The Africa Finance Corporation (AFC) has launched a new infrastructure and climate-resilient fund aimed at mobilising domestic institutional capital for Nigeria's infrastructure development. The fund, announced on August 25, 2026, seeks to address the country's infrastructure deficit while integrating climate resilience into project planning and execution.
Fund Objectives and Structure
The fund is designed to channel investments into projects that withstand climate-related risks, such as flooding, erosion, and extreme weather events. AFC, a pan-African multilateral development finance institution, will leverage its expertise to structure and manage the fund, targeting Nigerian pension funds, insurance companies, and other institutional investors as key capital sources.
According to AFC, the initiative responds to the growing need for climate-adaptive infrastructure in Nigeria, where rapid urbanisation and climate change pose significant threats to existing and planned assets. The fund will prioritise sectors including transportation, energy, water, and digital infrastructure, ensuring that new projects are built to last under changing climatic conditions.
Mobilising Domestic Capital
A key feature of the fund is its focus on mobilising domestic institutional capital, which remains underutilised in Nigerian infrastructure financing. By partnering with local financial institutions, AFC aims to reduce reliance on foreign currency-denominated debt and strengthen the naira's role in long-term project funding.
The corporation noted that domestic investors have shown increasing interest in infrastructure assets, driven by their stable, long-term returns and alignment with national development goals. The fund will offer tailored investment vehicles that meet the risk-return expectations of pension funds and insurers, while also supporting the federal government's infrastructure priorities.
Climate Resilience and Sustainable Development
Climate resilience is a central pillar of the fund's investment strategy. AFC will apply rigorous environmental and social standards to all projects, ensuring that they incorporate climate adaptation measures such as flood defences, heat-resistant materials, and sustainable drainage systems.
The launch comes as Nigeria faces growing pressure to meet its climate commitments under the Paris Agreement, while also addressing a significant infrastructure financing gap estimated at billions of dollars annually. AFC's new fund is expected to contribute to bridging this gap by providing a dedicated vehicle for climate-smart investments.
Impact and Next Steps
The fund is expected to catalyse private sector participation in infrastructure development, creating jobs and improving service delivery across the country. AFC will work with the Nigerian government, development partners, and local financial institutions to identify bankable projects and ensure effective deployment of capital.
In the coming months, the corporation plans to hold roadshows and investor briefings to attract commitments from domestic institutional investors. The successful mobilisation of these funds could set a precedent for other African countries seeking to finance climate-resilient infrastructure through local capital markets.
