Nigeria targets $5bn African Energy Bank to boost FDI

Business a.m.

The Nigerian government has expressed enthusiasm over the potential establishment of the $5 billion Africa Energy Bank (AEB) headquarters in Nigeria, which could serve as a long-lasting fount of foreign direct investments (FDIs) for the country.

Nicholas Agbo, the permanent secretary at the Ministry of Petroleum Resources, recently discussed the momentous development in a press statement, disclosing that a technical inspection team from the African Petroleum Producers Organisation (APPO) and Afreximbank – the joint promoters of the African Energy Bank (AEB) – just concluded their mission to evaluate Nigeria’s suitability and readiness to host the headquarters of the AEB, scheduled to be established in July 2024.

President Bola Ahmed Tinubu’s decision to invest $100 million from four Agencies of the Ministry of Petroleum Resources into the AEB headquarters bid, significantly surpassing the minimum equity requirement, is considered a masterstroke by Ella, who believes this move could pave the way for Nigeria to emerge as the host of the AEB, thereby transforming the country’s oil and gas industry.

The permanent secretary stated, “The $5 billion Africa Energy Bank, when headquartered in Nigeria, shall be the largest single foreign direct investment inflow into Nigeria in over two decades with its benefits including: the Africa Energy Bank eco system shall rank as the third largest bank in Africa and shall be the most prominent bank in Nigeria in terms of shareholders’ funds.

“It will significantly boost Nigeria’s gross domestic product, employment, financial architecture, and inclusion, and propel our economic diversification while supporting foreign exchange management strategies.

“The $5 billion AEB is expected to grow its assets to over $120 billion in 7 years, thus becoming a source of sustainable FDI for Nigeria that supports our vision 2030 ambitions,” he further said.

Agbo also underscored the potential far-reaching benefits that could come with hosting the Africa Energy Bank (AEB) headquarters in Nigeria, suggesting that this move could serve as a catalyst for the development of the country’s oil and gas sector, encouraging further exploration, investments, and commercial activity by a diverse range of industry players, including independent petroleum producers, service providers, and local content champions.

The African Energy Bank, poised to take off soon, is expected to attract an additional equity investment of $2 billion, with classes B and C shares to be offered to African sovereign wealth funds, national oil companies, and other institutional investors, whose investment objectives align with the mission and vision of the bank.

Afrexim-Bank, as a key stakeholder, has committed to invest $1.250 billion in class A shares alongside APPO members, highlighting the bank’s potential for significant financial backing and the level of enthusiasm it has generated among African energy leaders.

Four nations – Nigeria, Ghana, Benin, and Algeria – have successfully emerged as frontrunners from the first bidding round in early 2024, setting the stage for an intense competition to secure the highly coveted right to host the AEB headquarters.

These pre-qualified countries will now vie for the opportunity to provide a home base for the multilateral bank, which has been tasked with financing Africa’s vast hydrocarbon deposits, including oil, gas, and condensates, while also supporting the continent’s ambitious energy transition goals and net zero 2060 commitments.

According to Agbo, as preparations for the bid intensified, the Ministry of Petroleum Resources undertook a strategic and meticulous process to seek the guidance of both legal experts and consultants in January 2024, with the Federal Ministry of Justice playing a pivotal role.

He stated further that the expert opinions provided the necessary legal validation and support for the African Energy Bank proposed charter, establishment agreement, and headquarters host agreement, all of which were reviewed and approved, thus enabling the Federal Executive Council and National Assembly to expedite the ratification process, granting the bank the required privileges and immunities to function effectively on a global scale.

As part of Nigeria’s committed effort to convince the African Energy Bank to set up its headquarters in the country, Agbo made known that Nigeria has already identified a prestigious building in Abuja that could serve as a temporary headquarters for the bank.