This institution is not just about financing; it is about empowering Africa to unlock its vast energy potential, drive industrialization, and place energy poverty in the past, stated Omar Farouk Ibrahim, Secretary General of APPO.
“If Western countries, having long taken advantage of the energy resources that they now revile to develop, can now afford the luxury of abandoning them, this is not the case for African nations. Many African economies are still largely dependent on revenues from oil and gas” and have implemented the Africa Energy Bank to preserve it
The Africa Energy Bank (AEB) is a supranational institution spearheaded by the African Petroleum Producers Organization (APPO) and the African Export-Import Bank (Afreximbank). It is preparing to open its doors to projects and businesses in 2025. With Africa facing an urgent energy crisis, the AEB is poised to play a crucial role in ensuring Africa’s energy resources are monetized and maximized for the continent’s benefit. As the continent tackles this pressing issue, the AEB will fundamentally change how projects are financed, laying the foundation for a new era of energy security continent-wide.
The AEB was born out of a vital need to introduce new sources of financing for African energy projects – from upstream oil and gas to renewable energy and power infrastructure to green hydrogen and petrochemicals. Currently, the continent’s energy finance gap is estimated to measure between $31 billion and $50 billion, and the global energy transition has seen financing – specifically for fossil fuel projects – reduced even further. Concurrently, despite promises of receiving billions in climate financing from the global north, Africa receives less than 3% of global energy investment, highlighting a fundamental challenge given that over 600 million people live without electricity across the continent.
To address this challenge, APPO and Afreximbank introduced the concept of the AEB in 2022, signing the requisite documents for its establishment in June 2024. With an initial share capital of $5 billion, the Bank will focus predominantly on financing energy projects. Nigeria’s capital city of Abuja was selected as the headquarters of the Bank in July 2024, with the institution expecting to accept applications from early-2025. The priority beneficiaries of the Bank’s services will be the states that have ratified their documents for establishing the institution, with ratifications currently in the advanced stage. APPO and Afreximbank represent the primary contributors to the Bank’s financing, with additional financing secured from APPO member states and other financial institutions. Notably, the Bank is seeking $83 million from each of APPO’s 18 signatories, amounting to $1.5 billion. Additionally, the AEB wants to partner with up to 700 African banks to chart a profitable pathway for the African energy sector.
Representing the first of its kind in Africa, the AEB offers Africa a saving grace as the global energy transition makes financing projects much more challenging. Despite holding over 125 billion barrels of proven crude reserves and 620 trillion cubic feet of natural gas reserves, Africa struggles with lengthy project approvals, construction delays, and red tape, most of which can be accredited to financing. Through the AEB, African countries and companies stand to accelerate the pace of energy development continent-wide and reduce the reliance on foreign capital while maximizing resource development for future generations.
The AEB could not come at a better time for Africa. While countries such as Angola, Libya, Nigeria, and the Republic of Congo have long been major producers, efforts to address natural production declines have seen a rise in new discoveries. At the same time, exploration efforts in frontier markets have highlighted a wealth of untapped opportunities, such as Namibia’s prolific Orange Basin, the offshore MSGBC Basin, Zimbabwe’s onshore Cabora Bassa Basin, and South Africa’s onshore Karoo Basin. With these promising developments, Africa’s energy sector is rapidly emerging as one of the world’s most promising deep-water plays.
Africa is well-positioned to become a leading global supplier in the natural gas sector. The continent represents 13 per cent of international reserves, with LNG exports measuring just over 40 million tons annually. The industry is undergoing an $800-billion, 20-year upstream capital expenditure program, resulting in several world-class LNG facilities. The AEB’s role in providing project financing for African LNG is crucial. The continent is projected to account for over half of the world’s FLNG capacity brought online between 2023-2027. Without these resources, Africa’s efforts to industrialize and electrify its economies will be significantly impacted – highlighting the fundamental role of the AEB in providing project financing for African LNG.
“The value and role of the AEB cannot be overstated. By providing accessible and tailored financing solutions, the AEB ensures that African energy projects – whether in oil, gas, or renewables – receive the support they need to thrive. This institution is not just about financing; it is about empowering Africa to unlock its vast energy potential, drive industrialization, and make energy poverty a thing of the past,” stated Omar Farouk Ibrahim, Secretary General of APPO