AfDB rolls out $11.3m clean energy fund to power Nigeria, underserved African communities

NIGERIA is among 14 African countries set to gain from a new $11.3 million renewable energy financing programme approved by the African Development Bank (AfDB), in a move designed to deepen electricity access in some of the continent’s most energy-deprived and fragile regions. The initiative targets communities that remain largely cut off from national grids, where unreliable power continues to limit economic activity and quality of life.

At the heart of the programme is a financing structure built around Peace Renewable Energy Certificates (P-RECs), which will be used to support the development and expansion of mini-grid infrastructure. The bank estimates that the intervention could deliver electricity to roughly 856,000 people, while also creating a more predictable funding pipeline for developers operating in difficult investment environments.

The fund itself is structured as a blended financing vehicle, with the AfDB committing $5.65 million in grant funding, matched one-for-one by the Nordic Development Fund. This co-financing approach reflects a growing trend among development institutions to pool concessional capital in order to de-risk projects and crowd in private sector participation.

Execution of the programme will be handled by Camco Clean Energy alongside Energy Peace Partners, the organisation behind the P-REC concept. Together, they will manage the facility and coordinate investments across multiple frontier markets where access to traditional financing remains severely constrained.

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Unlike conventional project financing, the model introduces a system where renewable energy certificates generated by small-scale projects are monetised upfront. These certificates are then sold voluntarily to multinational corporations seeking to meet environmental, social, and governance (ESG) targets, effectively turning sustainability commitments into a direct funding source for electrification projects.

Through long-term offtake agreements, the facility will purchase future P-REC outputs from mini-grid developers across countries including Nigeria, Democratic Republic of Congo, Ethiopia, Liberia, Sierra Leone, and South Sudan, among others. This arrangement enables developers to secure early-stage capital in exchange for future certificate revenues, an approach that helps address one of the biggest bottlenecks in the sector, which is liquidity.

For Nigeria, the implications could be significant. Despite being Africa’s largest economy, the country continues to grapple with chronic electricity shortages, with millions of households and businesses relying on costly and polluting alternatives. Off-grid and mini-grid solutions have increasingly been viewed as a practical pathway to closing this gap, particularly in rural and peri-urban areas where grid extension is economically unviable.

Industry observers say the availability of non-dilutive, low-cost funding through mechanisms like the P-REC facility could accelerate deployment timelines and improve project bankability. By reducing reliance on expensive commercial debt or equity dilution, developers may be better positioned to scale operations and reach more communities.

The AfDB maintains that inadequate access to finance remains a central challenge to achieving universal energy access across Africa, especially in conflict-affected and high-risk markets where investor appetite is limited. The P-REC Aggregation Facility is therefore being positioned as a market-led solution that not only bridges financing gaps but also aligns public and private sector incentives.

João Duarte Cunha, who oversees the bank’s Renewable Energy Funds Division, noted that the initiative fits squarely within the AfDB’s broader push to expand energy access on the continent. He emphasised that innovative financing mechanisms will be critical in unlocking progress in regions where conventional funding models have struggled to deliver results.

Nigeria is hard hit by electricity crisis. The number of people without access to electricity in Nigeria stood at 86.8 million, the highest world-wide, according to the World Bank 2025 report.

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The World Bank report further noted that 61 percent of the Nigerian population had access to electricity and 26 percent had access to clean cooking energy in 2023.

The report said, “In 2023, the 20 countries with the largest electricity access deficits accounted for 76 percent of the global total, up from 75 percent in 2022. Once again, 18 of these countries are in Sub-Saharan Africa.”