On July 19, 2024, in Abidjan, the Board of Directors of the African Development Bank (AfDB) approved a significant loan of $500 million to the Federal Republic of Nigeria.
This funding will support the first phase of the Economic Transition, Governance, and Energy Support Program (EGET-SP), a new initiative aimed at accelerating the transformation of the country’s electrical infrastructure and improving access to cleaner energy sources.
Addressing Federal Budget Shortfalls and Supporting Energy Legislation
This loan is designed to bridge the funding gap in the federal budget for the fiscal year 2024-2025. Specifically, it will aid in the implementation of Nigeria’s new Electricity Law and the country’s Energy Transition Plan.
Nigeria’s government introduced an Energy Transition Plan in August 2022 and passed a new Electricity Law in June 2023.
This legislation decentralizes the electricity supply industry and sets the stage for increased investment from subnational authorities and the private sector.
Goals of the Energy Transition Plan
The Energy Transition Plan aims to develop an installed electricity capacity of 250 gigawatts (GW) by 2050, with 90% of this capacity derived from renewable sources.
By 2030, the plan seeks to provide clean cooking solutions to the majority of the population through liquefied petroleum gas (LPG), biogas, biofuels like ethanol, and electric stoves.
The EGET-SP will support these policies, contributing to the much-needed enhancement of Nigeria’s electrical infrastructure. This will facilitate the transition of millions of households and businesses to cleaner and renewable energy sources.
Supporting Economic Growth and Climate Action
The $500 million support from the African Development Bank is part of a broader series of initiatives aimed at bolstering Nigeria’s economic growth, reducing poverty, and addressing climate change challenges.
The EGET-SP aligns with the Bank’s new Decadal Strategy 2024-2033, its operational priorities known as the “High 5s,” and the New Deal on Energy for Africa, which aims to achieve universal access to modern energy by 2030.
As of July 2024, the African Development Bank’s active portfolio for Nigeria is approximately $4.4 billion, reflecting its ongoing commitment to the country’s development and energy needs.