Tosin Ajakaiye
Nigeria’s infrastructure challenge is no longer defined by a lack of ambition but by capital deployed inefficiently. Decades of reliance on public budgets, sovereign borrowing, and bilateral aid have produced abandoned projects, underperforming assets, and widening deficits. Roads that lead nowhere and power plants that never come online are not failures of intent; they are failures of structure.
What is changing is how infrastructure is financed. Nigeria is transitioning from fragmented, debt-heavy models toward a coordinated ecosystem of project finance instruments designed to attract private capital, manage risk, and deliver measurable economic outcomes. At the centre of this shift is a strategic architecture that blends public finance, private investment, development capital, Islamic finance, and philanthropy into a coherent framework.
The underlying insight is simple: emerging markets are not short of capital; they are short of bankable structures.
Infrastructure financing fails when capital is deployed without coordination. Ministries compete for budgetary allocations, projects lack clear revenue models, and private investors hesitate in the face of policy uncertainty.
Nigeria’s response is the Integrated National Financing Framework (INFF). It is a governance and coordination mechanism designed to align public, private, domestic, and international finance within a single national strategy.
Built on four pillars, assessment and diagnostics, financing strategy, monitoring and review, and governance, the INFF reframes infrastructure financing as a system rather than a series of isolated transactions. Instead of competing for scarce funds, capital is pooled and structured through blended finance, development institutions, export credit agencies, Islamic finance, and impact investors. One of the execution tools of the INFF is the NIFI.
Frameworks don’t build infrastructure. Institutions do. They structure risk and mobilise long-term capital.
Nigeria’s ecosystem rests on three anchors.
NSIA is the institutional architect. Through the Nigeria Infrastructure Fund, it invests in power, healthcare, transport, and agriculture. Its catalytic model unlocks private finance while avoiding unsustainable debt.
InfraCorp is the project catalyst. Co-owned by the Central Bank, Africa Finance Corporation, and NSIA, it focuses on preparing large-scale, investment-ready projects. By fixing weak pipelines, it tackles one of Africa’s toughest constraints: the shortage of bankable deals.
Complementing this is InfraCredit, Nigeria’s credit enhancement institution. By providing local-currency guarantees, InfraCredit improves the credit quality of infrastructure debt, enabling pension funds and insurance companies to invest in long-term naira-denominated projects. In doing so, it mitigates political and construction risk while mobilising domestic institutional capital.
Together, these institutions translate financing strategy into delivery.
Most importantly, Islamic finance has moved from the margins to the mainstream of Nigeria’s infrastructure strategy. Its principles – asset-backing, risk-sharing, and discipline against speculative excess – align naturally with long-term infrastructure development.
Sukuk issuances by Nigeria’s Debt Management Office demonstrate how Islamic instruments can fund ring-fenced projects with enhanced transparency and accountability. By linking capital directly to physical assets, Sukuk structures reduce the risk of diversion and project abandonment.
The adoption of AAOIFI standards by the Financial Reporting Council has strengthened regulatory clarity, placing Islamic instruments on equal footing with conventional finance. This clarity has broadened investor participation and reinforced market confidence.
Islamic finance embeds shared risk. Capital providers and sponsors keep “skin in the game”, aligning incentives and strengthening governance.
Nigeria is reframing philanthropy and faith-based finance as strategic tools for infrastructure. Zakat and Waqf are now positioned as social investment capital within the INFF framework.
Innovations like those ones preserve endowments while channeling returns into community projects. When used as first-loss or zero-interest capital, philanthropic funds absorb early risk, making projects more attractive to commercial lenders. Philanthropy shifts from one-off spending to leverage.
The common thread is blended finance, layering catalytic and commercial capital to balance risk and return.
At the base of the capital stack sits concessional or impact-oriented capital willing to accept lower returns for social outcomes. Above it sits commercial capital requiring market-rate returns and robust risk mitigation. By combining these layers, high-risk projects become investable. A relatively small first-loss contribution can unlock multiples of private financing, stretching scarce public resources while crowding in long-term capital.
What comes next?
For this architecture to reach full potential, regulatory frameworks across Sukuk, PPPs, and sub-national finance must be harmonised. States require support to build investment-ready pipelines. Domestic institutional investors, particularly pension funds, must be further integrated through sustained credit enhancement mechanisms.
Nigeria’s infrastructure deficit will not be solved by a single instrument. Its solution lies in governance, coordination, and intelligent capital structuring.
By institutionalising diverse financing models within a coherent framework, Nigeria is moving toward infrastructure that is bankable, inclusive, and economically transformative. In emerging markets, that is not merely financial innovation – it is a development imperative.
Tosin Ajakaiye is a construction lawyer and MBA graduate specialising in the intersection of law, finance, and infrastructure, with expertise in contract structuring, risk management, and ESG-driven investment.
Source: Businessday.ng | Read the Full Story…
