While the need to transition to a cleaner energy future is a global priority, Africa’s energy poverty challenges require strong and immediate solutions, of which investment in infrastructure to strengthen energy supply and access is predominant.
In line with this, the Global Head and Director, Client Relations at pan-African multilateral financial institution the African Export-Import Bank (Afreximbank), Rene Awambeng, delivered a presentation during this year’s edition of the African Refiners & Distributors Association – taking place from March 14-17, in Cape Town.
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 per cent 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 emphasised that consideration needed 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.
Monetising 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; industrialisation and export development; leadership in global trade banking in Africa; and financial stability.