African oil-producing nations planning to launch a $5 billion energy bank next year in Abuja have already secured 45% of the required startup capital.
The bank aims to address the funding gap created by traditional investors shifting their focus from crude oil to low-carbon energy.
According to Omar Farouk Ibrahim, Secretary General of the African Petroleum Producers Organization, Angola, Nigeria, and Ghana are among the initial backers, with the funds raised “even before” the bank’s legal establishment.
Ibrahim disclosed this during the Angola Oil & Gas conference in Luanda, Angola’s capital.
He said, “We have come a long way. I believe we are the first development bank to progress from conceptualization to near fruition in just over two years.”
The African Export–Import Bank, the primary financier of the initiative, signed a memorandum of understanding with APPO in June to establish the energy bank.
With global efforts focused on funding clean energy to achieve net-zero greenhouse gas emissions, African countries like Angola and the Democratic Republic of Congo may face challenges securing financing for oil projects on international capital markets.
The resolution from oil producing countries on the continent to continue to push on with the energy bank which hope to develop more oil producing fields in the region contradicts with resolutions reached at the last Africa climate summit in Kenya which call for more taxes on carbon emitters.
African countries torn between climate change and economic prosperity
Last year, a senior official from the African Finance Corporation (AFC) affirmed that the organization would continue investing in fossil fuels, despite climate change warnings from major development institutions.
In an interview with Reuters, Sanjeev Gupta, the Executive Director of Financial Services at AFC, stated that the corporation would not shy away from fossil fuel investments, citing the continent’s significant development needs.
In a 2022 opinion piece, former President Buhari urged Western nations to take stronger action against the climate crisis and condemned the “hypocrisy” of advising African countries not to use their resources for development. His successor, Bola Tinubu, has echoed this sentiment, advocating for a balanced partnership in addressing the climate challenge.
The African Export-Import Bank (Afrexim Bank) has cautioned that divestment from fossil fuels could lead to a reduction of up to $30 billion in Nigeria’s Gross Domestic Product (GDP).
The report explained that while a reduction in fossil fuels could lower emissions from the continent, most African countries rely on fossil fuels to meet their immediate energy needs. It also emphasized that fossil fuels play a crucial role as a major source of exports, foreign exchange, job creation, and power generation and supply.
