AFRICAN ENERGY BANK AS A CATALYST FOR SUSTAINABLE FINANCING IN DEEPENING INDIGENOUS PARTICIPATION IN AFRICA
Keywords:
Afreximbank, African Energy Bank, Organisation, African Petroleum Producers’, Industrialisation, SustainabilityAbstract
Although Africa has rich energy resources, the African continent is witnessing chronic energy poverty and scant local involvement in energy value chains because of the expensive financing, the risk of investing there is high, and reliance on foreign capital. The paper is a critical assessment of the African Energy Bank (AEB) as an institutional process that can be used to increase the presence of indigenous people in the energy sector in Africa by accessing more enhanced sustainable financing. Based on a qualitative desk-based research design, the study will employ a review of documents and thematic analysis of data to analyze AEB institutional framework, policy documents, and mandate. It has analysed three aspects, which are de-risking mechanisms, the development of indigenous capacity, and the alignment with the objectives of continental energy transition. As can be analyzed, the proposed financial instruments of the AEB such as blended finance structures, sovereign guarantees and local currency financing offer four avenues of cutting the cost of financing projects, namely, the reduction of the premium of country risk due to multilateral backing, the extension of loan tenors beyond the commercial bank limit, technical support in preparing projects, and mobilization of domestic institutional capital. The study, however, lays down very important challenges in the implementation, such as the clarity in the structure of how the government should be governed, the compatibility with the already existing institutions of development finance, and the ability to ascertain the impact. Although AEB is conceptually believable in its approach to fill the energy financing gap in Africa, its success as an agent of local participation relies on good governance and strategic distinction between it and the current institutions coupled with quantifiable results in response to local content needs and capacity transfer models.
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