The African Petroleum Producers Organization (APPO), and the African Export-Import Bank (Afreximbank) have signed the requisite documents for the establishment of the Supranational Multilateral $5 billion Africa Energy Bank– an institution set up to facilitate, promote, and finance the development of Africa’s hydrocarbon deposits of oil, gas, and condensates and support energy transition and net zero 2060 commitments.

The African Energy Chamber (AEC) in a statement obtained by Advisors Reports, confirmed that the signing ceremony was held in Cairo, Egypt, on Monday, June 3, 2024, marking the official creation of the institution.

The African Energy Chamber (AEC), a major voice in the African energy sector, in its remark, commended the efforts by APPO and Afreximbank for not only establishing the financial institution but also fast-tracking its creation.

It stated that despite the role oil and gas has and will continue to play in Africa, global efforts to transition to alternative sources of fuel have created a significant investment gap worldwide.

AEC emphasized that Africa still faces an energy crisis, with more than 600 million lacking access to electricity and over 900 million lacking access to clean cooking solutions.

The International Energy Agency estimates that delivering modern energy to the entire continent will require up to $25 billion in annual spending until 2030, highlighting a significant opportunity for financiers.

The Africa Energy Bank is expected to directly address funding challenges by providing an African solution to financing energy projects.

With $5 billion in initial capital raised from African signatories, the institution aims to close the funding gap by providing capital to oil and gas projects across the continent.

Advisors Reports confirmed that in a relatively short period of time, the institution has garnered substantial interest from African governments and development financial institutions.

APPO Secretary General Omar Farouk Ibrahim announced in March 2024 that the bank had already started receiving funds from APPO member states – underscoring the level of interest in supporting its establishment.

NJ Ayuk, Executive Chairman of the AEC said, “With the establishment of the bank, African countries will not only be able to benefit from a new source of financing but will be able to reduce their reliance on foreign capital.

“Between 2016 and 2021, over 88% of the general financing of the 24 largest fossil fuel companies in Africa was foreign funded. showcasing the level of reliance on foreign institutions.

“This has left the continent susceptible to foreign policies and capital trends, leading to difficulty in raising capital despite the urgency of oil and gas development.

“With the Africa Energy Bank, project developers can tap into African-raised funds, therefore driving the project forward.

“The AEC is proud to see organizations such as APPO and Afreximbank taking concrete steps towards financing African energy projects.

“Despite ongoing pressure to relinquish fossil fuel financing and redirect capital towards renewables, these organizations are promoting a just transition in Africa – one that prioritizes Africa’s development and recognizes the role oil and gas plays,” NJ Ayuk, said.

The Executive Chairman of the AEC, emphasized that the Africa Energy Bank will play a catalyzing role in expanding the energy industry in Africa while driving sustainable and equitable growth for the continent’s population.