Nigeria is turning to commercial banks and private investors to help close a $20.5 billion funding gap needed to improve electricity access and expand renewable energy across the country.

The funding gap was disclosed by the Managing Director of the Rural Electrification Agency (REA), Abba Abubakar Aliyu, who said Nigeria requires about $23 billion to address its electricity deficit but has so far secured less than $2.5 billion.

As the government looks for new sources of financing, Nigerian banks are beginning to increase their involvement in renewable energy projects. The latest move is a ₦50 billion financing facility agreed between the REA and Alpha Morgan Bank to support renewable-energy developers working on projects in underserved communities.

Under the arrangement, eligible developers can access up to ₦10 billion each, with the bank providing as much as 70% counterpart funding for qualifying projects. The financing will particularly support projects under the Distributed Access through Renewable Energy Scale-up (DARES) programme, which is focused on expanding electricity access through renewable solutions such as mini-grids and other distributed energy systems.

The agreement follows other financing commitments from Nigerian banks, including Stanbic IBTC’s $100 million facility, Lotus Bank’s ₦100 billion commitment, and FCMB’s financing of about $188 million for renewable-energy projects.

The push for private financing comes as Nigeria continues to struggle with inadequate and unreliable electricity supply. At the same time, electricity demand is expected to rise as population growth, digitalisation, artificial intelligence, and data centres increase the country’s energy needs.

For Nigeria, bringing commercial banks into renewable-energy financing could help move more projects from planning to actual construction, particularly in communities that remain underserved by the national grid. It also signals a growing shift toward using private capital alongside government and development funding to expand the country’s renewable-energy infrastructure.

If the financing strategy succeeds, it could accelerate the deployment of solar and other distributed renewable-energy solutions while helping Nigeria reduce its electricity-access gap and build a more reliable power system.