Dear Readers,
In its “State of Africa’s Infrastructure Report 2025,” the Africa Finance Corporation (AFC) presents a stark outlook for the continent’s power sector, noting that electricity generation is growing at less than 2% annually, with only 6.5 gigawatts (GW) of utility-scale capacity added in 2024. This lags significantly behind other jurisdictions such as India, which added 18 GW in renewables alone, and the United States, which added 48.6 GW. The report emphasises that, to meet even its most basic growth targets, Africa must add at least 16 GW of new grid-connected generation capacity each year until 2050 and invest $3.2 to $4.3 billion annually in transmission infrastructure. While the scale of the challenge is significant, the AFC also highlights the substantial investment opportunities it presents across solar PV, gas-to-power, hydropower, battery storage, and grid modernization.
Nigeria, as Africa’s most populous nation and its largest economy, sits at the centre of this transformation. This month, the Federal Government, through the Nigerian Independent System Operator (NISO), announced plans to scale daily electricity generation to at least 8,500 megawatts (MW), rallying private sector participation to support critical reforms. Presently, Nigeria utilizes around 5,500MWh of power daily, despite having a generation capacity exceeding 14,000MWh. Persistent challenges, such as ageing infrastructure, vandalism, and significant funding gaps, continue to hinder the sector’s ability to wheel power effectively to end-users.
The AFC report underscores that scaling Africa’s transmission capacity will require significant private sector participation, drawing on lessons from Latin America, particularly Brazil, as a model of structural transformation in the power sector. Since the 1990s, Brazil has opened its transmission sector to private participation through competitive auctions and the adoption of Independent Power Transmission (IPT) models. This approach has driven the expansion of its grid from 105,000 km in 2012 to 184,000 km in 2023, with a single transmission tender in 2024 raising $3.65 billion, equivalent to Africa’s entire annual transmission investment requirement. According to the AFC, Brazil’s success is anchored on regulatory reform, utility unbundling, and long-term planning, factors essential to mobilising private capital at scale.
This backdrop makes Nigeria’s recent capital inflows worth spotlighting:
- At the Mission 300 Africa Energy Summit held earlier this year in Dar es Salaam, Tanzania, the Federal Government, through the Minister of Power, on behalf of the President, announced the securing of a $1.1 billion facility from the African Development Bank (AfDB) to provide electricity access to 5 million Nigerians by the end of 2026, including a $200 million allocation to the Nigeria Electrification Project, aimed at delivering electricity to 500,000 people by the end of 2025.
- At the same summit, the Federal Government also secured $70 million in funding from the International Finance Corporation (IFC) to support the development of mini-grid projects across the country.
- In March, the Rural Electrification Agency (REA) announced that it had secured $950 million in funding for its Distributed Access through Renewable Energy Scale-up (DARES) programme, comprising $750 million from the World Bank and $200 million from the Japanese International Development Corporation (JICA). The DARES programme aims to provide electricity to 17.5 million Nigerians through a mix of isolated mini-grids, interconnected mini-grids, and mesh-free or standalone solar systems.
- The Islamic Development Bank (IDB) has announced plans to deepen its partnership with the Federal Government of Nigeria to address infrastructure gaps in the power sector. This will be executed through a new Country Engagement Framework, the first strategic framework of its kind since Nigeria joined the IDB in 2005.
These capital inflows reflect a strong appetite for reviving Nigeria’s power sector. However, the fundamental question remains: is the existing system evolving quickly enough to absorb and deploy this financing effectively?
Real progress depends not merely on the availability of capital but on the government’s ability to implement structural reforms, ensure regulatory clarity, and uphold transparent governance, conditions necessary to unlock lasting, systemic impact.
As billions continue to flow in, one must ask: are we truly building a resilient and investable power sector, or is it time for Nigeria to adopt Brazil’s Independent Power Transmission (IPT) privatization model to drive meaningful and long-term transformation?
