The African continent took a significant step towards energy independence on today, with the signing of the Establishment Agreement and Charter of the Africa Energy Bank (AEB) which is expected to address the funding crisis facing Africa’s oil and gas industry.

Traditional financiers are increasingly hesitant to invest in these projects due to global concerns about climate change.

This new institution is a collaboration between the African Export-Import Bank (Afreximbank) and the African Petroleum Producers’ Organisation (APPO), culminating two years of planning and negotiations.

The event was hosted by H.E. Eng. Tarek El Molla, Egyptian Minister of Petroleum and Mineral Resources who also witnessed the signing ceremony. Prof. Benedict Oramah, President and Chairman of Board of Directors, Afreximbank, and Dr. Omar Farouk Ibrahim, Secretary General of APPO signed the Establishment Agreement and the Charter of the Africa Energy Bank on behalf of their respective institutions.

“It is a great honour to witness the establishment of the Africa Energy Bank,” said H.E. Eng. Tarek El Molla. “This moment marks a significant milestone in our continent’s journey towards energy independence and sustainable development.” He emphasized the importance of collaboration between African nations to ensure energy security for future generations.

Africa boasts vast untapped reserves of oil and gas, exceeding 125 billion barrels of crude oil and 600 trillion cubic feet of natural gas. However, the continent also faces the challenge of having the world’s largest population without access to modern energy.

Dr. Omar Farouk Ibrahim, Secretary General of APPO, highlighted Africa’s dependence on external funding for oil and gas projects. “We cannot afford to abandon oil and gas in a hurry when it has the largest proportion of our population living without access to energy,” he argued.

While the AEB’s initial focus will be on oil and gas projects, it remains open to opportunities in renewable energy. The bank aspires to be a comprehensive resource for African nations, seeking to eradicate energy poverty across the continent.

Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commented, “These are challenging times when we must strive to find the right balance between climate change and the urgent need for development in Africa.” Afreximbank is proud to co-invest in the AEB and will play a leading role in its operational launch, expected in July 2024.

The AEB is structured as an independent and supranational pan-African energy development bank with an initial capital of $5 billion. With the signing complete, at least two member countries now need to ratify the agreements for the bank to officially begin operations.

The launch of the AEB signifies a major step for Africa as it takes control of its energy future and strives to ensure a brighter future for its citizens.

Zimbabwe which recently discovered oil and gas in the Mbire and Muzarabani area could also turn to AEB for funding.