The United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF) works to improve climate awareness across key infrastructure agencies in Nigeria. Our interventions are designed to promote and support Nigeria’s transition to a low carbon climate resilient approach to the planning and implementation of infrastructure projects. This blog examines how through technical assistance provided by UKNIAF’s Infrastructure Finance (IF) Component, UKAID has established a $7bn pipeline of infrastructure projects for private sector participation and investment in Nigeria.
Access to Finance plays a key role in the Government of Nigeria’s efforts to plan, build, maintain, repair, or replace critical infrastructure. Doing this in a climate smart manner is critical to aligning with the principles espoused in the Build Back Better World (B3W) initiative that serves as key pillar of UKAID. The key mechanism UKNIAF has established to do this is the development of a credible pipeline of climate-smart projects that can be structured and positioned for finance and private sector investment.
At the inception of the programme in October 2019, UKNIAF committed to developing a $3 billion pipeline of infrastructure public-private partnership projects (PPP). In addition to this ambitious target, the team committed to working towards attracting a third of this value in private sector financing by the time the programme closes in Q3 2023.
In keeping with the programme’s inclusive and sustainable development focus, UKNIAF adopted a “people first” and climate sensitive approach to the design of its Infrastructure Finance interventions. With these dual objectives in mind IF initiated its strategies, tools, and guiding approaches to screening, prioritising and developing climate smart infrastructure projects with a view to ensuring that it was socially inclusive, climate sensitive, and aimed at alleviating poverty. Using the Project Screening Tool developed by the team, IF screened over 160 projects from the pipeline of projects published by the Infrastructure Concession & Regulatory Commission – Nigeria’s PPP Regulator, to establish a shortlist of projects that met the climate, poverty, and socially inclusive criteria for investment and TA support. Eleven of the screened projects met these criteria, and also demonstrated the potential to attract finance. The shortlisted projects were pitched to a panel of institutional investors including CDC, PIDG, Africa50, African Development Bank, World Bank, Afreximbank and others between July 2020 and February 2021, with varying degrees of interest established.
Following a change in the programme in early 2021 to reflect the impact of the pandemic on the UKAID budget, the project pipeline was resized to $2 billion, as support for the $1.2 billion Highway Development & Management Initiative – one of the eleven projects on the UKNIAF pipeline had to be dropped to reflect the need for all UKNIAF IF interventions to be 100% aligned with the programme’s climate focus.
Over the last six months, in further evidence of the critical role UKNIAF is playing to support FGN’s transition towards low carbon and climate resilient infrastructure, an additional 167 projects from a range of FG agencies have been screened and assessed using UKNIAF’s Project Screening Tool. This has produced a shortlist of 18 climate-smart projects across multiple sectors, with estimated project value of over $5bn that meet UKNIAF’s criteria for investment, which has grown UKNIAF’s pipeline of climate-smart projects to about $7bn.
Beyond the development of climate-smart infrastructure pipelines, the IF team is supporting the delivery of Phase 1 of the $540m Special Agro-Industrial Processing Zones Programme funded by the AfDB and its co-financiers IFAD and IsDB. As part of this, the team is supporting Oyo State and Kaduna State to meet the requirements to draw down about $80 million in committed support to help progress these projects to procurement phase. This is the next step in the process expected to crowd in an estimated $320m in private sector investment for the delivery of these special agro-industrial zones.
Gori Olusina Daniel is Infrastructure Finance Component Lead at UKNIAF, which is committed to supporting Nigeria’s transition towards low carbon, climate-resilient infrastructure planning and implementation.