Fossil fuel-focused Africa Energy Bank on track to start in 2024

The proposed Africa Energy Bank, which would focus investment in oil and gas projects across the continent, was set to start operations later this year with an initial $5bn authorised capital base, a senior official said on Wednesday.

The bank, a partnership between Afreximbank and the African Petroleum Producers Organisation (APPO), is meant to help plug a funding gap in Africa amid pressure on banks from environmental groups to shift investment dollars away from climate-warming oil and gas projects.

“Africa should set up its own financing capability so that we can still develop this strategic sector, that is the rationale,” Zakaria Dosso, MD of Africa Energy Investment Corporation (AEICORP), the investment arm of APPO, said.

Dosso said that Ghana on Friday deposited just over $20m to AEICORP, becoming the third African country to pay after Africa’s top two crude oil producers, Nigeria and Angola, each deposited $10m last year to help fund the bank.

“Africa Energy Bank is on the verge of becoming a reality and should be operational during the second half of 2024,” Dosso said.

It is envisaged that each African member country will contribute a minimum of $83m for a total of about $1.5bn, while Afreximbank and APPO as founder members of AFE are expected to match this amount. The outstanding $2bn will potentially be sourced from other investors, including Middle Eastern sovereign wealth funds.

Afreximbank did not immediately respond for comment.

Dosso, who is part of the interim steering committee charged with setting up AFE, said six countries — Algeria, Benin, Ivory Coast, Ghana, Nigeria and SA — are competing to host the headquarters of AFE. Egypt withdrew its initial application.

Angola, Libya, Senegal, Venezuela and Afreximbank as members of the selection committee would assess applicants and present their results before ministers take a final decision, he said.

Reuters