Phillipe Valahu, Chief Executive Officer of the Private Infrastructure Development Group (PIDG), has highlighted the critical role of credit enhancement, domestic capital mobilisation, and stronger public-private partnership (PPP) frameworks in addressing Nigeria’s infrastructure financing gap.
Speaking in an interview with Isaac Chibuife, Valahu explained that while Nigeria has viable infrastructure projects, many struggle to attract investment due to low credit ratings that fall below the thresholds required by institutional investors such as pension funds.
According to him, credit enhancement facilities help bridge this gap by improving the risk profile of projects. Instruments such as guarantees enable infrastructure assets to achieve higher credit ratings, making them more attractive to conservative investors.
He noted that these mechanisms also allow for longer financing tenors, aligning funding structures with the lifecycle of infrastructure projects. In addition, local currency financing helps mitigate foreign exchange risks by ensuring that projects earning revenue in naira are not exposed to currency volatility.
On climate financing, Valahu described Nigeria’s Sovereign Green Bond issuance as a significant step toward funding its energy transition agenda. However, he stressed that government-led funding alone would not be sufficient to meet the scale of investment required.
He said PIDG is working to complement public financing efforts by supporting the development of bankable private-sector projects and enabling greater participation from domestic institutional investors. Through tools such as technical assistance, concessional capital, and credit guarantees, the organisation aims to support investments in renewable energy, transport, and climate-resilient infrastructure.
Valahu also highlighted ongoing collaboration with the African Development Bank Group to mobilise domestic capital across Africa. He noted that the initiative focuses on leveraging pension funds, sovereign wealth funds, and insurance assets, which collectively represent a significant pool of long-term capital.
He expressed optimism that new credit enhancement platforms being explored in West and Southern Africa would further unlock investment into infrastructure projects in the coming months.
Addressing barriers to domestic capital mobilisation in Nigeria, Valahu identified three key constraints: regulatory limitations, capacity gaps, and perceived investment risks.
He explained that pension fund regulations currently limit exposure to infrastructure assets, although efforts are ongoing to demonstrate that properly structured, guaranteed instruments can meet low-risk investment criteria.
He also pointed to a shortage of technical expertise among local financial institutions in assessing complex PPP transactions. PIDG, he said, is addressing this through capacity-building initiatives and transaction-level collaboration.
On risk perception, Valahu cited data indicating that infrastructure debt in Africa has relatively low default rates, comparable to those in developed markets, suggesting that the asset class may be less risky than commonly assumed.
Commenting on the broader financing landscape, Valahu called for a shift from traditional aid models to a mobilisation-driven approach that prioritises attracting private capital. He emphasised that public funds should be used strategically to crowd in significantly larger volumes of private investment.
He added that while cross-border capital flows remain important, there is increasing potential for “south-to-south” investment, particularly from African institutional investors. However, regulatory gaps continue to limit the ability of such capital to flow into infrastructure projects.
On Nigeria’s updated PPP framework under the Infrastructure Concession Regulatory Commission (ICRC), Valahu acknowledged the government’s efforts to accelerate project delivery but warned that structural weaknesses persist in many projects across Africa.
He identified common challenges, including weak feasibility studies, unclear risk allocation, and limited institutional capacity, which often delay projects before they reach financial close.
To address these issues, he stressed the need for stronger project preparation, clearer contractual frameworks, and the strategic use of blended finance to make projects more commercially viable.
Valahu concluded that improving early-stage project design and aligning infrastructure proposals with investor expectations would be critical to accelerating delivery and attracting long-term capital into Nigeria’s infrastructure sector.
