The African Export-Import Bank (Afreximbank) and Africa Petroleum Producers’ Organisation (APPO) have signed the Establishment Agreement and the Charter of the Africa Energy Bank (AEB).

The agreement was signed at a ceremony held at the Ministry of Petroleum and Mineral Resources of the Arab Republic of Egypt.

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The event was hosted by Tarek El Molla, Egyptian Minister of Petroleum and Mineral Resources, a statement issued by Vincent Musumba, Manager, Communications and Events, Afreximbank, said on Tuesday.

Musumba said Prof. Benedict Oramah, President and Chairman, Board of Directors, Afreximbank, and Dr Omar Ibrahim, Secretary-General, APPO, signed the Establishment Agreement and the Charter of the Africa Energy Bank on behalf of their respective institutions.

He said the signing ceremony concluded two years of negotiations and preparations by the two parties, having signed a Memorandum of Understanding in May 2022 toward the establishment of the AEB.

Musumba said the AEB was created to address the impending funding crisis in the African oil and gas industry, triggered by the global energy transition.

“Traditional financiers, on whom Africa has relied for decades, are withdrawing support, particularly in Africa, citing climate change concerns as the primary reason.”

He said while the AEB’s focus would be funding oil and gas projects, it would not close its doors to renewable energy projects.

Musumba said AEB would strive to harness all forms of energy to ensure that Africa’s energy poverty was eradicated.

“Although started by Africa, shareholding is open to all investors who share the mission and vision of the bank”.

He said the AEB had been structured as an independent and supranational Pan-African energy development bank with an initial five billion dollars capital.

“With the signing of the establishment documents by the two founding institutions, at least two member countries now need to sign and ratify the establishment documents for the bank to take off.”

He said El Molla, who is also a member of the APPO Ministerial Council, was quoted as saying, “It is a great honour to witness the establishment of the AEB.

“This moment marks a significant milestone in our continent’s journey towards energy independence and sustainable development.

“By harnessing our collective resources and expertise, we are paving the way for a brighter, more prosperous future for all Africans”.

El Molla said the collaboration between Afreximbank and APPO was a testament to the two institution’s unwavering commitment to powering Africa’s growth and ensuring energy security for generations to come.

“ I am confident that this newborn institution shall grow to serve the cause of Africa and its people. I commend the negotiating team and on behalf of the APPO Ministerial Council, I congratulate the team.’’

Musumba quoted Oramah as saying, “today marks a historic day for our continent and we are honoured to have collaborated with APPO towards the establishment of the AEB.

“These are challenging times when we must strive to find the right balance between the imperatives of mitigating climate change.

“Also the urgency of averting social upheavals as a result of increasingly difficult economic and financial conditions in Africa.

“For us at Afreximbank, we are proud to be co-investing in this new vehicle and for taking the lead role in advising on the management and implementation process with the operational launch set to commence in July,” Musumba quoted Ibrahim as saying.

“The AEB is Africa’s response to the imminent funding challenge that the global paradigm shift from fossil fuels to renewable energies, euphemistically called the energy transition poses to the oil and gas industry in Africa”.

Ibrahim said for too long, Africa’s oil and gas industry had been dependent on extra-African funding.

“We came to take foreign financing of our oil and gas projects for granted until the advent of energy transition made us realise that those on whom we have depended for many decades have decided to abandon us.”

The Secretary-General argued that Africa cannot afford to abandon oil and gas in a hurry when it has the largest proportion of its population living without access to energy.

Ibrahim commended Oramah for his exemplary leadership and commitment to the cause of the African continent.