A GROUNDBREAKING initiative to fund Africa’s oil and gas sector, the African Energy Bank (AEB), is set to launch on January 28, 2025. Spearheaded by the African Petroleum Producers OrganiSation (APPO) and Afreximbank, this pan-African financial institution aims to address funding shortfalls in the continent’s energy sector, primarily in oil and gas projects, as global financiers increasingly withdraw from fossil fuel investments over climate concerns.
With its headquarters in Abuja, Nigeria, the African Energy Bank will begin operations with an initial capital base of $5bn. The institution is designed to provide financing to African energy projects that have struggled to secure international investment due to shifting priorities in global finance towards renewable energy. By stepping in to fill this gap, AEB hopes to support Africa’s energy security and economic growth through sustainable exploitation of its fossil fuel resources.
Africa is rich in oil and gas reserves, boasting over 125 billion barrels of oil and approximately 600 trillion cubic feet of gas. These resources, which have remained largely untapped due to financial constraints, are viewed as essential for addressing energy poverty and supporting the continent’s economic development. The launch of AEB is seen as a strategic move to enable African nations to harness these resources without relying on foreign investors, whose priorities have increasingly shifted towards carbon neutrality.
APPO Secretary General, Dr Omar Farouk Ibrahim, explained the motivation behind the bank: ‘The African Energy Bank represents Africa’s commitment to driving its own energy agenda and using its resources for the continent’s benefit.’ By focusing on self-sufficiency and sustainability, AEB will provide African governments and private sector partners with an alternative financing source to continue critical oil and gas projects, ensuring these resources can be utilised for development even amidst global financial pressure to divest from fossil fuels.
Nigeria, as a founding contributor, has shown considerable commitment to the project. The Nigerian government has already made its capital contribution and finalised the preparation of the bank’s headquarters in Abuja, expected to be ready early next year. Nigeria’s Minister of Petroleum, Adegbite Oladipo, commented on the significance of the bank’s launch, saying, ‘This initiative will not only bolster Nigeria’s energy sector but also strengthen the continent’s capacity to manage and develop its resources independently.’ He highlighted that the bank’s headquarters in Abuja would place Nigeria at the centre of African energy development.
As global investors shift focus toward renewable energy, Africa has faced significant challenges in securing capital for fossil fuel projects, which many African leaders argue are still necessary to power the continent’s development. While international banks and institutions have started prioritising green investments, Africa’s reliance on oil and gas to meet immediate energy needs makes such transitions challenging.
According to APPO, Africa’s transition to renewable energy must be gradual and aligned with the continent’s developmental goals. Dr Ibrahim remarked, ‘Africa must balance environmental considerations with the need for reliable energy access. The African Energy Bank is a solution to funding issues that threaten to derail Africa’s progress towards energy independence.’
The AEB’s creation underscores a shared vision among African nations to control their energy trajectory by making fossil fuels available as a reliable source while gradually transitioning to renewable options. Energy analysts believe that African countries, especially those reliant on oil and gas revenues, need an alternative financing source to ensure that their economic development is not compromised by the push for decarbonisation led by wealthier nations.
The establishment of the African Energy Bank also signals Africa’s collective resolve to manage its resources in a way that prioritises economic development and addresses energy poverty across the continent. In many African countries, the lack of stable financing has impeded infrastructure projects in energy, from pipelines to refineries, limiting energy access for millions of people and constraining industrial growth.
Energy analyst Nana Mensah sees AEB as a game-changer. ‘Africa has resources in abundance, but has long lacked the financing and autonomy to develop them effectively,’ Mensah said. ‘The African Energy Bank could bring a level of self-reliance that allows Africa to leverage its own assets for the benefit of its people.’
By focusing on fossil fuels in the immediate term, the bank enables Africa to increase local refining capacity and reduce dependency on imported fuel products. This strategy not only enhances energy security but also positions African nations to use revenues from fossil fuels to fund future renewable energy initiatives.
The African Energy Bank represents a model of self-directed development and is part of a broader shift among African countries to regain control over their energy sectors. The continent’s leaders hope that with AEB’s support, African nations can pursue economic growth strategies that fit the local context, balancing environmental sustainability with realistic development goals. The initial $5bn capital is expected to grow as more member states join and private investors contribute, further bolstering Africa’s energy infrastructure and resource management capabilities.
As global climate policies evolve, Africa’s energy roadmap will likely continue to diverge from that of Western nations, prioritising resource utilisation to address poverty, unemployment, and development gaps. While climate advocates have raised concerns over continued fossil fuel projects, proponents of the AEB argue that Africa’s energy journey must reflect the continent’s unique challenges and needs.
The African Energy Bank’s launch in 2025 marks a historic moment for the continent. With headquarters in Nigeria, it symbolises a new era of African cooperation, ambition, and independence in the energy sector, aiming to foster both immediate development and long-term resilience.
Credit: Africabriefing
