exporting of these resources after they are transformed which again will lead to industrialisation on the continent.”

He also said the bank would be able to improve developed oil assets and develop infrastructure which is more needed in terms of refineries, logistics, pipelines, and building of storage facilities.

‘BANKS, FIRMS TO FINANCE $80TRN PROJECT’

According to Awambeng, the “firepower” is not there to meet the $80 trillion requirement from the industry.

“You see sectors like fintech are attracting more money than investment in oil and gas or energy which is critical to the industrialisation of the continent,” he said.

“We have been able to put together all the 700 commercial banks in Africa and the firepower is extremely limited.

“We have severe challenges in supporting the sector, whether in basic trade flow from a continent where we are net importers of products to fuel our industrialisation.

“Other challenges in developing upstream oil and gas projects or logistics support like pipelines, infrastructures, rehabilitation of refineries or building new refineries, and maintaining existing infrastructures.”

Awambeng said working with the bank’s partners which are the development financial institutions, commercial banks and corporations like Oilserv, Oando, Sahara, and others, is not sufficient.

On his part, Emeka Okwuosa, chairman of Oilserv Group, emphasised that development in Africa is tied to government support on harnessing its huge gas resources.

“Yes, we are open to decarbonising. But for the African continent, the fastest means of growing its energy sector and infrastructure is for an intentional development of its gas infrastructure,” Okwuosa said.

“That is the closest energy mix to develop the sector.”

Meanwhile, the energy bank is expected to champion energy-related projects for the development of the African continent.

The initiative was conceived in 2022 when Afreximbank signed an agreement with the African Petroleum Producers Organisation (APPO).

Both parties are expected to collaborate on the establishment of an African Energy Transition Bank in support of an Africa-led energy transition strategy.