Business
ADF To Finance Nigeria’s Power Sector With $157m
Nigeria and two other African countries Botswana and Cape Verde are to receive about $441 million to finance strategic energy and poverty reduction projects in their countries. Of this amount, Nigeria will get $157 million from the Africa Development Fund (ADF) to finance its Economic and Power Sector Reform Programme (EPSERP) which seeks to provide access to affordable and reliable electricity in order to encourage economic diversification, sustain growth, create jobs and alleviate poverty.
The fund will also support the implementation of the government’s development agenda which aims at improving the electricity system and the business environment for active private sector government in the power sector in the medium term.
In addition, the project provides the bank with a donor-cordinated platform to engage in dialogue with the Nigeria government on on-going public finance management and fiduciary reforms as macroeconomics stability is necessary condition for addressing the critical challenges in the power sector and protecting strategic budget priorities in the context of the global financial crisis.
The EPSERP is the bank’s first budget support operation in Nigeria and will be implemented over two fiscal years – 2009 to 2010. It is aligned with the Nigerian government’s 2008 – 2011 seven point Agenda which stresses critical infrastructure, particularly in power, as a key element in building a robust, resilient and competitive economy for sustainable growth.
Botswana will receive $225 million to finance the moruplle B power project, which involves the construction of a 600mw (4x150mw) coal-fired power plant and associated transmission infrastructure. The project, to be co-financed by the World Bank, the Industrial and commercial Bank of China and Standard Bank Consortium (ICBC-SB), is designed to achieve energy generation self-sufficiency in the wake of rapidly declining electricity imports to support economic growth and reduce poverty.
Botswana relies on imported electricity to meet the bank of its needs. In 2008, 80 per cent of the electricity supplied in the country was imported from South Africa’s Eskom and other neighbouring countries, while 20 per cent was generated by the morupule “A” plant, a 25 year-old facility that has become increasingly undependable. Eskom is suspending energy exports to cope with local demand.
The morupule B project is situated adjacent to the existing morupule power station which lies approximately 280km north of Gaborone. The project is of strategic importance to Botswana as it will contribute to national energy security and improve the competitiveness of the national economy. It will also benefit the entire population, estimated at 1.8 million in 2008.
The board also approved a $59 million ADF loan to cape Verde to finance its poverty reduction programme. This additional budget support loan is the AFDB’s response to the economic impact of the financial crisis on cape Verde. The loan will strengthen public finance management, as well as improve the business climate-the two components of its poverty Reduction Strategy Support Programme (PRSSP-II).
The impact of the economic and financial crisis has seriously affected the tourism sector, the engine of the country’s economic growth. According to fore- casts, the economic will persist in the second half of 2009 and in 2010. The budget support is designed to stimulate growth while enabling the government to continue implementing its economic and institutional reform programme.
Edun made the call while speaking at the 2025 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, where he reaffirmed the federal government’s commitment to sustaining ongoing reforms and expanding access to finance as key drivers of economic growth beyond four per cent.
“We all know that monetary policy under Cardoso has stabilised the financial system in a most commendable way. Of course, it is a team effort, and those eye-watering interest rates have to be paid by the fiscal side. But the fight against inflation is one we all have to participate in,” he said.
The minister stressed the need for banks to broaden credit access and finance innovation-driven enterprises that can create jobs for young Nigerians.
“The finance and banking industry has more work to do because we must finance their ideas, deepen the capital and credit markets down to SMEs. They should not have to go to Silicon Valley,” he said.
The minister who described the private sector as the engine of growth, said the government’s reform agenda aims to create an enabling environment where businesses can thrive, access funding, and contribute meaningfully to job creation.
The facility, known as the Nigeria Actions for Investment and Jobs Acceleration (P512892), is a Development Policy Financing (DPF) operation scheduled for World Bank Board consideration on December 16, 2025.
According to the Bank’s concept note , the financing would comprise $500m in International Development Association (IDA) credit and $500m in International Bank for Reconstruction and Development (IBRD) loan.
If approved, it would be the second-largest single loan Nigeria has received from the World Bank under President Bola Tinubu’s administration, following the $1.5 billion facility granted in June 2024 under the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative.
The World Bank said the new programme aims to support Nigeria’s shift from short-term macroeconomic stabilisation to sustainable, private sector–led growth.
“The proposed Development Policy Financing (DPF) supports Nigeria’s pivot from stabilization to inclusive growth and job creation. Structured as a two-tranche standalone operation of US$1.0 billion (US$500 million IDA credit and US$500 million IBRD loan), it seeks to catalyse private sector–led investment by expanding access to credit, deepening capital markets and digital services, easing inflationary pressures, and promoting export diversification,” the document read.
The document further stated that Nigeria’s private sector credit-to-GDP ratio stood at only 21.3 per cent in 2024, significantly below that of emerging-market peers, while capital markets remain shallow, with sovereign securities dominating the bond market.
To address these weaknesses, the DPF will support the implementation of the Investment and Securities Act 2025, operationalisation of credit-enhancement facilities, and introduction of a comprehensive Central Bank of Nigeria rulebook to strengthen risk-based regulation and consumer protection.
The operation also includes measures to deepen digital inclusion through the passage of the National Digital Economy and E-Governance Bill 2025, which will establish a legal framework for electronic transactions, authentication services, and digital records.
Beyond the financial and digital sectors, the programme targets reforms to lower production and living costs by tackling Nigeria’s restrictive trade regime. High tariffs and import bans have long driven up consumer prices and constrained competitiveness, particularly for manufacturers and farmers.
Under the proposed reforms, Nigeria would adopt AfCFTA tariff concessions, rationalise import restrictions, and simplify agricultural seed certification to increase the supply of high-quality varieties for maize, rice, and soybeans. The World Bank projects that these measures will help reduce food inflation, attract private investment, and enhance export potential.
The operation is part of a broader World Bank FY26 package that includes three complementary projects—Fostering Inclusive Finance for MSMEs (FINCLUDE), Building Resilient Digital Infrastructure for Growth (BRIDGE), and Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW)—all focused on expanding access to finance, strengthening institutions, and mobilising private capital.