Nigeria must leverage domestic capital to address its infrastructure deficit, according to Phillipe Valahu, Chief Executive Officer of the Private Infrastructure Development Group (PIDG). In an interview with Isaac Chibuife, Valahu highlighted the role of credit enhancement, climate finance, and public-private partnerships (PPPs) in driving sustainable development.
Credit Enhancement as a Catalyst
Valahu explained that infrastructure projects in Nigeria often face a rating gap, where technically sound projects carry low credit ratings unsuitable for pension funds. Credit enhancement facilities, such as InfraCredit, bridge this gap by providing AAA-rated guarantees. These guarantees cover non-payment risks, allowing for credit substitution, extended tenors of up to 15-20 years, and local currency loans that mitigate foreign exchange risks. This stimulates investment by aligning project financing with long-term revenue streams in Naira.
Aligning with Nigeria's Green Bond Programme
Nigeria's Sovereign Green Bond, issued in June 2025 to support its Energy Transition Plan, is a step forward, but Valahu stressed that sovereign issuance alone is insufficient. PIDG complements government efforts by strengthening private-sector projects through technical assistance, concessional capital, and credit enhancement. InfraCredit, for instance, helps unlock long-tenor, local-currency financing for renewable energy, transport, and climate-efficient infrastructure, enabling more private-sector green issuances.
Partnership with AfDB for Domestic Capital Mobilisation
PIDG is collaborating with the African Development Bank Group to mobilise domestic capital from sovereign wealth funds, pension schemes, and insurance assets, estimated at over $2 trillion across Africa. Valahu noted that efforts are underway in West and Southern Africa to establish additional credit enhancement facilities, with positive outcomes expected in the coming months.
Overcoming Structural Barriers
To unlock Nigerian institutional capital, Valahu identified three primary barriers: regulatory constraints, capacity gaps, and perceived risk. PENCOM limits infrastructure exposure, but PIDG works with regulators to demonstrate the low-risk nature of guaranteed bonds. Local banks and asset managers lack specialised skills for complex PPPs, so PIDG provides technical assistance and collaborative learning. Regarding perceived risk, Valahu cited Moody's data showing a 1.9% default rate for infrastructure debt in Africa, comparable to European rates, with high recovery rates.
Innovating Financial Architecture
Amid global aid cuts, Valahu emphasised moving from a traditional aid mindset to a mobilisation mindset, where every taxpayer dollar mobilises up to six dollars of private capital. He noted a shift from north-south to south-south capital mobilisation, but regulatory frameworks often hinder African institutional investors from funding local infrastructure. Addressing these gaps is crucial.
Improving PPP Structuring
Valahu observed that many PPPs in Africa stall due to weak early-stage preparation, including underdeveloped feasibility studies, unclear risk allocation, and limited institutional capacity. PIDG supports upstream design, pre-feasibility funding, transaction structuring, and debt guarantees. For commercially challenging projects, concessional capital can bridge viability gaps and crowd in private finance, moving projects from concept to bankable reality faster.
