Africa Energy Bank set for launch in 2024 with $5B war chest

The African continent is poised to gain a new financial institution dedicated to its oil and gas sector. The Africa Energy Bank (AEB), a joint venture between the African Export-Import Bank (Afreximbank) and the African Petroleum Producers Organization (APPO), is expected to begin operations in the latter half of 2024.

The bank’s primary objective is to address the funding shortfall in Africa’s energy sector. This comes as major international banks face increasing pressure from environmental groups to move investments away from fossil fuels due to climate change concerns.

“The rationale behind this is for Africa to establish its own financing mechanism to ensure continued development of this strategic sector,” said Zakaria Dosso, Managing Director of the African Energy Investment Corporation (AEICORP), APPO’s investment arm.

Dosso confirmed that Ghana recently joined Nigeria and Angola as contributors to the bank’s initial capital. Each country has deposited $20 million so far. The plan is for each African member state to contribute at least $83 million, reaching a collective total of $1.5 billion. Afreximbank and APPO are expected to match this amount, with the remaining $2 billion potentially coming from external investors, possibly including Middle Eastern sovereign wealth funds.

The bank’s headquarters location is yet to be determined. Six countries – Algeria, Benin, Cote d’Ivoire, Ghana, Nigeria, and South Africa – are currently vying for the honor. A selection committee comprised of representatives from Angola, Libya, Senegal, Venezuela, and Afreximbank will evaluate the applications and present their recommendations to government ministers for a final decision.

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