The proposed Africa Energy Bank which will help in funding oil and gas projects across Africa is set to begin operations this year with an initial capital base of $5 billion according to reports from Reuters.
The bank is a joint initiative between Afreximbank and the African Petroleum Producers Organization (APPO), established to counteract the financial deficiency in Africa’s energy sector, particularly as major banks face increased pressure from environmental groups to reallocate investments from fossil fuel projects that affect the climate.
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Zakaria Dosso, the managing director of Africa Energy Investment Corporation (AEICORP), announced that Ghana recently deposited just over $20 million to AEICORP, marking its position as the third African nation to contribute, following Nigeria and Angola. Both nations had each contributed $10 million last year to support the bank’s funding.
- He stated, “Africa should set up its financing capability so that we can still develop this strategic sector, that is the rationale. Africa Energy Bank is on the verge of becoming a reality and should be operational during the second half of 2024”
The funding source for the bank’s capital
The expectation is set for each African member country to donate at least $83 million, aiming for a collective total of approximately $1.5 billion. Founding members Afreximbank and APPO of the Africa Energy Fund (AFE) are anticipated to provide an equal amount of funding.
The remaining $2 billion is expected to be raised from alternative sources, which could include sovereign wealth funds from the Middle East.
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Bids to host the headquarters of the proposed bank
Dosso, a member of the temporary leadership team responsible for establishing AFE, mentioned that six nations Algeria, Benin, Cote d’Ivoire, Ghana, Nigeria, and South Africa — are vying to become the location for AFE’s headquarters. Egypt has withdrawn its earlier bid to host.
- He said, “Angola, Libya, Senegal, Venezuela and Afreximbank as members of the selection committee will assess all applicants and present their results before ministers take a final decision,”