PRESS RELEASE:
19th June, 2023
Calls intensified for Afreximbank to Cease Funding Fossil Fuel Projects in Africa and Sign the Glasgow Statement
We, the undersigned African NGOs, write to express our deep concern regarding the ongoing support for fossil fuel projects in Africa. As we are aware, these projects not only contribute to climate change but also have severe negative impacts on local communities and ecosystems.
Africa is one of the most vulnerable regions to the impacts of climate change, with rural communities already facing the devastating consequences of droughts, floods, and extreme weather events.
The continent is also saddled with an energy crisis. Over 640 million Africans have no access to energy, corresponding to an electricity access rate for African countries at just over 40 percent, the lowest in the world.
The Continued investment in fossil fuel projects only exacerbates these challenges and undermines our efforts to achieve 1.5 degrees climate target and the Sustainable Development Goals.
Fossil-fuel based power generation is the single largest source of electricity generation in Africa. However, fossil fuels are the most expensive means for generating electricity, and this is exacerbated by high fuel prices. In a number of countries, emergency energy solutions, which constitute a large part of installed capacity, also rely mostly on fossil-fuel energy. The costs of emergency generation are in the range of US $0.2 to US $0.3 per kWh, which is much higher than the cost of conventional generation.
Meanwhile, Africa’s energy potential, especially renewable energy, is enormous, yet only a fraction of it is being currently employed. Hydropower provides around a fifth of current capacity but not even a tenth of its total potential is being utilized. Similarly, the technical potential of solar, biomass, wind and geothermal energy is significant.
Electricity is the backbone of Africa’s new energy systems, powered increasingly by renewables. Africa is home to 60% of the best solar resources globally, yet only 1% of installed solar PV capacity. Solar PV – already the cheapest source of power in many parts of Africa – outcompetes all sources continent wide by 2030. Renewables, including solar, wind, hydropower and geothermal account for over 80% of new power generation capacity by 2030 in Africa.
In as much as civil society organisations in Africa appreciate Afreximbank’s efforts in accelerating trade and investments across Africa through financial boosts and making the continent competitive in world trade, however, the bank is urged to put a stop to supporting to fossil fuel projects which pose threat to environmental conservation, human rights and sustainable energy transition on the continent.
According to the bank’s 2021 Annual Report, between 2020 and 2021 approvals to the oil and gas sector rose from US$2.41 billion in 2020 to US$2.45 billion in 2021, and accounted for 16.4 percent of total approvals.
Afreximbank support to fossil fuel projects contravenes with Article 2.1(c) of the Paris agreement, which encourages companies to finance projects consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient developments. If the investment initially intended for these fossil fuel projects were redirected to solar PV, it could cover more than a quarter of the cost of all Africa’s solar PV capacity additions to 2025.
It is worth stating that, the fossil fuel projects Afreximbank financed in Nigeria, Mozambique and East Africa have had significant socioeconomic impacts including land grabbing, displacement, loss of livelihoods, increased poverty, and gender-related issues such as teenage pregnancies and gender-based violence; Local conflicts, militarization, and instability; environmental issues like land and water pollution, biodiversity loss, and the disruption of vital ecosystems, which directly undermines the progress towards achieving the Sustainable Development Goals (SDGs), particularly SDGs 1, 5, 8, 10, 14, 15, and 16.
We want the Afrieximbank to take a cue from the African Development Bank (AfDB) for its commitment to green and sustainable development in Africa.
The recent launch of the African Green Financial Initiative demonstrates the Bank’s recognition of the urgent need to transition towards renewable energy and low-carbon development pathways. We believe the Afrieximbank can do the same.
However, we believe that Afrieximbank needs to do more to align the Bank’s investment policies with the goals of the Paris Agreement.
It is crucial for the Afrieximbank to take a stronger stance against fossil fuel projects and shift its focus towards supporting renewable energy initiatives and sustainable infrastructure development.
In light of this, we urge you, Prof. Benedict Okey Oramah, Chairman of the Afieximbank, to sign the Glasgow Statement and join other financial institutions in committing to end support for fossil fuel projects.
The Glasgow Statement, spearheaded by the Friends of Fossil Fuel Subsidy Reform, calls for a global effort to phase out subsidies and public support for fossil fuels by 2020.
By signing the Glasgow Statement, the Afrieximbank can send a powerful message to the international community, demonstrating its commitment to a cleaner, safer, and more sustainable Africa. It will also encourage other African financial institutions to take similar steps and accelerate the transition towards a renewable energy future.
We understand that transitioning away from fossil fuels poses certain challenges, particularly in terms of economic considerations and energy security. However, we firmly believe that the long-term benefits of investing in renewable energy far outweigh the short-term gains of fossil fuel projects. Renewable energy sources are not only cleaner and more sustainable but also provide greater opportunities for job creation, poverty alleviation, and inclusive economic growth.
We call upon you, Prof. Benedict Okey Oramah, to demonstrate leadership and vision by signing the Glasgow Statement and urging the Afieximbank to divest from fossil fuel projects in Africa. Together, we can build a thriving, sustainable, and resilient continent, where the benefits of development are equitably shared and the impacts of climate change are effectively mitigated.
In response to this urgent need, the signatories call on the Afrieximbank to take the following steps:
1. Stop all plans to provide financial support for fossil fuel projects, including natural gas, and associated activities in Africa and make a public announcement of this decision. It is a critical moment for the Afrieximbank to act and divest from fossil fuels, which are the major contributors to the climate crisis. Immediate action is needed because Africa’s energy future requires stronger efforts on the ground that are backed by global support.
2. Show your dedication to combating climate change and supporting renewable energy by endorsing and signing the Glasgow Statement.
3. There is an urgent need in Africa not only to create jobs, but to create jobs that are productive and well paid to underpin that employment can be a strong path out of poverty. Development of Africa’s energy system offers major opportunities to stimulate the creation of decent jobs that require wide‐ranging skills.
The Afrieximbank must prioritize investments that will capitalize these opportunities in the clean energy sector to alleviate the continent’s poverty, ensure the protection of human rights and promote environmental sustainability.
4. The Afrieximbank must set an aspirational goal of helping the continent achieve universal electricity access by 2030 with a strong focus on encouraging clean and renewable energy solutions.
5. We propose that the bank develop a new energy policy which will prioritize partnerships for clean energy development, mobilize domestic and international capital for innovative financing in Africa’s clean energy development and climate financing.
6. We call on the Afrieximbank to invest in clean energy projects that focus on regional integration of the power sector. This will create economies of scale, permitting for lower costs across all aspects of infrastructure including for power. Estimates show that cross-regional collaboration could reduce electricity costs in Africa by US $2 billion per year.
CONTACT: Eca-watch African Team
AbibiNsroma Foundation
info@abibinsromafoundation.org
- Samuel Okulony – samuelokulony@gmail.com
Environment Governance Institute Uganda
- Amegadzé Kokou Elorm-kelorm5@yahoo.fr
Friends of the Earth Togo
- Matey Richard – matey.richard@aiesec.net
Alliance for Empowering Rural Communities
- Kenneth Nana Amoateng
AbibiNsroma Foundation
Nana Kenneth Amoateng kamoateng@gmail.com
