Nigeria’s proposal of an African energy bank may just be the financing solution Africa is looking for, and African Energy Week in Cape Town will drive it.
Despite the consequences inflicted with the sudden withdrawal of critical capital in Africa, western nations continue to phase out fossil fuel-directed investment. Nigeria’s Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva, has, therefore, emphasized the need for African raised capital in accelerating continent-wide energy growth. With international financing institutions significantly reducing hydrocarbon-directed investment in the face of the COVID-19 pandemic and the move to cleaner sources of energy, H.E. Timipre Sylva reiterated the value that an African energy bank will have in enhancing Africa’s energy future.
Discussed in a recent state visit to Nigeria, H.E. Gabriel Lima, Minister of Hydrocarbons, Equatorial Guinea, Sonagas Director General, Juan Antonio Ndong Ondo, and Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, all emphasized the role that African financing solutions will play in accelerating hydrocarbon development continent-wide. As speakers at AEW 2021 in Cape Town, these industry leaders will not only contribute to the discussion on African financing, but will drive it, offering up key solutions to Africa’s financing challenges and positioning the continent as a self-reliant energy sector.
Africa’s immense natural resources require significant investment if the continent is to realize its developmental objectives, and despite the fact that the continent has created the long-demanded enabling environments for investment, international financiers continue to withhold critical investment. Nigeria, for example, with the implementation of a progressive Petroleum Industry Bill, has ensured its sector is both open and competitive for investment. Yet, international investment seems unattainable. In response, H.E. Timipre Sylva has opted for alternative financing solutions, with African capital raising initiatives taking the lead. Through the establishment of an African energy bank, which enables African project developers adequate sources of finance, Africa will no longer have to rely on the international community to advance its energy sector.
The proposed African energy bank will significantly enhance investment in the African oil and gas sector. Just like the Africa Energy Investment Corporation – a developmental financial institution created by the African Petroleum Producers Association to channel resources towards the development of Africa’s energy sector – the Bank will serve as a key driver of energy growth, providing the much-needed financial resources to African government, project developers, and stakeholders.
“If we insist on the exploration of our oil and gas reserves when the world is cutting down on investments in the sector, we must set a financial institution, an African energy bank, to develop the oil and gas sector,” stated H.E. Timipre Sylva.
H.E. Gabriel Obiang Lima has issued his support of this concept, with both Ministers looking to increase engagement and partnerships with other African stakeholders. The concept of an African energy bank holds significant opportunities for resource-rich countries such as Nigeria and Equatorial Guinea. Feasible, domestic financing opportunities will drive cross-border initiatives across Africa. Emerging natural gas hubs in Equatorial Guinea and Nigeria, for example, will be able to accelerate regional project development with access to adequate financing. With construction on the 4.2 million tons per year Liquified Natural Train in Nigeria breaking ground this year, and national objectives to ensure the monetization and utilization of its natural gas resources, Nigeria can significantly benefit from institutions such as the African energy bank. Both Sonagas and the NNPC are committed to driving regional natural gas expansion, and with the establishment of the African energy bank, these entities will lead the way in Africa’s energy growth.
“Africa requires multilateral financing solutions to accelerate hydrocarbon development. The continent will no longer place a reliance on international capital channels. That’s history, we need to urgently use free market principles and establish Africa’s own financing solutions to mitigate against the radical divestment and reduction in investment into African Oil and Gas. The creation of an African energy bank could provide critical capital for emerging energy markets in Africa, and AEW 2021 in Cape Town will drive this narrative, working alongside Nigeria, EG and APPO” stated NJ Ayuk, Executive Chairman of the African Energy Chamber.
The theme of domestic capital raising will comprise a dominant topic at African Energy Week (AEW) 2021 in Cape Town. As the African Energy Chamber continues to emphasize, if the international community continues to boycott African energy growth, Africa will not only boycott them, but will create their own financial solutions to driving energy growth. At AEW 2021, both H.E. Timipre Sylva and H.E. Gabriel Lima will be key speakers, leading a strong delegation from Nigeria and Equatorial Guinea to Cape Town in November, and driving a strong discussion on hydrocarbon investment, financing solutions for African developments, and capital raising in a post-COVID-19 context. AEW 2021 is committed to African people and African finance and will promote the African energy bank, regional collaboration, and domestic capital as a key driver of continent-wide energy growth.
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