African Export-Import Bank (Afreximbank) has signed an Agreement with the African Petroleum Producers Organization (APPO) according to which both parties will collaborate on the establishment of an African Energy Transition Bank in support of an Africa-led energy transition strategy.
According to a press statement, the new institution will accelerate Africa’s economic development, whilst ensuring this progress is compatible with, and complementary to, the Sustainable Development Goals (SDG) as well as the continent’s long-term social and environmental objectives as set out in African Union’s Agenda 2063: The Africa We Want.
How the African Energy Transition Bank Will Work
The African Energy Transition Bank addresses an urgent and existential need on the continent. Africa stands to experience profound effects from climate change, while the considerable poverty across the continent further disincentivizes a focus on environmental care and sustainability for many populations. Moreover, Africa’s oil and gas industry faces growing pressures as international investment in hydrocarbons diminishes.
While Africa’s transition towards alternative energy sources presents great opportunities for the continent, this transition must be carefully managed to minimise the short-term adverse impacts of the transition while maximizing its longer-term benefits.
The new bank’s responsibilities would include the management and encouragement of such a productive transition.
APPO member states will be signatories to the Energy Transition Bank’s constitutional documents which will be structured in the form of a multilateral treaty, and invest equity into the new vehicle, whilst Afreximbank will co-invest and advise on the establishment and implementation process.
REMARKS
Prof. Benedict Oramah, President of Afreximbank, commented:
“We are delighted to be collaborating with APPO towards the establishment of the proposed African Energy Transition Bank. These are challenging times when we must strive to strike the right balance between the imperatives of mitigating climate change and the urgency of averting social upheavals as a result of increasingly difficult economic and financial conditions in Africa. For us at Afreximbank, supporting the emergence of the African Energy Transition Bank will enable a more efficient and predictable capital allocation between fossil fuels and renewables. It will also free human and other resources at Afreximbank that will make it possible to support its member countries more effectively in the transition to cleaner fuels. We thank the members and leadership of APPO for their confidence in Afreximbank to support them as they embark on this very important initiative.”
Dr Omar Farouk Ibrahim, APPO Secretary General, commented:
“Today’s event marks the beginning of Africa taking its destiny into its own hands. For too long we have looked outside for solutions to our challenges – access to finance, access to technology, access to markets – and so on. We have come to believe that without foreign support we cannot make any progress in addressing these challenges on the African continent.
“But the resolve to establish the Africa Energy Bank, evidenced in the signing of an MoU between these two African institutions – Afreximbank and APPO – is a clear indication of the changing orientation of Africans to how to address their challenges. How else do Africans expect to harvest the 125 billion barrels of crude and over 500 trillion SCUF of gas when the traditional financiers have decided to abandon the continent? How else do we manage the impact of climate change on the continent without the resources to make the investment? How else can we give access to energy to 600m people on our continent who have no access today? Africa is fully supportive of the fight against climate change because we bear the biggest brunt and we contribute the least carbon emissions but we must engage in the fight in a collaborative and just manner.”
