Afreximbank and APPO to inaugurate the African Energy Bank in June 2024.

The African Export-Import Bank (Afreximbank) announces that it is set to inaugurate the African Energy Bank in June 2024 to alleviate the crisis in Africa's energy sector

Afreximbank revealed this during a session on "Energy Transition and Financing Africa" 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 finance energy-related projects for the development of the African continent.

Speaking at the event, René Awambeng, Customer Relationship Manager at Afreximbank, said the bank had joined forces with over 700 banks in Africa and its partners to chart a profitable course for Africa's energy sector.

"In addition to what the bank is doing with its partners, Afreximbank's management, working on the sidelines with the African Petroleum Producers Organization (APPO), has decided to create another agency that will take on the task of financing Africa's energy needs," Awambeng revealed. 

"We're in the final stage of getting all the approvals and it will be a treaty organization.

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

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

"There will be a process to identify these charter settlement agreements in order to launch fundraising and begin operations by June 2024," he added.

"The AEB will then be in a position to help oil-producing African member states take advantage of the more than 125 billion barrels of oil reserves and the more than 75,000 billion cubic meters of gas reserves we have on the African continent.

"This will not only help to collect much-needed foreign exchange through trade, to export these resources after processing, which will again lead to the industrialization of the continent."

He also stated that the bank would be able to enhance developed oil assets and develop more needed infrastructure in terms of refineries, logistics, pipelines and storage facility construction.

"This will bring equipment and installations closer to the market in a safer way, and also develop capacity building for players in the energy sector.

"We look forward to this new institution as we work tirelessly with our partners in the hope of closing the glaring gap in the sector."

Awambeng noted that the challenges faced in the energy sector were not new, adding that many international banks had moved away from financing projects in the sector.

In his view, the firepower isn't there to meet the industry's $80 trillion needs.

"We're finding that sectors like fintech are attracting more money than investments in oil, gas or energy, which are essential to the industrialization of the continent.

"We've managed to bring together all 700 commercial banks in Africa, and the firepower is extremely limited.

"We face serious challenges in sustaining the sector, whether it's basic trade flows from a continent where we are net importers of products to fuel our industrialization.

"Other challenges related to upstream oil and gas project development or logistical support such as pipelines, infrastructure, refinery rehabilitation or new refinery construction, and maintenance of existing infrastructure around the energy value chain."

He said that the challenges were significant, and that it was therefore urgent to work with the banks' partners to put in place structures that would help mitigate some of these challenges and meet the requirements.