By Omar Bah
The newly established Africa Energy Bank (AEB) headquarters will be in Nigeria’s federal capital, Abuja. This decision comes as the African Petroleum Producers’ Organisation (APPO) and the African Export-Import Bank (Afreximbank) focus on advancing the continent’s fossil fuel projects.
The establishment of the African Energy Bank is positioned to tackle the funding obstacles encountered by Africa’s oil and gas industry amidst the global energy transition movement. Western financial institutions are increasingly hesitant to finance oil and gas projects worldwide due to concerns about climate change. In contrast, the Africa Energy Bank aims to fund energy projects in Africa, including emerging oil and gas initiatives across the continent. With an initial share capital of US$5 billion, the bank will prioritize financing energy projects across the continent, encompassing fossil fuels and renewable energy sources.
In May 2022, Afreximbank and the African Petroleum Producers Organization (APPO) signed a memorandum of understanding, signaling the creation of a multi-billion-dollar energy bank in Africa. The agreement, inked in Luanda, the capital of Angola, outlines the energy bank’s mandate to offer private sector financing for new and existing oil and gas projects and energy development across the entire value chain. Following the bank’s announcement last November, Afreximbank expressed its intention to collaborate with more than 700 African banks to drive profitability in the continent’s energy sector.
Nigeria’s appointment was the result of a thorough review process. The decision was reached during the 45th Extraordinary Session of the APPO Ministerial Council, which took place virtually on July 4, 2024, under the leadership of Bruno Jean Richard Itoua, the Minister of Hydrocarbons for Congo Brazzaville. Heineken Lokpobiri, Nigeria’s Minister of State for Petroleum Resources (Oil), assured the Council that Nigeria would provide the necessary support for the timely and impactful establishment of the bank.
The evaluation conducted by the ministerial selection committee of the African Energy Bank headquarters considered various factors such as socio-economic conditions, safety, security, and accessibility. The rigorous selection process highlights the thoughtful assessment of Nigeria’s capabilities and strategic significance. As stated by the African Energy Chamber, establishing the bank in Abuja is projected to enhance Nigeria’s influence in the African energy sector and facilitate funding for projects across the continent, paving the way for widespread industrialization and economic advancement.
The African Energy Bank is designed to function similarly to the Africa Energy Investment Corporation established by APPO. As a developmental financial institution, it is dedicated to directing resources to the growth of Africa’s energy sector. The bank’s role also includes mobilizing finance from within Africa. Instead of relying on international banks for pension funds, the bank will function as an investment corporation, steering these funds towards African projects. This approach promises significant returns on investment and facilitates the development of Africa’s energy sector, thereby driving socio-economic progress through increased energy access.
The energy bank headquarters was unveiled before the African Petroleum Producers Organization’s executive retreat on July 8-9 in Johannesburg, South Africa. During the retreat, discussions centered on the future of Africa’s oil and gas sector in light of the ongoing energy transition. APPO has forged a robust partnership with the Organization of the Petroleum Exporting Countries (OPEC) to jointly advance African oil and gas projects by leveraging shared expertise, concerted efforts in market stabilization, and investment opportunities.
