African Development-Bank
Abayomi Susan
The African Development Bank (AfDB) has endorsed the second phase of Nigeria’s Economic Governance and Energy Transition Support Programme with a $500 million financing package, designed to strengthen public finances and advance energy sector reforms.
The approval, announced in a statement after the Bank’s Board of Directors met in Abidjan, Côte d’Ivoire, signals growing confidence from multilateral lenders in Nigeria’s macroeconomic reform direction, even as the country continues to battle high inflation, revenue pressures and a fragile power sector.
As stated by the AfDB, the policy-based operation covers the 2024–2025 fiscal period and is designed to consolidate the early gains achieved under the first phase of the programme, which focused on restoring basic fiscal stability and initiating reforms in critical segments of the energy industry.
Abdul Kamara, director general of the AfDB Group’s Nigeria Country Department, said the intervention is expected to help Nigeria rebuild fiscal space, boost non-oil revenue, and advance the country’s transition toward cleaner, more efficient energy systems.
“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,” Kamara said.
Nigeria has been facing constrained public finances, characterised by high debt-service costs, limited non-oil revenues, and structural inefficiencies in public spending. The AfDB programme seeks to address these challenges by supporting reforms that strengthen public financial management, improve transparency, and reduce fiscal risks.
A key focus is improving the efficiency of government spending, an area where Nigeria has faced longstanding challenges due to leakages, weak procurement processes, and low audit compliance across ministries, departments and agencies (MDAs).
The intervention also aims to expand non-oil revenue mobilisation, a critical objective for a country where oil earnings are increasingly volatile and insufficient to support rising expenditure needs in infrastructure, health, education and social protection.
Nigeria’s power sector is plagued by structurally weak generation, dilapidated transmission infrastructure, liquidity shortages, and ineffective regulation, rendering its electricity supply profoundly unreliable. The AfDB loan is therefore designed to address these core issues, going beyond broader fiscal consolidation.
According to the AfDB, the programme’s key objectives are reducing energy poverty, improving electricity access, enhancing institutional governance, and attracting private investment.
