AfDB Approves $500 million Loan for Nigeria’s Economic Reforms and Energy Transition

The African Development Bank Group has approved a $500 million loan to the Federal Government of Nigeria to finance the second phase of the Economic Governance and Energy Transition Support Programme.

This was disclosed in a statement by the Bank on Wednesday after its Board of Directors met in Abidjan, Côte d’Ivoire.

According to the statement, the policy-based operation covers the 2024 and 2025 fiscal years and aims to stimulate inclusive growth through accelerated structural reforms, particularly in fiscal policy and the energy sector.

“The second phase of the programme aims to stimulate inclusive growth by accelerating structural reforms in the energy sector, while supporting progressive reforms of fiscal policy to boost non-oil revenues and expand fiscal space,” said Abdul Kamara, Director General of the AfDB Group’s Nigeria office.

The programme is designed to consolidate gains made under the first phase, which focused on stabilising fiscal operations and initiating reforms in the energy sector.

Focus areas for reform and transition 

The AfDB stated that the intervention would focus on three key areas.

First, it will deepen Nigeria’s fiscal policy reforms by strengthening public financial management and enhancing transparency and efficiency in government spending. This is expected to help Nigeria increase its non-oil revenues and reduce fiscal risks.

Second, the programme will accelerate reforms in the power sector, with an emphasis on reducing energy poverty, expanding access to reliable electricity, improving governance structures, and attracting private sector investment into the energy value chain. Nigeria’s power sector has struggled with low generation capacity, poor transmission infrastructure, and weak market structures, which the AfDB hopes to address through this support.

Third, the facility will support Nigeria’s energy transition by backing the implementation of the National Energy Transition Plan. This includes promoting climate change adaptation and mitigation strategies, such as the introduction of energy-efficiency standards for electrical appliances. The plan also involves updating Nigeria’s Nationally Determined Contribution (NDC) targets for the 2026–2030 period.

The policy-based loan is intended to provide budget support, helping the government carry out these reforms while cushioning the fiscal impact. It also aligns with the broader macroeconomic reform agenda being implemented by the current administration.

Key beneficiaries and implementation scope 

The direct beneficiaries of the programme include major institutions involved in Nigeria’s economic and energy policy. These are the Federal Ministry of Finance, Federal Inland Revenue Service, Office of the Auditor General, Debt Management Office, Federal Ministry of Power, National Climate Change Council (NCCC), Nigerian Electricity Regulatory Commission (NERC), and the Federal Ministry of the Environment.

According to the AfDB, the support will also benefit private businesses across the country by improving the investment climate, particularly in the energy sector, and facilitating public-private partnerships at the subnational level.

The programme is expected to contribute to fiscal consolidation, macroeconomic stability, and energy security, which remain key challenges facing Nigeria. These reforms are also critical for restoring investor confidence and attracting long-term financing for infrastructure and green energy projects.

As of 31 October 2025, the AfDB’s active portfolio in Nigeria consisted of 52 projects valued at $5.1 billion. These projects span infrastructure, agriculture, governance, energy, and private sector development.