The African Export-Import Bank (Afreximbank) and the Africa Petroleum Producers’ Organisation (APPO) have signed an establishment agreement forming the Africa Energy Bank (AEB).

The AEB has been set up to plug the gap in funding for Africa's oil and gas industry brought about by the global energy transition.

While the AEB’s focus will be funding oil and gas projects, it will “not close its doors to renewable energy projects”.

“The AEB shall strive to harness all forms of energy to ensure that Africa’s energy poverty is eradicated,” the bank’s founders said in a statement.

The signing ceremony in Egypt on 4 June concludes two years of negotiations and preparations by the two parties, having inked a memorandum of understanding in May 2022 towards the establishment of the AEB.

The AEB has been structured as an independent and supranational pan-African energy development bank with an initial US$5 billion in 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.

Benedict Oramah, president, Afreximbank said, “These are challenging times when we must strive to find 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, we are enormously 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.”

Egyptian energy minister, Tarek El Molla, who is also a member of the APPO Ministerial Council said: “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.’’

Africa has more than 125 billion barrels of proven crude oil reserves and some 600 trillion cubic feet of proven gas reserves.