Nigeria faces a major challenge in funding the infrastructure it needs for growth. According to Philippe Valahu, Chief Executive Officer of Private Infrastructure Development Group, attracting private investment is key to solving this problem. In a recent discussion, he explained how financial tools, partnerships, and policy changes can help unlock funding for development projects across the country.
One of the main barriers to infrastructure investment in Nigeria is the “credit rating gap.” Many projects are technically strong but considered too risky for investors like pension funds. These funds are required to avoid high-risk investments. To solve this, credit enhancement tools—such as guarantees—are used. For example, organisations like InfraCredit provide high-quality guarantees that improve a project’s credit rating. This makes it safer and more attractive to investors.
Credit enhancement also allows projects to access long-term funding. While banks may only offer loans for about five years, guaranteed bonds can extend repayment periods to 15 or even 20 years. This matches the long lifespan of infrastructure projects. In addition, using local currency financing helps reduce foreign exchange risks, ensuring projects earning in naira can repay loans in the same currency.
Nigeria has also taken steps toward climate-friendly financing. In June 2025, the government issued a Sovereign Green Bond to support its plan to achieve net-zero emissions by 2060. While this is a positive move, Valahu noted that government funding alone is not enough. More private-sector participation is needed. PIDG supports this by helping develop investment-ready projects and offering financial tools that meet the needs of institutional investors like pension funds and insurance companies.
PIDG is also working with the African Development Bank Group to mobilise domestic capital across Africa. The goal is to tap into over $2 trillion held in savings, pensions, and insurance funds. Efforts are ongoing to create more credit enhancement facilities, which could significantly increase investment in infrastructure, especially in West Africa.
However, several challenges still limit investment in Nigeria. First, strict regulations from National Pension Commission restrict how much pension funds can invest in infrastructure. Second, there is a shortage of local expertise needed to evaluate complex projects. Third, many investors still see infrastructure as too risky, despite evidence showing relatively low default rates.
Globally, there is also a shift in how development finance works. Instead of relying only on aid from developed countries, there is now a focus on using public funds to attract private investment. Valahu stressed that every dollar of public money should aim to bring in multiple dollars from private investors. He also highlighted the growing importance of “south-to-south” investment, where African investors fund projects within the continent.
Public-private partnerships (PPPs) are another important tool, but many projects in Africa fail to reach completion. Common problems include weak planning, unclear risk-sharing, and lack of preparation. PIDG helps address these issues by supporting project design, funding early-stage studies, and improving financial structures.
