Page 47 - Energize January 2022

VIEWS AND OPINION

“Our countries cannot achieve an marginal fields, provides a large return on investment. And millions of Africans would be
energy transition and abandon the polluting participating in our growth and our future.
patterns of the industrialised countries Our options for raising capital don’t end there. We also should seek the support of wealthy
without a viable, fair and equitable Africans who want to invest in a better African future. As of December 2020, total private
alternative,” stated Sall. “Our countries, wealth in Africa totalled approximately USD 2 trillion. That’s not even including the African
which are already shouldering the crushing diaspora. Imagine what can be done if we just unite.
weight of unequal trade, cannot bear the Not only do we have pathways for raising capital, we also have an example of the kind
burden of an unfair energy transition.” of bank(s) Africa needs to finance its own energy projects, one that goes back decades. I’m
President Sall is right and so is South talking about the African Export Import Bank (Afrieximbank). In 1993, African governments
African President Cyril Ramaphosa, who worked with public and private investors to create a bank that would finance, promote
said, “We must contend not only with these and expand intra-African and extra-African trade. They succeeded. In 2020, Afrieximbank
primary dangers (of climate change), but received the Africa-America Institute’s (AAI’s) Institutional Institution of Excellence Award for
also with potential economic and social its commitment to the creation and implementation of the African Continental Free Trade
damage should the global community fail to Agreement (AfCFTA) and its ongoing dedication to investing in education. AAI noted that
deal with the crisis in a way that works for between 2015 and 2019 alone, Afrieximbank disbursed more than $30 billion in support of
developing as well as developed markets.” African trade, including more than $15 billion for the financing and promotion of intra-Africa
Developing African energy banks is a trade.
way to protect our countries from those Afrieximbank, by the way, recognises the importance of protecting Africa’s oil and gas
social and economic dangers. China might industry.
be a credible partner to Africa in building “The way we see it at the bank, Africa produces less than 4% of greenhouse gas. We
these unique financial infrastructures. are not the cause of greenhouse gases. We are the victims. We are asking for balance,”
Afrieximbank President and Chairman of the Board Benedict Oramah said.
We can do this Let’s build on Afrieximbank’s model. And not only that, let’s cultivate a pool of investors
You may be wondering if African energy who understand and appreciate the importance of oil and gas to Africa. Capital from foreign
banks are a realistic goal. How can a countries and companies will always be welcome — as long as it isn’t predicated on phasing
continent that is struggling to bring many out fossil fuels on their timeline. If they’re pushing a rush to renewables, they’re not going to
of its people out of poverty raise capital be part of our solution.
for energy projects? I believe it can be With the support of one or more African energy banks, local oil and gas companies will
done. To begin with, African governments have the finances necessary to acquire assets. They’ll have the financing to build crude and gas
can set aside a percentage of their oil and pipelines across Africa and to facilitate the use of natural gas (including liquid natural gas) to
gas revenues for new project funding. In power Africa, minimising energy poverty and driving industrialisation.
our report, Africa Energy Outlook 2021, And African states and entrepreneurs will be able to finance the development of
the African Energy Chamber projected renewable energy operations, particularly blue, green and grey hydrogen operations that
that African governments’ earnings from create additional opportunities for Africans. Africa already has emerging green hydrogen
royalties, oil profits, and other taxes in 2021 operations in Mali, Namibia, Gambia, Senegal, Mauritania, Niger and South Africa, and with
would reach USD 100 billion. Even 5% of the proper funding, could become a major green hydrogen exporter.
that amount would produce $50 million The African Energy Chamber will support the energy bank initiative and work to bring
that could be leveraged for exploration, potential participants together. Creating our own institutions to finance energy projects will
development, or infrastructure. send a clear signal to the marketplace that Africans are seeking to become leaders in scaling up
We can also raise capital by investing private capital. It will show that we are advancing natural gas development and infrastructure
African pension funds in African energy while supporting low-carbon investments.
projects. According to Cape Town-based With the financing in place, not only will African companies be able to produce oil and gas,
investment firm RisCura, local pension but they also will support local community development, develop green energy markets and
funds collectively manage around USD 350 create jobs.
billion of assets in sub-Saharan Africa, and The financing also will allow African companies to upgrade their refineries, an urgent
they are actively looking for new places to need addressed by Anibor Kragha, the Executive Secretary of African Refiners and Distributors
invest. Why not encourage them to add oil, Association, during African Energy Week, so they can produce cleaner fuels.
gas, and renewables projects to their list? For many African countries, the oil and gas industry represents our best shot at giving
Investing pensions in the energy sector is millions of Africans the kind of jobs, living standards and stability that developed countries
hardly a new practice. have enjoyed for well over a century. We must hold fast to those goals and do what it takes to
Some of America’s largest pension achieve them.
funds are invested in fossil fuel producers
and pension funds around the globe are NJ Ayuk is the Executive Chairman of the African Energy Chamber
investing in green energy projects. This
would not be a giveaway: investing in fossil Contact NJ Ayuk, African Energy Chamber, Phone 011 245-5900, news@energychamber.org,
fuels, especially gas projects and developing https://energychamber.org

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