The presentation, under the theme, ‘Financing Infrastructure Projects to Accelerate Africa’s Energy Transition,’ tackled emerging trends across the African energy sector, with Awambeng making a strong case for increased infrastructure investment with the aim of accelerating the continent’s energy transition.
Kicking off his presentation, Awambeng provided key insights into Africa’s infrastructure financing needs, stating that, “The scale of finance required by African countries to access energy for its population as per Nationally Determined Contributions is in the range of $2.5 trillion in the decade ending 2030. This represents nearly a 10% annual investment of the continent’s GDP and is over and above what countries can provide on their own.”
Despite the wealth of natural resources on the continent, Awambeng shared that currently, market trends seen across the African energy sector show “high demand for energy products with limited supply; foreign currency scarcity; lack of investment in new refineries, refineries capacity, pipeline, storage and logistics; unreasonable prices and supply chain disruptions leading to increased costs of importation; currency mismatch; withdrawal of international banks due to the current climate finance agenda which limits the financing of fossil fuel,” among others factors.
Awambeng emphasized that consideration needs to be given to the wealth of natural resources, including the oil and gas that Africa possesses and how these can be used to drive economic development, just as was done in the developed world.
Monetizing the continent’s resources represents a critical step towards economic prosperity, the alleviation of energy poverty and the acceleration of an energy transition in Africa.
“Africa currently sits on a wealth of natural resources totaling more than 130 billion barrels of providen crude oil (representing 7% of the world’s oil) and more than 15 trillion standard cubic meters of natural gas (representing 13% of the world’s natural gas) discovered to date,” he said.
As such, and as a leading pan-African financial institution committed to financing the next wave of project developments in Africa’s energy sector, Afreximbank has put in place a five-year strategic plan running from 2022 to 2026 –‘Extending the Frontiers’ – which seeks to develop continental needs along four critical pillars. According to Awambeng, these pillars are, “Intra-African trade & African Continental Free Trade Agreement implementation; industrialization and export development; leadership in global trade banking in Africa; and financial stability.
He further noted that Afreximbank is identifying the gaps and opportunities of oil and gas finance in Africa. “The means that will pave the way for a synergetic ecosystem on the continent to deliver the necessary solutions by creating tailors products that can help the sector. To do this, Afreximbank aims to enhance African refinery capacity to produce what we consume as continuous importation; refine crude domestically and sell locally and regionally; develop new sources of energy depending on gas and other forms of domestically sourced energy; build capacity and enhance the strength of your financial institution to support trade and investment needs; support the African Energy Bank; and work with willing strategic partners to change the narrative.”
Under this strategic plan, Afreximbank is focused on enhancing the provision of capital to drive Africa’s transformation, with “an array of programs, instruments and services to stimulate the expansion and development of African trade.”
According to Awambeng, these programs include, “the creation of the Africa Energy Bank for sovereigns’ a project preparation facility; the establishment of funds for export development; project and asset-based finance program; and structure trade financing.’
With these mechanisms, the bank “strongly advocates for the need of energy transition solutions, adaptation and mitigation strategies and overall international support of these critical items, while allowing Africa its unique growth path to develop and industrialize using available resources,” Awambeng concluded.
The establishment of an Africa Energy Bank and the need to create Africa-centric financial solutions represents a key point of discussion at this year’s edition of the African Energy Week (AEW) conference and exhibition – taking place in Cape Town from October 16-20. Under a mandate of making energy poverty history by 2030, AEW 2023 recognizes and advocates for increased investment in Africa’s downstream industry so as to ensure energy security ahead of the continent’s transition to a clean energy future. Through panel discussions, networking forums and downstream-focused summits, AEW 2023 represents the place to sign deals and drive development.