Phillipe Valahu, Chief Executive Officer of the Private Infrastructure Development Group, has emphasised the need to unlock domestic institutional capital to drive infrastructure development in Nigeria, highlighting credit enhancement, regulatory reform, and stronger project preparation as critical enablers.

In an interview, Valahu outlined how innovative financing tools and public-private partnerships (PPPs) can bridge Nigeria’s infrastructure funding gap while aligning with national development priorities.

Credit Enhancement Driving Investment

Valahu explained that many infrastructure projects in Nigeria face a “rating gap,” where viable projects are considered too risky for institutional investors like pension funds.

He noted that credit enhancement mechanisms, such as guarantees provided by entities like InfraCredit, help bridge this gap by assigning higher credit ratings to projects.

This approach enables three key outcomes:

• Credit substitution, where projects inherit stronger credit ratings
• Longer financing tenors, extending funding from typical five-year bank loans to 15–20 years
• Reduced foreign exchange risk through local currency financing

“These mechanisms make infrastructure investments more attractive and aligned with long-term funding structures,” he said.

Aligning with Nigeria’s Green Finance Agenda

Speaking on Nigeria’s Sovereign Green Bond issued in June 2025, Valahu described it as a significant step toward financing the country’s Energy Transition Plan.

However, he stressed that sovereign funding alone is insufficient.

“Scaling infrastructure financing requires more bankable private-sector projects and deeper participation from domestic investors,” he said.

PIDG, he added, is focused on supporting private-sector participation through technical assistance, concessional funding, and credit enhancement tools to boost investment in renewable energy, transport, and climate-resilient infrastructure.

Mobilising Africa’s $2 Trillion Domestic Capital

Valahu confirmed ongoing collaboration with the African Development Bank Group to mobilise domestic capital across Africa, including pension funds, insurance assets, and sovereign wealth funds.

He noted that efforts are underway to establish additional credit enhancement facilities across West and Southern Africa, with expected progress in the coming months.

Barriers to Unlocking Nigerian Capital

According to Valahu, three major barriers continue to limit infrastructure investment in Nigeria:

• Regulatory constraints, including limits on pension fund exposure
• Capacity gaps among local financial institutions
• Perceived investment risks

He cited data showing infrastructure debt default rates in Africa remain relatively low, arguing that the sector is often misclassified as high-risk.

Shift from Aid to Investment Mobilisation

Valahu called for a shift in global development finance from reliance on aid to a mobilisation model that attracts private capital.

He emphasised that public funds should be used strategically to unlock larger pools of private investment, noting that domestic capital in Africa remains underutilised due to regulatory and structural limitations.

Fixing PPP Challenges in Nigeria

On public-private partnerships, Valahu identified weak project preparation as a major reason many infrastructure deals fail to reach financial close.

He listed common issues including:

• Poor feasibility studies
• Unclear risk allocation
• Weak institutional capacity
• Misalignment with investor requirements

He noted that improving early-stage project design, strengthening transaction structuring, and incorporating blended finance solutions are essential to delivering bankable projects.

Outlook

Valahu maintained that Nigeria has strong potential to attract infrastructure investment if it can unlock domestic capital, strengthen regulatory frameworks, and improve project preparation standards.

He concluded that a coordinated approach involving government, investors, and development institutions will be key to accelerating infrastructure delivery and supporting long-term economic growth.

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