Nigeria Secures $1.1bn AfDB Loan to Provide  Electricity for Five Million People

In a bid to address Nigeria’s worsening electricity crisis, the Federal Government has secured a $1.1 billion loan from the African Development Bank (AfDB) to provide electricity access to five million people by the end of 2026.

The announcement was made by President Bola Tinubu at the Mission 300 Africa Energy Summit in Dar es Salaam, Tanzania, where African leaders convened to strategize on improving energy access across the continent.

Delivering Tinubu’s speech at the summit, Minister of Power, Adebayo Adelabu, reiterated the government’s commitment to prioritizing electrification as a key driver of economic development. Tinubu also revealed that an additional $200 million from AfDB’s Nigeria Electrification Project would power 500,000 people by the end of 2025.

“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.

$1.1 Billion for 5 Million People: A Costly Intervention?

However, while the announcement denotes progress in Nigeria’s electrification drive, it has also sparked concerns over cost efficiency, with critics questioning whether $1.1 billion for just five million people represents prudent financial planning, especially in a country of over 200 million people struggling with a worsening debt burden.

While the investment is seen as a much-needed boost to Nigeria’s struggling power sector, many analysts argue that the cost per capita appears exorbitant.

At $1.1 billion for five million people, this translates to $220 per person, an amount some experts say is disproportionately high compared to similar electrification projects in other countries. To put this into perspective, five million people barely represent a quarter of Lagos’ population, meaning an equivalent nationwide initiative would require tens of billions of dollars, an unrealistic financial prospect for a country already battling fiscal constraints.

Energy economists have noted that electrification efforts should be guided by cost-effectiveness and measurable impact. This means for $1.1 billion, one would expect a significantly larger number of beneficiaries.

Nigeria’s power sector has a history of massive financial injections with little tangible progress. Past administrations have spent billions of dollars on various electrification projects, yet the national grid remains unreliable, rural electrification remains a major challenge, and millions of Nigerians continue to rely on expensive and polluting alternatives like generators.

At the Mission 300 Africa Energy Summit, Tinubu and 11 other African leaders signed the Dar es Salaam Declaration, a commitment to electrify 300 million Africans by 2030. The participating nations, including Chad, Côte d’Ivoire, the Democratic Republic of the Congo, Liberia, Madagascar, Malawi, Mauritania, Niger, Senegal, Tanzania, and Zambia, pledged to implement National Energy Compacts to drive policy reforms and attract investments in their energy sectors.

Tinubu emphasized the importance of collective action, stating: “Let us work together to create a brighter future for our citizens—where every African can access reliable and affordable energy. A future where our industries thrive, our economies grow, and our people prosper.”

AfDB and World Bank Support: A Lifeline or Another Debt Trap?

Beyond the $1.1 billion loan, Nigeria is also set to benefit from additional AfDB and World Bank investments, including:

• $700 million for the Desert-to-Power program, aimed at leveraging solar energy to power remote communities.
• $500 million for a Nigeria-Grid Battery Energy Storage System, expected to improve grid stability and supply electricity to an additional two million people.
• $750 million from the World Bank to expand distributed energy access via mini-grids and standalone solar systems, projected to provide electricity to 16.2 million people.

While these investments are crucial for bridging Nigeria’s energy gap, some argue that increasing reliance on external loans for basic infrastructure is unsustainable.

Nigeria’s total public debt has surged past $100 billion, raising concerns about repayment obligations and the efficiency of loan utilization.

Nigeria’s Power Woes Are More Than Just Funding Issues

Nigeria’s electricity crisis is not merely a result of insufficient investment but also deep-seated structural and operational challenges such as:

1. Frequent Grid Collapses – The national grid has collapsed multiple times in recent years, leading to nationwide blackouts.
2. Poor Transmission Infrastructure – Even when power is generated, much of it is lost in transmission due to outdated infrastructure.
3. Distribution Challenges – Many parts of the country remain unconnected to the grid due to a lack of expansion and maintenance.
4. High Cost of Alternative Energy – Many Nigerians rely on diesel and petrol generators, which are expensive and environmentally harmful.

While the AfDB and World Bank funds offer a significant opportunity to improve electrification, many Nigerians remain skeptical about the government’s ability to effectively utilize these funds.

Nigeria has received billions in energy-related loans over the past two decades, yet the power supply remains largely unreliable, with many citizens experiencing prolonged blackouts.