Nigeria Bets on Blended Finance to Fix Electricity Crisis

Last week, some stakeholders unveiled the Green Finance and Investment Facility as a new financing model aimed at turning Nigeria’s huge energy deficit into an investable  opportunity, Festus Akanbi reports

Nigeria’s power crisis has never lacked speeches, policies, or donor interest. Analysts say what it has lacked is a financing structure strong enough to move projects from conference halls to communities.

That is the promise and the test of the Green Finance and Investment Facility, a private-sector-led blended-finance platform designed to mobilise $40 billion for distributed renewable energy across Nigeria.

The initiative comes at a time when Nigeria remains one of the world’s most energy-poor countries. 

The World Bank said the Distributed Access through Renewable Energy Scale-up (DARES) programme is designed to provide more than 17.5 million Nigerians with new or improved access to electricity through distributed renewable energy solutions. A 2025 World Bank-linked report also estimated that about 86.8 million Nigerians lacked electricity.

The GFIF did not begin as a grand platform. It started as a conversation between the Rural Electrification Agency and Barton Heyman Limited on how to mobilise financing for Nigeria’s distributed renewable energy market. From that conversation came a bigger proposition: do not create just another fund; build a financing architecture.

Senior Partner at Barton Heyman, Anthony Feyitimi, captured the problem clearly at the programme’s launch in Lagos last week. “When we keep saying there are no bankable projects in Africa, especially in Nigeria, that is not true,” he said. 

“What is true is that getting debt to bankability is a major challenge.”

His point goes to the heart of Nigeria’s infrastructure problem. Many projects exist. Demand is strong. Technology is available. But financiers, developers, grant providers, equity investors, and guarantee institutions often operate in separate rooms, each requesting different documents, assurances, and risk protections.

According to its promoters, GFIF seeks to bring them into one room. The pilot facility is a $188 million syndicated transaction expected to finance 191 megawatts of solar mini-grid projects under the DARES programme. It targets 230,000 household connections and about 1.2 million people, using an average household size of roughly five persons. Nigeria’s own living standards data put the average household size at 5.06 persons.

At full scale, GFIF is expected to mobilise $40 billion and support 20 gigawatts of distributed renewable energy. Feyitimi said Nigeria must think at scale if it wants to be taken seriously as an African economic powerhouse. “We need at least 100 gigawatts of power at a minimum,” he said, contrasting Nigeria’s weak supply with India’s massive renewable energy ambition.

The platform’s logic is simple but difficult: use public and concessional resources to reduce risk, then crowd in private capital. The Rural Electrification Agency (REA) results-based financing under DARES provides the de-risking anchor. Commercial lenders and equity investors then provide debt and capital support. The World Bank’s latest implementation document shows DARES is a $750 million programme, with implementation already underway.

For FCMB, the attraction is as much impact as return. The bank’s Senior Vice-President and Divisional Head, Business Banking, George Ogbonnaya, said the bank had watched renewable energy projects move from “dreams” to real assets touching households and businesses. 

The bank is committing financing to developers, with structures that can fund up to 70 percent of capital expenditure, subject to project-specific conditions.

However, the remaining 30 percent equity requirement remains a bottleneck. Many technically sound projects have stalled because developers could not raise sponsor equity. This is where the GFIF structure matters: grants, guarantees, senior debt, junior capital, and developer equity can be layered into a single coordinated instrument.

Chief Investment Officer of ARMHILL, Derek Chime, was blunt about the investment case. Nigeria, he noted, is a market where a significant portion of electricity is self-generated by households and businesses. That makes power more expensive than it should be. For SMEs, industrial clusters, schools, hospitals, and agricultural value chains, distributed renewable energy is not a luxury. It is core infrastructure.

Yet Chime warned that capital will not move simply because demand exists. “Private capital only participates where structures are credible, risks are transparent, and returns are commercially viable,” he said.

That is why GFIF’s promise will depend not on slogans but on discipline: project quality, standardised contracts, clear risk allocation, bankable cash flows, currency-risk management and credible exit routes for investors.

Guarantees are another critical piece. Co-Chair of the Green Guarantee Group, Farouk Yusuf, argued that many projects may be “theoretically bankable” but still unable to attract financing because nobody wants to absorb political, credit, operational, or currency risk. 

In his view, Nigeria and other emerging markets need stronger guarantee institutions, clearer premium structures, better data, and deeper local-currency markets.

His warning is important. Without affordable long-term financing, renewable energy projects will either fail to scale or pass high costs to consumers.

The UK Government, through UK PACT and the Foreign, Commonwealth and Development Office, supported the technical design of GFIF. Simon Field, speaking for the British Deputy High Commission in Lagos, described the facility as “a strategic risk-sharing mechanism designed to attract private finance, not replace it.”

That distinction matters. Nigeria does not need another donor-dependent scheme. It needs structures that make commercial capital comfortable enough to enter difficult markets without demanding impossible returns.

For Lagos State, the GFIF conversation fits into a wider climate-finance agenda. Special Adviser to the Governor on Climate Change and Circular Economy, Mrs. Titi Oshodi, said green finance must move from ambition to measurable performance. Climate finance, she argued, does not respond to good intentions alone; it responds to credible data, verifiable impact, and investable projects.

REA Managing Director Aliyu Abba made the strongest institutional case for scale. He said Nigeria cannot solve electricity access through “small, small projects” when tens of millions remain unserved or underserved. 

He also pointed to regulatory constraints, including mini-grid capacity limits, and said REA had pushed for reforms to allow larger, more ambitious projects. Nigeria’s 2023 Mini-Grid Regulations apply to mini-grids up to 1MW per site, although ongoing reforms and interconnected projects are pushing the market toward larger structures.

Still, its design addresses a real problem. It recognises that Nigeria’s energy transition will not be financed solely by public funds. It also recognises that private capital will not come merely because the need is urgent.

The bridge between need and capital is structure. If GFIF delivers, it could become more than a Nigerian financing platform. It could offer a model for emerging markets facing the same contradiction: abundant energy demand, viable renewable projects, but an insufficient financing architecture.

For now, the promise is clear. The harder work begins after the signatures are obtained. 

And as Managing Partner/CEO, Barton Heyman Ltd, Mr. Olumide Lala put it, “This is only the beginning. What takes its first step in Lagos today will be presented to the world as a global blueprint for mobilising private capital to power communities in emerging markets. We are not simply solving a Nigerian problem. We are building a model for the rest of Africa. So, let’s make it count”.