The Federal Government of Nigeria has successfully secured a $1.1 billion loan from the African Development Bank (AfDB) to enhance electricity access across the country, aiming to provide power to at least 5 million people by the end of 2026. This financial agreement represents a significant step toward addressing Nigeria’s persistent energy deficit and advancing the country’s electrification goals.

The announcement was made by Bayo Onanuga, Special Adviser to the President on Information and Strategy, following a statement from President Bola Tinubu during the two-day Mission 300 Africa Energy Summit held in Dar es Salaam, Tanzania. The event, which focused on accelerating Africa’s energy transition, provided a platform for discussing innovative financing solutions to tackle the continent’s energy crisis.

Key Investments in Nigeria’s Electrification Efforts

In addition to the $1.1 billion loan, AfDB has committed another $200 million to Nigeria’s Electrification Project, which aims to bring electricity to 500,000 people by the end of 2025. These investments reflect a growing recognition of the need to improve Nigeria’s energy infrastructure and expand access to electricity in rural and underserved communities.

Speaking on behalf of President Tinubu, Nigeria’s Minister of Power, Adebayo Adelabu, emphasized the importance of these financial commitments in bridging the country’s energy gap.

“This is an ambitious goal, but we can achieve it together. As Nigeria’s President, I am committed to making energy access a top priority,” Tinubu stated.

The latest funding aligns with the Nigerian government’s broader energy strategy, which seeks to integrate renewable energy solutions, mini-grid systems, and battery storage facilities to create a more sustainable and reliable power supply for its citizens.

Desert-to-Power Initiative and Grid Storage Expansion

In addition to these projects, the AfDB has planned a $1.2 billion investment in Nigeria’s Desert-to-Power Programme, which aims to harness solar energy across the country’s northern regions. This initiative is designed to expand solar power generation, reduce dependency on fossil fuels, and increase access to affordable energy in off-grid areas.

As part of its broader commitment, AfDB is also set to establish a $500 million facility for the Nigeria-Grid Battery Energy Storage System, a cutting-edge project that will enhance power reliability by storing excess electricity and releasing it when needed.

According to Tinubu, these investments will provide electricity to an additional 2 million people, reinforcing Nigeria’s efforts to transition toward a cleaner and more resilient power grid.

“We also look forward to the AfDB’s planned $700 million investment in the Nigeria Desert-to-Power programme and its planned $500 million facility for the Nigeria-Grid Battery Energy Storage System, which will provide electricity for an additional two million people,” Tinubu added.

World Bank’s Support for Nigeria’s Energy Expansion

Nigeria’s electrification drive has also received strong backing from the World Bank, which has pledged a $750 million support package to expand distributed energy access through mini-grids and standalone solar systems. This initiative is expected to benefit 16.2 million people, helping them transition from unreliable and expensive diesel generators to cleaner, more sustainable energy solutions.

The World Bank’s commitment comes as part of its broader strategy to support climate-friendly investments and enhance energy security across Africa. Tinubu acknowledged the crucial role played by Ajay Banga, President of the World Bank Group, and Akinwunmi Adesina, President of AfDB, in shaping transformative policies that will power Africa’s future.

“I commend Ajay Banga of the World Bank and Akinwunmi Adesina of AfDB for their visionary leadership, which will light up and power Africa,” Tinubu said.

The Role of Global Development Partners

The Nigerian government has also acknowledged the critical contributions of international organizations, including the United Nations Sustainable Energy for All (SEforALL), the Rockefeller Foundation, and the Global Energy Alliance for Development (GEAD), in supporting its energy transformation agenda.

These organizations have played a pivotal role in advocating for innovative financing mechanisms, such as blended finance and risk-sharing facilities, to encourage private-sector participation in the energy sector.

Tinubu highlighted Africa’s paradoxical energy challenge:

“As we all know, Africa is rich in energy resources, yet millions of our citizens still lack access to reliable and affordable energy.”

Nigeria’s Energy Crisis: A Persistent Challenge

Despite being Africa’s largest economy, Nigeria continues to struggle with chronic electricity shortages that have hindered economic growth and industrialization. The country’s power sector is plagued by inadequate generation capacity, transmission bottlenecks, and a high rate of power theft.

At present, Nigeria generates about 4,000–5,000 megawatts (MW) of electricity for a population exceeding 200 million people, resulting in widespread blackouts and reliance on alternative energy sources such as diesel generators and solar panels.

The Nigerian Electrification Roadmap, developed in partnership with Siemens AG, aims to increase power generation capacity to 25,000 MW by 2030. However, progress has been slow due to financial constraints and regulatory challenges.

Renewable Energy as a Long-Term Solution

Experts believe that renewable energy sources, particularly solar and wind power, will be critical to Nigeria’s future energy mix. Given the country’s vast solar potential—estimated at 5.5 kWh/m²/day—the government has been promoting large-scale solar projects as a cost-effective and environmentally friendly alternative to fossil fuel-based power generation.

The Desert-to-Power Initiative is expected to accelerate solar energy adoption in northern Nigeria, where sunlight is abundant but electricity access remains low.

The initiative will complement other renewable energy programs, including:

• The Rural Electrification Agency’s (REA) Off-Grid Electrification Strategy, which focuses on deploying mini-grids in underserved communities.
• The Nigerian Energy Transition Plan (ETP), which aims to achieve universal electricity access by 2030 and net-zero emissions by 2060.
• The Nigeria Electrification Project (NEP), supported by the AfDB and World Bank, which is driving investments in solar home systems and small-scale renewables.

The Economic Impact of Improved Electricity Access

Expanding electricity access has far-reaching economic benefits. According to the World Bank, Nigeria loses about $28 billion annually due to inadequate power supply, representing 2% of its GDP. Reliable electricity could boost productivity, attract foreign investments, and create jobs in key sectors such as manufacturing, agriculture, and digital services.

The growth of solar-powered irrigation systems, cold storage facilities, and agro-processing plants is expected to enhance food security and improve rural livelihoods. Similarly, access to uninterrupted power will support businesses, educational institutions, and healthcare facilities, ultimately raising the standard of living.

Conclusion

Nigeria’s latest $1.1 billion loan from AfDB marks a significant step in its electrification journey, bringing the country closer to its goal of universal energy access. With additional funding from AfDB, the World Bank, and other global partners, Nigeria is poised to strengthen its power infrastructure, integrate renewable energy, and improve economic competitiveness.

While challenges remain, including bureaucratic delays, regulatory hurdles, and financial sustainability, the Nigerian government’s commitment to scaling up clean energy solutions reflects a promising future for the country’s energy sector. If successfully implemented, these projects could reshape Nigeria’s power landscape, benefiting millions and unlocking new economic opportunities.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

4th January, 2025