For years, Africa’s oil and gas sector has faced mounting global pressure to halt new fossil fuel investments, with international organisations demanding an immediate shift to renewables. Yet these calls often come from industrialised nations that built their wealth on fossil fuels, while denying Africa the same opportunity. This hypocrisy underscores the need for Africa to chart its own energy future.
The case for oil and gas
Africa’s vast untapped oil and gas reserves represent a path to economic growth, infrastructure development, and poverty alleviation. International oil companies (IOCs) bring technical expertise, create jobs, and generate revenue that can fund renewable energy projects. Furthermore, natural gas offers a cleaner alternative for addressing Africa’s energy poverty.
However, global financial institutions have increasingly withdrawn support for African fossil fuel projects. At COP26, more than 20 nations and institutions pledged to end public financing for overseas fossil fuel projects. Ironically, European countries now consider natural gas ‘clean’ for their own energy needs, while labelling it ‘dirty’ for Africa. This double standard stifles Africa’s ability to industrialise and meet its energy demands.
A new approach: the African Energy Bank
The African Energy Chamber is championing the establishment of the African Energy Bank. With support from institutions like the African Petroleum Producers Organisation (APPO) and Afreximbank, the bank aims to fund a broad spectrum of energy projects, from oil and gas to solar and hydrogen. By reducing reliance on foreign capital, Africa can secure its energy independence and sustain economic development.
Innovative financing solutions
Raising capital for the bank is achievable through multiple channels:
Oil and gas revenues: African governments could allocate a small percentage of their oil and gas earnings. A fraction of the $100bn projected in 2021 alone could significantly fund new projects.
Pension funds: Sub-Saharan Africa’s pension funds, managing $450bn, could invest in energy initiatives, following global examples where pensions back both fossil fuel and renewable energy ventures.
Private wealth: With private African wealth estimated at $2.3 trillion, the continent’s elites and diaspora could become critical investors in its energy future.
Learning from Afreximbank
The African Energy Bank could build on the success of Afreximbank, established in 1993 to finance intra-African trade. Afreximbank’s achievements demonstrate the power of localised, continent-focused financial institutions. For example, between 2015 and 2019, it disbursed USD 30 billion to support African trade.
The stakes are high
The potential is enormous. Recent discoveries — light oil offshore Angola, oil in Namibia’s Orange Basin, shale gas in South Africa’s Karoo Basin, and Côte d’Ivoire’s offshore reserves — could transform economies. Meanwhile, renewable energy projects, such as green hydrogen initiatives in Namibia and South Africa, could position Africa as a global leader in clean energy.
For African states and entrepreneurs, energy self-reliance isn’t just a possibility; it’s a necessity. Establishing the African Energy Bank sends a clear message: Africa is ready to lead in balancing fossil fuels and renewables on its terms.
A future for all Africans
A robust oil and gas industry can create jobs, improve living standards, and support renewable energy transitions. With the African Energy Bank, local companies can acquire assets, build pipelines, and power homes while financing sustainable energy solutions.
Africa must seize this opportunity to take control of its energy destiny. The time to act is now.
NJ Ayuk is the Executive Chairman, African Energy Chamber (https://EnergyChamber.org).
