Africa Launches Its Own Oil Bank As Western Lenders Retreat

Authored by Alex Kimani via OilPrice,

Africa now has a bank built to finance the oil and gas projects Western banks and development lenders have dropped under their climate commitments. 

Afreximbank and the African Petroleum Producers’ Organization (APPO) formally established the Africa Energy Bank (AEB) at its inaugural general meeting in Abuja on October 31. That was more than four years after the two institutions began work on it and some 20 months behind schedule. Abuja beat bids from six countries, including Ghana, Algeria, South Africa and Benin, to host the bank. Its first president is Helmy Ghazi, formerly deputy CEO of HSBC Bank Egypt, and a board drawn from the public sector, private sector and policy institutions will lead it. The AEB’s mandate covers the entire energy value chain: exploration and production, transport, processing, refining and distribution, cross-border pipelines and regional refineries, and power generation and transmission.

The bank’s $5 billion in authorized capital is a ceiling. About $500 million has been mobilized so far, including $222 million from Afreximbank and a Nigerian contribution reported at between $100 million and $200 million. The AEB aims to mobilize up to $10 billion in financing in its first operational phase and plans to fund at least three projects in 2027, starting with regional refineries and pipelines. Its founders want to cut Africa’s dependence on imported petroleum products, expand intra-African energy trade, and finance “a just energy transition” in which African governments set the pace. The continent needs an estimated $200 billion in energy investment, and roughly 600 million Africans still lack electricity.

Africa received about $35 billion a year in energy finance from G20 countries and multilateral development banks between 2012 and 2021, according to a Carnegie report. The continent’s energy sector still faces a massive financing shortfall that existing channels have struggled to fill.

Private money is flowing into African energy, but it is going to clean power, not oil and gas. Climate tech startups raised about $1.2 billion in 2025, or 38% of all venture funding on the continent, according to Africa: The Big Deal. Development lenders and commercial banks provided much of the money for clean energy: more than two-thirds of 2025 energy funding came as loans and structured facilities. Kenya alone took 29% of Africa’s startup funding last year, much of it in climate deals. In September, Nigeria launched a $300 million Distributed Renewable Energy Fund for solar mini-grids and off-grid power, backed by its sovereign wealth fund, Africa50 and SEforALL. The World Bank’s Mission 300 program is pushing in the same direction, with infrastructure investors overall putting $47.3 billion into African projects since 2012, and 81% of it went to energy and telecoms, according to the African Private Capital Association (AVCA).

Hardly surprisingly, China continues to dominate Africa’s energy and mining sectors, providing much-needed capital through a combination of state policy banks, commercial loans, resource-backed agreements and integrated contractor packages. Through the so-called Angola Model, Chinese institutions provide large-scale loans for energy and infrastructure projects in exchange for long-term access to commodities like oil, copper and critical minerals. The extracted resources are either sold directly to Chinese buyers or used as collateral and direct repayment for the loans.

The Export-Import Bank of China (Eximbank) and the China Development Bank (CDB) have lent $182 billion across Africa since 2000, mostly into the energy sector. Bilateral lending peaked in the 2010s, and the policy banks have since pivoted toward targeted clean energy and critical mineral supply chains. Chinese suppliers also use export credit insurance and vendor financing backed by agencies like Sinosure, so African buyers can purchase equipment and pay over time, giving Chinese firms a competitive edge over traditional grants.

China builds a large share of Africa’s power plants without handing African governments the money or keeping a stake in the plants. Over two decades, it has supported about 23 GW of generation capacity across at least 27 sub-Saharan countries, roughly 20% of the region’s total. Most of these projects come as a package: a Chinese policy bank lends the money, and a state-backed Chinese firm handles engineering, procurement, and construction. The loan goes straight to the Chinese contractor as each construction milestone is certified and never passes through the host country’s treasury. Once the plant is built, the Chinese firm leaves. It does not take an equity stake or run the plant as an independent power producer. The AEB is meant to give African governments what this model doesn’t: their own source of capital and their own say over which projects get built.