Nigeria needs $23bn to fix power sector — REA boss
August 21, 2026 4:49 pm
Managing Director, Rural Electrification Agency, Dr Abba Aliyu
Nigeria’s electricity challenge could deepen as population growth, artificial intelligence, digitalisation and the increasing electrification of transportation, agriculture and other sectors drive an unprecedented rise in demand, the Rural Electrification Agency has warned.
The Managing Director of the REA, Abba Aliyu, gave the warning on Friday in Abuja during the signing of a collaboration agreement between the agency and Alpha Morgan Bank, which committed up to N50bn in financing for renewable energy developers.
Aliyu said the agreement was part of efforts to close the huge financing gap confronting Nigeria’s electricity sector, particularly in rural and underserved communities where millions of households and businesses remain without reliable access to power.
Under the arrangement, eligible developers participating in REA programmes, including the Distributed Access through Renewable Energy Scale-up project, will be able to access revolving loans of up to N10bn each, subject to the bank’s credit assessment and approval.
Alpha Morgan Bank will provide up to 70 per cent counterpart funding for eligible projects, with proposed loan tenures ranging from 12 to 24 months.
However, Aliyu said the N50bn facility represented only a fraction of the financing required to address Nigeria’s electricity deficit, disclosing that the country required about $23bn in additional investment to improve electricity access and supply reliability.
He said, “Currently, this era is being termed as the era of electricity. Electricity is going to drive almost every single thing that we are going to do. Electricity will drive transportation, electricity will drive agriculture, electricity will drive health, education and everything we do.
“So, when you look at the future, three factors are going to be the main drivers of increasing electricity demand. Population growth is one. Beyond that, there are the two other factors: electrification of everything, digitisation, AI and data centres. And this is profound.
“This is one of the things that will make the need for electricity continue to grow drastically, beyond any level that we have seen.”
The REA boss said Nigeria’s population was growing faster than the rate at which electricity infrastructure was being expanded, worsening the country’s electricity access challenge.
He said the growing deployment of artificial intelligence and data centres would further increase pressure on electricity systems, arguing that reliable and affordable power would increasingly become a strategic economic advantage.
According to him, the global shift towards electricity was also accelerating investment in renewable energy as the cost of solar generation and battery storage continued to decline.
Aliyu said, “One of the things that keeps making renewable energy continue to grow and remain the fastest-growing source of electricity generation is that the cost of using solar to generate electricity has kept going down.
“This is going to continue because technology keeps improving, particularly in photovoltaic manufacturing and battery storage. Solar will continue to be a dominant source of electricity generation.”
He said several countries had already begun making massive investments in electricity infrastructure to support artificial intelligence, manufacturing and data centres.
According to him, Nigeria must also treat electricity as a strategic component of its infrastructure and economic development plans.
Aliyu said President Bola Tinubu had approved a $750m renewable energy intervention aimed at deploying 1,350 mini-grids and expanding electricity access to about 2.5 million Nigerians.
He said the programme was already in its second year of implementation.
However, the REA boss stressed that the available financing remained inadequate.
“But still, what is required to address the electricity challenge in Nigeria and to enhance reliability of supply is about $23bn. What we currently have is less than $2.5bn,” he stated.
He added that the agency was expecting an additional $119m in financing from the Japan International Cooperation Agency to support the deployment of interconnected and isolated mini-grids.
Aliyu said the REA had designed many of its interventions around a performance-based framework, under which private developers must meet agreed project milestones before accessing catalytic grants.
He explained that this created opportunities for Nigerian financial institutions to provide bridge financing that would enable developers to execute projects and unlock grant funding.
“We have seen how Nigerian local financing has moved from not knowing or not seeing renewable energy as an infrastructure project to now becoming active members of the financing ecosystem,” he said.
Aliyu also disclosed that the REA planned to launch the Renewable Energy Asset Management Company next week, describing it as a platform expected to become Africa’s largest renewable energy asset holder.
According to him, the proposed company will support the sustainability, operation and maintenance of renewable energy projects while helping to recycle capital and leverage existing assets to attract fresh private-sector financing.
“We currently have assets worth over $300m in various universities. We want to leverage those assets to raise more financing,” he said.
Aliyu further disclosed that Nigeria had developed a pipeline of about 3.7 gigawatts of local renewable energy manufacturing capacity, supported by investments estimated at $225m.
He said the expansion of renewable energy was also creating opportunities for equipment leasing companies, energy service firms, fintech operators and other businesses involved in revenue collection and project maintenance.
The REA boss added that the agency was close to completing 288MW of interconnected mini-grid projects, with commissioning expected to begin in November.
Speaking at the event, the Executive Director of Alpha Morgan Bank, Doyin Anyaehie, said the partnership was designed to address the financing gap that had prevented many viable renewable energy projects from progressing.
She said the bank’s decision to commit N50bn was driven by the need to translate discussions about Nigeria’s power deficit into practical interventions.
“We all know that Nigeria has electricity challenges, power challenges, and we thought to ourselves, what can we do? What part can we play, even if it seems to chip away at the monolithic problem of power?” Anyaehie said.
She added, “One of the major challenges is that the right financing structures are oftentimes absent, and nowhere is it more evident than in the power sector.
“When we talk about Nigeria’s power challenges, oftentimes we talk about them in numbers, in gigawatts and all of that. But oftentimes, we don’t drill it down to the human challenge, which is what it really is.”
According to her, unreliable electricity affects rural businesses, health facilities and schools and limits the ability of communities to improve their livelihoods.
“We thought that while we recognise that there is a financing gap, we cannot just stay on the sidelines and acknowledge that gap. We asked ourselves, what can we do?
“Our success is going to go beyond signing this MOU. The real success will be what we can look at one or two years from now and say: because we provided this financing, developers were able to build renewable energy projects and this is the impact that we can point to,” she said.
She added that the bank was willing to work with developers with viable projects and appropriate fundamentals, saying the partnership was ultimately aimed at unlocking businesses, improving healthcare and education, and expanding economic opportunities in underserved communities.
The agreement is expected to strengthen the link between public-sector interventions and private-sector finance as Nigeria seeks fresh capital to close its electricity access gap at a time when rising population, digitalisation and new technologies are expected to push power demand to new levels.
Damilola Aina is a journalist at Punch Newspapers with over five years of experience covering energy, business, investment, infrastructure, and property sectors. He specializes in producing well-researched and insightful reports that inform readers and provide clarity on complex topics. Damilola’s work demonstrates practical newsroom experience, editorial insight, and a strong commitment to accurate and engaging journalism.
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