Nigeria Needs $23bn to Address Electricity Challenges, REA MD Says

Nigeria Seeks $23bn Investment to Close Electricity Access Gap

Nigeria requires about $23 billion to address its electricity challenges and improve the reliability of power supply, the Managing Director and Chief Executive Officer of the Rural Electrification Agency (REA), Abba Abubakar Aliyu, has said.

Aliyu disclosed this during the signing of a ₦50 billion Memorandum of Understanding (MoU) between the REA and Alpha Morgan Bank to increase electricity supply to underserved communities across the country.

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According to the REA chief executive, available funding remains significantly below the level required to tackle the country’s electricity challenges, making additional public and private-sector financing necessary.

REA Seeks More Financing for Electricity Projects

Aliyu said the country needs to continue mobilising financing to close the gap between existing resources and the investment required to improve electricity access.

He also disclosed that Nigeria expects an additional $119 million from the Japan International Cooperation Agency (JICA), which will support the deployment of interconnected and isolated mini-grids.

The additional funding forms part of efforts to expand decentralised electricity infrastructure, particularly in communities that remain underserved by the conventional power grid.

Alpha Morgan Bank Commits ₦50bn to Renewable Energy

Under the new agreement, Alpha Morgan Bank will provide up to ₦50 billion in project financing to eligible renewable energy developers participating in REA-led programmes, including the Distributed Access through Renewable Energy Scale-up (DARES) Project.

Eligible developers can access revolving loans of up to ₦10 billion each, subject to the bank's credit assessment and approval processes.

The financing will have proposed tenures ranging from 12 to 24 months, while the bank can provide up to 70 per cent counterpart funding for eligible projects.

The arrangement is designed to address one of the major constraints facing renewable energy developers: access to affordable and timely financing.

Financing Expected to Expand Electricity Access

The REA said improved access to financing would help renewable energy developers procure equipment, complete projects and expand electricity services to households, businesses and public institutions in rural and underserved communities.

Aliyu said access to finance remains critical to scaling decentralised renewable energy projects because developers need sufficient capital to move projects from approval to implementation.

The partnership is expected to strengthen private-sector participation in Nigeria's energy transition while supporting efforts to expand reliable electricity access.

Reliable Power Remains Important for Businesses

Alpha Morgan Bank's Managing Director and Chief Executive Officer, Ade Buraimo, represented by Executive Director Doyin Anyaehie, said reliable electricity remains fundamental to economic activity and improved livelihoods.

The bank said the partnership would provide financing and advisory support to renewable energy developers working under the DARES programme.

Buraimo noted that access to reliable electricity remains particularly important for small and medium-sized enterprises and rural communities that cannot sustainably rely on alternative sources of power.

Electricity Investment Has Housing and Construction Implications

The scale of the funding requirement also has implications for Nigeria's housing and construction sectors.

Reliable electricity is an important component of residential development. Developers and households face higher operating costs when electricity supply remains unreliable and properties require generators or other alternative power systems.

For developers, dependable electricity can reduce operating costs in residential estates, commercial buildings and mixed-use developments. It can also improve the attractiveness of locations where infrastructure is still developing.

In underserved communities, decentralised renewable energy could support the growth of housing and local economic activity by improving access to basic infrastructure.

Renewable Energy Could Support Underserved Communities

The focus on mini-grids and other decentralised renewable energy systems is particularly relevant to communities where extending the conventional electricity grid may take longer or require significant investment.

The REA-Alpha Morgan Bank partnership is expected to support projects that provide electricity directly to households, businesses and public institutions in such locations.

By increasing access to financing, renewable energy developers could potentially deploy projects more quickly and expand electricity services to areas with limited access to reliable grid power.

Public and Private Finance Remain Critical

The $23 billion funding requirement highlights the scale of investment needed to address Nigeria's electricity challenges.

Government funding alone may not be sufficient to meet the country's infrastructure needs, making private-sector capital and development finance important components of the electricity expansion strategy.

The latest financing agreement provides one example of how commercial banks can support renewable energy deployment through structured project finance.

The REA will also facilitate project approvals, grant agreements and verification under the partnership, creating a framework intended to connect public-sector programmes with private-sector financing.

Outlook

Nigeria's $23 billion electricity funding requirement underscores the scale of investment needed to improve power reliability and expand access across the country.

The new ₦50 billion financing arrangement between the REA and Alpha Morgan Bank is expected to support renewable energy developers participating in government-led electrification programmes, particularly in underserved communities.

For Nigeria's housing, construction and real estate sectors, progress in electricity infrastructure could reduce reliance on expensive alternative power sources and improve the viability of developments in emerging communities.

The effectiveness of the investment drive will ultimately depend on sustained financing, efficient project delivery and the successful expansion of reliable electricity services to households and businesses across the country.

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