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 African energy sector.
Afreximbank disclosed this during a session on “Africa’s Energy Transition and Financing”, at the Inter-African Trade Fair (IATF) 2023 Trade Conference in Cairo, Egypt covered by The Energy Republic.
Based on our findings, the African Energy Bank will fund energy-related projects for the development of the African continent.
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 African Petroleum Producers Organisation (APPO), has decided to create another agency that will engage in financing the energy Africa requirement,” Awambeng revealed.
“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.
“This will help move the equipment and facilities in a more secure way closer to the market and equally develop the capacity building of the people in the energy sector.
“We are looking forward to this new institution as we are working tirelessly with our partners hoping to sell the gap which is glaring in the sector.”
Awambeng noted that the challenges faced in the energy sector were not new, adding that a lot of the International banks had moved away from financing projects in the sector.
According to him, the firepower is not there to meet the 80 trillion dollar 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.
“`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 around the energy value chain.”
He said the challenges were significant so there was an urgent need to work with the banks’ partners to put in place structures that would help mitigate some of these challenges and meet the requirements.