African Bank and Fair Policy Key to Solving the Growing Investment Gap – African Energy Investment Company (AEICORP)

With investment across Africa’s hydrocarbon sector declining due to global climate policies, calls for Africa to develop innovative and domestic financial solutions to accelerate project development continue to grow. Ahead of African Energy Week, Africa’s leading investment platform for the oil and gas sector running from 18 – 21 October 2022 in Cape Town, the African Energy Chamber spoke with Zakaria Dosso, Managing Director, African Energy Investment Company (AEICORP), to understand investment trends in the entire African energy market.

What sectors do you think have the best potential for growth in Africa?

Currently representing more than 17% of the world’s population, Africa accounts for only 4% of global electricity supply investment while only 58% of its population has access to electricity. With Africa’s population growing rapidly – ​​to reach 26% and 39% of the global population by 2050 and 2100, respectively – the demand for food, transport, energy, housing, health, education and all sectors related to basic subsistence needs will be facing substantial growth.

Most sectors will need more energy to support their growth. Much remains to be done in the energy sector to bring other sectors into the face of this growing demographic. Thus, Africa’s production capacity needs to be doubled by 2030 if we are to raise living standards and promote economic growth. African governments are well aware of these challenges and are taking action to anticipate them.

On the regulatory side, what needs to be done to ensure African countries become competitive investment destinations, especially in the post-COVID-19 reduced capital spending environment?

Africa needs to build a fair and convincing legal framework that attracts foreign direct investment and protects all types of investment. Such policies need to facilitate inflows and outflows of finance and the recruitment of foreign staff for highly technical sectors where the required skills are not available internally.

Returns on investment are generally higher in Africa due to very high demand, weak mechanisms to raise funds locally and country specific risks, however, policies also need to prioritize the development of local African markets.

What role do African domestic financiers play in meeting the investment demand seen across African oil markets?

While African financiers are not sufficiently prepared to respond to strong investment demand, they are key to addressing inadequate funding in the hydrocarbon sector. Their role is to mobilize the necessary funds both locally and abroad to direct them to their financing needs. Africa is a net importer of petroleum products while we export more than 70% of our crude oil. With demand for hydrocarbons also growing, African financiers and National Oil Companies must work together to invest more in refining the continent’s crude oil.

Do you believe the African Energy Bank is feasible and what steps need to be taken to establish such an institution?

The African Energy Bank is viable and we are well on our way to getting started. The first step, and one that remains the most important, is the willingness of political leaders to implement it. This willingness was manifested in action through the establishment of AEICORP in January 2019 to mobilize financial resources from APPO member countries and other financial institutions to finance the development of the oil & gas and renewable energy sectors. With the signing of the agreement between Afeximbank and APPO in Luanda on 16 May 2022, the bank will be ready to operate in the coming months.

With Europe looking to Africa as an alternative gas supplier, do you expect gas-directed investment to increase across the continent?

It is clear that African gas is a real alternative to the current situation with Russia. The question was even asked during the German Chancellor’s recent visit to Senegal. I expect investment growth for African gas. It is true that the sale of gas like any other raw material provides Africa with foreign currency with which to finance other parts of our economy. However, part of the investment should be used for local processing for local needs. Therefore, gas must be used to increase access to energy for our population and our manufacturing industries.

What deals do you foresee or hope to sign at this year’s Africa Energy Week?

I would like to see the Cooperation Agreement signed between AEICORP and the African National Oil Company present at Africa Energy Week.

Distributed by APO Group on behalf of African Energy Week (AEW).

This Press Release has been issued by APO. Content is not monitored by the Business Africa editorial team and is not content that has been vetted or validated by our editorial team, evidence readers or fact checkers. The publisher is fully responsible for the contents of this announcement.

African Bank and Fair Policy Key to Solving the Growing Investment Gap – African Energy Investment Company (AEICORP)

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