The Role of Development Finance Institutions (DFIs) in Supporting Renewable Energy Projects in Nigeria
DOI:
https://doi.org/10.54536/ajhrpa.v1i1.7050Keywords:
Blended Finance, Development Finance Institutions, Green Transition, Policy Reform, Renewable EnergyAbstract
The green transition is essential for achieving sustainable development, particularly in developing economies like Nigeria that are highly vulnerable to the impacts of climate change. In Nigeria, where energy access remains a critical development challenge, renewable energy provides a viable pathway toward inclusive, climate-resilient growth. This study examines the catalytic role of Development Finance Institutions (DFIs) in financing renewable energy projects in Nigeria. Anchored on Development Finance Theory and Public Goods Theory, This study investigates the role of Development Finance Institutions (DFIs) in accelerating Nigeria’s renewable energy transition by financing clean energy projects. Utilizing a mixed-method approach that combines empirical data analysis, case studies, and policy document reviews, the study focuses on key DFIs such as the Bank of Industry (BOI), African Development Bank (AfDB), and the World Bank. Findings reveal that DFIs have employed innovative instruments—including blended finance, concessional loans, technical assistance, and performance-based grants—to address market failures and mobilize private sector investments. Evidence from six DFI-supported project sites indicates substantial socio-economic benefits, such as reduced energy costs, improved household productivity, and expanded educational opportunities. Nonetheless, challenges persist, particularly in areas such as project bankability, regulatory uncertainty, limited local currency financing, and weak private sector participation. The paper concludes that DFIs play a pivotal role in de-risking renewable energy investments and expanding clean energy access, especially in underserved regions. To enhance their impact, policy recommendations include scaling up local currency lending, strengthening public-private partnerships, and promoting regulatory reforms that foster investor confidence and long-term sustainability.
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Copyright (c) 2026 Olurotimi David Aduloju, Lydia Olufunmilayo Adedotun, Adewale Kayode Adedotun, Anthony Adebayo Taiwo (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
