The African Export-Import Bank has signed a memorandum of understanding with the African Oil Producers Association to establish an African Energy Transition Bank, to provide the necessary financing for the oil and gas industry.
The move aims to address the challenge facing the continent due to the coordinated withdrawal of international trade and project finance from the oil and gas industry in Africa.
In a joint press release, the two institutions also acknowledged the impact of climate change in Africa, and the need for an orderly and equitable transition that protects the environment and enhances living standards.
Oil and Gas Financing in Africa
The African Export-Import Bank and the African Oil Producers Association affirmed their commitment to take the necessary measures, to promote a sustainable and parallel solution to the challenge of financing the oil and gas industry in Africa during the energy transition.
This will be achieved, among other things, by the creation of an African Energy Transition Bank dedicated to supporting the continent’s led energy transition strategy, which is aligned with the goal of environmental conservation and livelihoods.
The bank will operate as an independent entity, organized and led by experienced professionals who know and understand Africa’s energy needs, news and releases platform reported.
However, the proposed bank will not be a substitute for private investment, but rather a catalyst for investment directed to Africa.
Create a bank
“The African Chamber of Energy has been pushing for the creation of an Africa-based and focused African Energy Bank, and I am proud to announce that the African Export-Import Bank and the African Oil Producers Association have taken the first steps towards its establishment,” said ACC CEO N. Jay Ayuk. .
He stressed that “the Bank will be critical to 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 wish to make a history of energy poverty and fight climate change.” “.
“Why should our pension funds go to European banks, who say they won’t fund Africans, and call us risky? We need to use this money to finance oil and gas,” Ayuk asked.
Energy poverty in Africa
Africa continues to face an energy poverty crisis, while the developed world is calling for the end of fossil fuels due to climate change.
More than 600 million Africans lack access to electricity, while 900 million people lack clean cooking solutions; Leading stakeholders to call for rapid expansion of the oil and gas sector, recognizing the role these resources play in making a history of energy poverty.
Despite these calls, global investors are turning away from hydrocarbons, leaving the continent without the investment it needs if it is to tap into its resources.
According to the African Energy Chamber’s Q1 2022 report, capital expenditures in Africa fell to $22.5 billion in 2020, from a peak in 2014 of $60 billion.
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.
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