BudgIT says the country is emerging as a major destination for renewable energy financing, but weak project preparation and high investment risks continue to frustrate the sector….
Nigeria is increasingly attracting investment into clean energy as funding for gas-fired power projects remains difficult to secure, according to BudgIT Foundation.
Vahyala Kwaga, Country Director of BudgIT, disclosed this on Wednesday at a sustainable energy summit in Abuja organised by BudgIT, the Natural Resources Governance Institute (NRGI) and Resource Justice Network under the Energising Sustainability Project.
The summit, themed “Financing Nigeria’s Energy Future: Closing the Gap Between Policy Commitment and Investment,” brought together stakeholders to examine the financing challenges facing Nigeria’s energy sector and what is required to attract more private capital.
Kwaga, citing a 2026 NRGI study, said global investment in clean energy had increased tenfold between 2019 and 2024, intensifying competition among countries seeking to attract capital for their energy transitions.
He said the shift was becoming increasingly visible in Nigeria, where renewable energy was attracting growing interest from international investors while conventional gas-fired power projects struggled to secure fresh financing.
According to him, Nigeria ranked as the fifth-largest recipient of international public finance for clean energy globally in 2023, receiving about $829 million committed to 42 projects.
The country also ranked 10th globally among recipients of foreign investment in renewable energy in 2024, he said.
Kwaga said the figures showed that investors were already showing confidence in Nigeria’s clean-energy potential, but stressed that the country needed stronger transparency and accountability mechanisms around climate and energy financing.
The growing interest in decentralised energy was also reflected in the performance of Nigerian companies, which received roughly one-fifth of all mini-grid financing in Africa between 2019 and 2023, according to the BudgIT director.
However, he noted a sharp contrast in the financing available to gas-fired power.
Kwaga said the NRGI study found that almost no capital was directed towards Nigerian gas power projects during the period under review, despite the country’s continued dependence on gas for electricity generation.
The development, he said, should prompt a deeper conversation about how Nigeria intends to finance an energy system that must simultaneously expand electricity access, improve reliability and respond to the growing impact of climate change.
“These are critical moments in Nigeria’s evolving history and the decisions and actions we take today have implications for our future,” he said.
Kwaga added that BudgIT’s work with communities and other stakeholders over the past three years had focused on increasing the participation of women and young people in Nigeria’s climate discussions, while also pushing for greater accountability in the management of natural resources and climate finance.
Nigeria needs $1.9trn to achieve net zero
The scale of the financing challenge was further highlighted by Ibrahim Shelleng, Senior Special Assistant to the President on Climate Finance and Stakeholder Engagement.
Shelleng said Nigeria would require approximately $1.9 trillion in total investment to achieve the objectives of its energy transition plan and reach net-zero emissions by 2060.
Of that amount, about $410 billion would represent additional investment above business-as-usual spending, he said.
He identified renewable power generation, gas infrastructure, transmission and distribution, clean cooking, electric mobility, industrial energy efficiency, battery storage and decentralised energy systems as areas with significant investment potential.
But Shelleng warned that Nigeria still lacked an effective link between government policy announcements and projects capable of attracting financing.
“An aspiration is not yet an investment opportunity. A policy announcement is not a bankable project,” he said.
For investors to commit funds, he explained, projects must have essential groundwork in place, including feasibility studies, credible demand assessments, permits, land documentation, environmental safeguards, reliable financial models and clear revenue structures.
Shelleng identified regulatory uncertainty, fragmented institutions, high borrowing costs and limited early-stage financing among the major obstacles preventing energy projects from reaching financial close.
He advocated stronger project-preparation facilities and greater deployment of public and concessional funding to reduce investment risks and bring more private capital into the sector.
According to him, government should measure the effectiveness of public spending not only by the amount invested but also by the volume of additional private investment it succeeds in unlocking.
“The measure of success should not simply be how much government spends, but how much additional investment each naira of public expenditure unlocks.”
Power sector still faces major financing gaps
Idris Kuforiji, Senior Energy Economist at the Nigeria Governors’ Forum, said substantial financing gaps persisted across Nigeria’s electricity value chain, including generation, transmission, distribution and decentralised renewable energy.
Kuforiji said investors were looking for greater regulatory certainty, commercially viable projects and credible mechanisms for reducing risk before committing funds to Nigeria’s power sector.
He identified project-development delays, concerns over payment security and difficulties in implementing reforms as factors slowing the movement of capital into the industry.
“Project development bottlenecks, payment security concerns, and implementation challenges slow the conversion of reforms into investments,” he said.
The economist called for closer cooperation between the federal and state governments, regulators, development institutions and private investors.
Such coordination, he said, would be critical to turning Nigeria’s energy ambitions into investable projects and ensuring that the increasing global interest in clean energy translates into more financing for the country’s power sector.
