"AFC will continue to provide institutional support to Indigenous companies looking to develop the core assets that have been left behind by the majors."

Osam Iyahen


May 17, 2024

Can you provide an overview of the recent developments at the Africa Finance Corporation’s Natural Resources division?

Africa continues to be recognized as a key contributor to the world achieving the energy transition, given its abundance of critical minerals and gas reserves. Africa Finance Corporation (AFC) has been following this trend closely to see how we can play a catalytic role in harnessing Africa’s contributory role and fulfilling our mandate as a development finance institution. We are carefully assessing opportunities for participating in early-stage development of natural resources projects, as many projects in Africa have been unable to effectively tap into funding sources, due to a lack of access to capital for early-stage development. 

Can you elaborate on AFC’s energy portfolio, and where the company is currently focused? 

AFC has invested US$60 million in Etu Energias, the largest private Angolan oil E&P company, as part of a drive to boost Indigenous participation in the continent’s energy sector. This transaction was consistent with what we are seeing in the sector where the majors are looking to divest from non-core international oil and gas assets, and these assets are being taken over by Indigenous companies. In Nigeria, we have seen the first wave of this with the Shell divestment and Seplat acquisition (Exxon Mobil Divestment) coming in, a transaction that AFC participated in significantly. AFC will continue to provide institutional support to Indigenous companies looking to develop the core assets that have been left behind by the majors or looking to enter or expand in the oil and gas and energy sectors so that we can continue to grow capacity within these local sectors. Such support ensures that African exploration and production companies develop the required technical expertise to operate complex assets such as the Block 14 asset in which Etu Energias acquired a non-operated stake. 

How would you assess the current financing environment for oil and gas in Africa, and which areas is AFC focused on? 

Gas is very important at the moment. Africa must ensure that it monetizes the significant gas resources on the continent to the benefit of Africa through beneficiation and value addition. 

Nigeria is in the process of rolling out a gas monetization program, and AFC wants to ensure that we participate and support in providing the much-needed financing for such projects.  

What is AFC’s approach to ESG when deciding where to invest? 

The word ESG has been used very freely globally, and one could argue that the meaning of ESG in the West is slightly different from the meaning of ESG on the African continent. In the West, the emphasis is on the ‘E’, whereas in Africa, the ‘E’ is important, but it is the ‘social’ and ‘governance’ part that really needs to be bolstered. Africa has only contributed 3% of total GHG emissions globally, and while we should continue to be environmentally responsible and reduce emissions, we also have to put it in the context of our particular situation where we need energy security on the continent. We will have to continue to exploit our resources but do so responsibly. 

We have to ensure that jobs, employment, and the livelihoods of people are maintained and respected by energy companies, ensuring that it is a win-win situation for all parties. There needs to be a strong governance mechanism where the government and the stakeholders take full accountability in terms of reporting, standards, enforcement, etc. 

ESG is an extremely important point of focus for AFC when making an investment decision, as we can see the impact sustainability and responsible practices, or the lack thereof, have on the lives of people. Every project we consider goes through a screening mechanism of impact, ensuring the project is sustainable from an ESG perspective.

What are AFC’s main priorities for 2024 and beyond? 

AFC will continue to maintain our geographical diversification and spread across the continent, entering new areas and countries where we do not have a great presence. We will also focus to ensure that gas resources on the continent are effectively monetized, and we will also continue to support Indigenous players to take full advantage of the resources available on the continent.


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