Afreximbank, African Petroleum Producers Organization (APPO) Sign MoU for the Creation of a Multi-Billion-Dollar Energy Bank

The Memorandum of Understanding will see both entities working together on the creation of a pan-African energy bank

JOHANNESBURG, SOUTH AFRICA / ACCESSWIRE / May 17, 2022 / Pan-African multilateral trade finance institution, the African Export-Import Bank (Afreximbank), has signed a Memorandum of Understanding (MoU) with the African Petroleum Producers Organization (APPO) for the creation of a multi-billion-dollar energy bank. Aimed at scaling up private sector investment in African oil and gas projects, the bank will provide critical financing for new and existing oil and gas projects, as well as energy developments across the entire value chain. Following international oil company divestment and the shift in global investment trends, the bank comes at a particularly critical time for Africa's energy sector.
The MoU was signed by Mr. Rene Awambeng, Director & Global Head, Client Relations, Afreximbank, and Dr Omar Farouk, Secretary General of APPO, in the presence of H.E. João Lourenço, President of the Republic of Angola, APPO Ministers and African Energy Chamber (AEC) Executive Chairman NJ Ayuk.

While the developed world calls for the end of fossil fuels due to climate change, Africa continues to face the crisis of energy poverty. Over 600 million lack access to electricity and 900 million lack access to clean cooking solutions, leading to stakeholders calling for the rapid expansion of the oil and gas sector, recognizing the role these resources play in making energy poverty history. Despite these calls, global investors are shying away from hydrocarbons, leaving the continent without the investment it needs if it is to capitalize on its resources.

According to the AEC's Q1 2022 Report, the State of African Energy, from the peak in 2014 at $60 billion, capital expenditure in Africa declined to $22.5 billion in 2020. Despite projected increases to $30 billion in 2020, significant levels of investment are still required, and thus, the role of African financial institutions has been emphasized. Organizations such as the Afreximbank have already made notable progress to drive oil and gas project developments. At the end of 2020, the Afreximbank's total assets and guarantees stood at $21.5 billion, with shareholder funds amounting to $3.4 billion. Other institutions including the African Development Bank - with an active portfolio of projects upwards of $12 billion - also represent critical providers across the African energy landscape. However, more needs to be done, and if large-scale discoveries such as those made in Namibia and Ivory Coast are to be sufficiently developed, more capital needs to be made available.