Afreximbank, APPO sign MoU on establishment of pan-African oil and gas financing entity

The African Export-Import Bank (Afreximbank) and the African Petroleum Producers Organisation (APPO) are teaming up to establish a new avenue of funding for oil and gas projects in Africa, the African Energy Chamber (AEC) reported on Monday, May 16.

In a statement, AEC said that Afreximbank and APPO had signed a memorandum of understanding (MoU) on the establishment of a new pan-African energy bank. The document was finalised by Rene Awambeng, Afreximbank’s director and global head of client relations, and Dr. Omar Farouk, APPO’s secretary-general, during the CAPE VIII conference in Luanda. The signing ceremony was attended by Angolan President João Lourenço, as well as cabinet-level ministers from APPO member states and AEC’s executive chairman NJ Ayuk.

The document calls for the creation of a multi-billion-dollar institution capable of “scaling up private sector investment in African oil and gas projects,” the statement said. The African Energy Bank will provide financial support for existing and new projects while also supporting initiatives all the way up and down the energy value chain, it added.

The AEC did not say exactly what steps APPO and the bank intended to take to set up the proposed African Energy Bank. It did state, though, that the new institution would operate in a fashion similar to that of Africa Energy Investment Corp. (AEIC), a developmental financial institution set up by APPO to channel resources into the continent’s energy industry.

“In addition to ensuring capital is made available for African oil and gas, the bank will serve as a vessel for mobilising African-sourced finance,” the chamber said. “Rather than utilising international banks for pension funds, the bank will serve as an investment corporation that will channel these funds into African projects, thus ensuring high returns of investment as well as the development of Africa’s energy sector.”

The statement also stressed that the African Energy Bank would focus on ending energy poverty. This phenomenon remains widespread in Africa, where hundreds of millions of people still lack access to reliable electricity supplies and clean cooking fuel, it noted. The oil and gas industry can and should play a key role in eliminating energy poverty, despite environmental activists’ insistence that new generating capacity come from renewable sources, it asserted.

Ayuk expressed satisfaction with the signing of the MoU, saying: “The African Energy Chamber has been pushing for the creation of an African Energy Bank, one that is African-based and Africa-focused, and I am proud to announce that the Afreximbank and APPO have taken the first steps towards its creation. The bank will be critical for Africa’s energy sector, serving as a catalyst – not a substitute – for private investment in African energy. This is a practical strategy for prosperity and a pragmatic vision that must be embraced by all who want to make energy poverty history and fight climate change.”