The African Petroleum Producers’ Organization (APPO) has signed a memorandum of understanding with African Export-Import Bank (Afreximbank) to establish African Energy Transition Bank.
The bank will boost Africa’s energy transition goals and will also boost economic development in line with the Sustainable Development Goals.
Statement from the Afreximbank yesterday stated that it was in support of an African-led energy transition strategy that will boost Africa’s economic development and also ensure the progress was compatible with and complementary to, the Sustainable Development Goals.
The proposed Energy Transition Bank would also ensure compatibility with the continent’s long-term social and environmental objectives as set out in African Union’s Agenda 2063: The Africa We Want.
“Africa stands to experience profound effects from climate change, while the considerable poverty across the continent further disincentivises a focus on environmental care and sustainability for many populations.
“Moreover, Africa’s oil and gas industry faces growing pressures as international investment in hydrocarbons diminishes. While Africa’s transition towards alternative energy sources presents great opportunities for the continent, this transition must be carefully managed to minimise the short-term adverse impacts of the transition while maximizing its longer-term benefits,” the statement read in part.
Afrexim said the Bank’s duties include the management and encouragement of such a productive transition, as the APPO member states would be signatories to the Energy Transition Bank’s constitutional documents which would be structured in the form of a multilateral treaty, and invest equity into the new vehicle.
President of Afreximbank, Prof. Benedict Oramah, said, “We are delighted to be collaborating with APPO towards the establishment of the proposed African Energy Transition Bank.
“These are challenging times when we must strive to strike the right balance between the imperatives of mitigating climate change and the urgency of averting social upheavals as a result of increasingly difficult economic and financial conditions in Africa.
“For us at Afreximbank, supporting the emergence of the African Energy Transition Bank will enable a more efficient and predictable capital allocation between fossil fuels and renewables.”
He added that establishing the bank would also free human and other resources at Afreximbank that would make it possible to support its member countries more effectively in the transition to cleaner fuels.
On the other hand, the Nigerian National Petroleum Corporation (NNPC) group has also announced that it is working with the African Export-Import Bank (AfreximBank) to raise the sum of $5billion to boost its upstream capacity and its energy transition business.
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