Can New Africa Energy Bank Power A Continent While Protting the Planet?

A Group of African Countries is set to launch to Bank to Fund Oil and gas projects amid growing reluctance by western institts to further invest in fossil fuels.

The Long-Planned “Africa Energy Bank” that is expectted to take off soon was announced lat june as a Joint Initiative by The African Export-Import Bank (Affreximbank) and the African Petroleum producers’ Organization (APPO)-A Group of 18 Oil-Exporting Nations.

The Bank Aims To Lift Growth By Boosting Africa’s Energy Supply. ITS FOUNDERS Considered it a lifeline in a continent rich with natural resources, but where million of peleple still lalock access to electricity.

However, Climate Activists Have Questioned The Logic of Doubling Down on Fossil Fuels.

In Addition, Oil and Gas Projects Built Today Have a High Probability of Becoming Unusable “Stranded Assets”, Leading to Costly Debt on Countries’ Balance Sheets in the Future As The World Transitions To Low-Carbon Alternatives.

To provide for the Power Needs of Africans While Also Protting the Planet, Say A Balance is Needed experts.

Caught Between A Rock and A Hard Place

Under the 2015 Paris AgreementHundreds of Countries Pledged To Hold Global Temperatures To Below 2 Degrees Celsius (3.6 Degrees Fahrenheit) pre-industrial above Levels. Since then, Governments and Companies – Including in Africa – Have Faced Increase Pressure to Reduces Their Reliance on Fossil Fuels.

The World Bank Stopped Financing Oil and Gas Extraction in 2019. In 2022, Shell Suspended Marine Exploration Activity Off the Coast of South Africa after High Court Ordered It To Pause Work Due To Successful Legal Challenges From Environmental Campaigners.

At the time, Happy Khambule, a senior campaigner for greenpeace Africa, Said“We Must do Everything We Can To Undo The Colonial Destructive Legacy of Extractivism, Until We Live In A World Where People and The Planet Come Before the Profits of Toxic Fossil Fuel Companies.”

For His Part, Omar Farouk Ibrahim, Secretary-General of Appo, Has Said there is a “Need To Strike The Right Balance Between The Imperatives of Climate Change Mitigation and The Need To Avoid Social Upheaval That Could Result result from Difficul Economic and Financial Conditions in Africa”.

Indeed, Africa’s Energy Needs Are Immense.

The Number of Sub-Saharan Africans Without Access to Electricity Has Risen In Recent Years. As Population Growth Outpaced New Energy Supply in 2023, 600 Million People (43 Percent of the Continent) Were Left in the Dark, According to the International Energy Agency.

WHILE ESTIMATES VARY, ELECTRICITY SUPPLY WOLD NEED TO INCREASE FIVEFOLD TO SUPPORT LARGE-SCALAL INDUSTRIAL ACTICEITY AND HELP LIFT THE MAJORITY OF AFRICANS-ONE-THIRD OF WHOM LIVE ON Less than $ 1.90 to Day – Out of Poverty.

On a per capita basis, Africa you have The Lowest Level of Modern Energy Usage in the World. At an Economy-Wide Level, It Also Lags Behind. GLOBALLY, Makes UP manufacturing 42.2 Perent OF TOTAL POWER CONSUMPTION. In Africa, It’s Just 16.8 Perent.

APPO HEAD IBRAHIM SAYS THE AFRICA ENERGY BANK IS THE BUS OF WESTERN COUNTRIES “[ing] Hydrocarbons ”So That“ The Leaders of the Continent Have No Choice But To Look Within To Raise The Required Funds To Sustain and Grow The [energy] Industry ”.

The Africa Energy Will Be Headquartered in Abuja, Nigeria’s Capital.

ON FEBRY 11, NIGIA’S MINISTER OF STATE FOR PETROLEUM RESOURCES HEINEKEN LOKPOBIRI TOLD REPORTS THAT [end of March]This Bank Will Take Off. “

Countries Involved in the Africa Energy Bank Include Nigeria, Angola and Libya, Among Others. Planned Projects are Expecta to Range from offshore oil exploration to new gas-fled power plants.

EACH COUNTRY HAS PLEDGED $ 83M AND TO RAISE A TOTAL AMOUNT OF $ 1.5BN. That Will Be Completed by $ 14BN from the Afreximbank, A Trade Credit Organism.

Over The Next Five Years, Lokpobiri Said That the Africa Energy Is Hoping To Secure $ 120bn in Assets. Additional Funding Will Likely Come from Sovereign Wealth Funds, Commodity Traders and International Banks Intersted In Acquiring Equity.

Africa’s context is ‘different’

Many African Leaders Collect The Need for Rapid Industrial Development and Balk at Restrictions from Western Financial Backers, Whose Rules Increasingly Bar Them from Traditional Energy Projects.

Arkebe Oqubay, A former Adviser to Ethiopia’s Prime Minister Abiy Ahmed, insists that “Africa’s context is totally different from Elsewhere Becouse ITS Economic Resources Have Not Been Fully Developed. At the Same Time, It’s Made a Minimal Contribution to Climate Change. “

Africa is responsible for just 4 percent OF GLOBAL CARBON EMISSIONS AND EVEN Less on A Historical Basis. It also suffers disportely from the effects of Extreme Weather Events.

“The imperative morals to cut emissions is not as present in Africa,” Said Oqubay.

HE TOLED AL JAZEERA THAT, “[these] Are countries at a developement stage where you cannot suddenly move into the green transition … You Cannot Just Say Funding is Cut and They Cannot Commit to Oil and Gas ”.

The African Energy Chamber, An Advocacy Group, Has Also Argued that Africa has to “Sovereign Right” to develop its Natural Resources, which, According to the Group, Includes 125 billion Barrels of Oil and 620 Trillion Cubic Feet of Natural Gas.

“Unantil [renewable energy] Funding Becomes More Readily Available, African Countries are entitled to expand their oil and gas capabilities … and The International Community Does not have the right to say we can canot do This, ”Said Oqubay.

“But to Be Clear, Fossil Fuels Are Not The Future,” He Said.

‘Hug’ Renewable Energy Potential

Africa’s Energy Shortages are a “Development Constraint”, Said Fadhel Kaboub, An Associate Professor of Economics at Denison University in the United States. Africa’s Subdued Power Sector Limits The Production of Fertiliser, Steel and Cement – Hallmarks of Economic Development.

The Continent’s Inable to Industrialise you have exacerbated Global Growth Divergence.

From 2014 to 2024, Gross Domestic Product (GDP) per capita in sub-Saharan Africa Dropped by More than 10 percent (from $ 1,936 to $ 1,700). Over The Same Period, Global GDP Per Capita Rose By 15 Percent.

“To Climb The Development Ladder, The Continent Needs More Energy,” Kaboub Said. “But the best way forward isn’t to Double Down on Fossil Fuels. And Boosting Oil and gas exports as an end, in itself, is What Afrexim is pushing for. ”

INSTERAD, HE BELIENVES THAT AFRICA SHOULD LEVERGE ITS REMAINING FOSSIL FORE INFRASTRULE TO BUILD OUT ITS “HUGE” REnewable Energy Potential. Africa is endowed with solar, Wind and Geothermal Resources, as well as the critical minerals Needed for Green Technologies.

According to the International Renewable Energy Agency, Africa’s potential to generate renewable energy from Existing TechnologiesAccounting for Current Costs, Is 1,000 Times Greater Than The Projected Demand for Electricity in 2040.

“Of Course, There are constraints to Realising Africa’s Renewable Energy Capacity. But cost is not one of them, ”Said Kaboub, Referring To Reports WHICH STATE THAT MOST NEW WIND AND SOLAR PROJECTS ARE CHEAPER TO RUN THAN THES FOSSIL FUEL COUNTERPARTS.

INSTEAD, HE CONTENDS THAT “DEBT IS THE PRESSURE POINT NOT TO CHANGE TACK”.

ALMOST 60 PERENT OF COUNTRIES IN SUB-SAHARAN AFRICA ARE IN DEBT DISTRESS, ACCORDING TO THE WORLD BANK. “For Oil Producers on The Continent, Economic Activity Mainly Consists of Exporting Fossil Fuels to Stay on Top of Debt Repayments,” Said Kaboub.

I have suggested that, by providing oil and gas for other country ‘industrial process, African Governments are engagement in “Economic Entrapment”.

“Industrial Growth requires Economies of Scale [cost savings derived from high levels of production]”Said Kaboub. “Africa Needs Regional Development Plans where National Resources are complement and built out across country … it doesn’t need More Siloed Oil and Gas Projects.”

In His View, Development Banks Are Failing to present Long-Term Economic Vision for the Continent. “And the Green Industrial Revolution, where renewable energy power domestic manufacturing, Could Be That Strategy,” He Said.

“OR WE CAN CONTINUE TO FOCUS ON RAW MATERIAL EXPORT Activity and STAY STUCK IN THE RESOURCE TRAP.”