• Tuesday, June 25, 2024
businessday logo

BusinessDay

Nigeria eyes $5bn African Energy Bank to grow FDI

Some comments on remittances, FDI and diaspora entrepreneurship

The Nigerian government is hopeful that the headquarters of the $5 Africa Energy Bank (AEB), when established in Nigeria will become a source of sustainable Foreign Direct Investments for the nation.

Nicholas Agbo Ella, the Permanent Secretary at the ministry of Petroleum Resources disclosed this in a statement issued on Friday.

According to him, the technical inspection team from the African Petroleum Producers Organization (APPO) and Afrexim Bank- the joint promoters for the Establishment of the African Energy Bank – AEB, just completed their mission to validate Nigeria’s readiness to host the headquarters of the African Energy Bank (AEB), set to be established in July 2024.

Agbo explained that President Bola Ahmed Tinubu has approved a $100 million investment from four Agencies of the Ministry of Petroleum Resources, exceeding the minimum equity requirement of $83.33 million for class A shares.

“This decision positions Nigeria favorably to win the bid, potentially reshaping the country’s oil and gas ecosystem.

“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.”

Agbo also explained that the establishment of the bank in Nigeria will pivot the development exploration and investment initiatives by the Independent petroleum producers, commercial service providers, legal and local content drivers, and technology and skills development that will leverage the bank’s proximity to the market and scale up production and capacity.

The African Energy Bank upon take-off is expected to attract an additional $2 billion equity in classes B and C from African Sovereign wealth funds, National oil companies, and other Institutional investors whose investment objectives are aligned with the vision and mission of the bank. Afrexim-Bank board has committed to Invest $1.250 Billion, as a major investor in class A shares alongside the APPO members club.

Following the first bidding round in early 2024, Nigeria, Ghana, Benin, and Algeria were pre-qualified to proceed to the final round of bidding. These countries will compete for the right to host the multilateral bank, which will finance Africa’s hydrocarbon deposits of oil, gas, and condensates and support energy transition and net zero 2060 commitments.

Agbo said that in preparation for the bid, the Ministry of Petroleum Resources sought and obtained expert opinions from the Federal Ministry of Justice and consultants in January 2024.

“They reviewed and approved the Bank’s proposed Charter, Establishment Agreement, “The Treaty,” and Headquarters Host Agreement. This approval provided the impetus to proceed, and the Federal Executive Council and National Assembly are currently finalizing the ratification process. This will ensure that the AEB receives the necessary privileges and immunities to operate in line with its global vision.

“To demonstrate the country’s commitment, Nigeria has identified a prestigious building in Abuja for the temporary headquarters and opened a secured data room for the technical team’s review.

“The application form for land for the permanent headquarters in the Central Business District of Abuja has been submitted for approval,” he said.