The International Monetary Fund (IMF) has called on Nigeria and other emerging economies to adopt blended finance models as a strategic tool to drive sustainable development, strengthen climate resilience, and bridge the financing gap in critical sectors such as energy, infrastructure, and agriculture.In its latest policy briefing released this week, the IMF noted that many low- and middle-income countries continue to face difficulties in attracting adequate investment for long-term sustainability projects. The Fund emphasized that blended finance — which combines public, private, and concessional funding — offers a viable path to mobilize large-scale resources and reduce investment risks in developing markets.
According to the IMF, countries like Nigeria, Ghana, Kenya, and South Africa have the potential to lead Africa’s transition toward sustainable financing if they create robust frameworks that integrate both domestic and foreign capital into green and social projects. The Fund stated that traditional financing alone cannot meet the scale of investment required to achieve the United Nations Sustainable Development Goals (SDGs) and Paris Climate Agreement targets by 2030.
The IMF’s report, titled “Innovative Finance for Emerging Economies,” highlights that sub-Saharan Africa faces an annual funding shortfall of more than $200 billion for climate adaptation and infrastructure. Nigeria, being the continent’s largest economy, is seen as a crucial player in spearheading regional efforts to attract private capital through well-structured blended finance initiatives.
“The time for African economies to rethink financing models is now,” the IMF stated. “By leveraging public and philanthropic funds to de-risk private investment, countries like Nigeria can unlock billions in new capital for sustainable growth.”
Experts say blended finance can enable governments to crowd in private investment by using concessional funding from international development agencies and climate funds to offset the higher risks associated with projects in developing markets. This model has already shown success in parts of Asia and Latin America, where renewable energy and infrastructure projects have benefited from similar structures.
The IMF advised Nigeria to strengthen its financial governance and policy frameworks to attract more climate-focused investments. It added that the establishment of a clear legal and institutional structure for blended finance would enhance transparency and encourage foreign participation in sustainable sectors.
Nigeria’s finance authorities have recently expressed interest in expanding partnerships with development banks and multilateral agencies to scale up climate financing and green investments. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has reiterated that the government is working with international partners to introduce innovative financing mechanisms that align with Nigeria’s energy transition plan and long-term sustainability objectives.
Edun recently stated that Nigeria is committed to balancing its economic growth ambitions with global environmental goals. “The Federal Government recognizes that blended finance will play a central role in achieving inclusive and sustainable development. We are focused on strengthening frameworks that allow private capital to participate effectively in this transformation,” he said.
Similarly, analysts from the African Development Bank (AfDB) and the World Bank have supported the IMF’s position, noting that blended finance is particularly suitable for economies facing fiscal pressures and high debt burdens. By combining public and private resources, they argue, countries can accelerate the implementation of renewable energy projects, improve infrastructure quality, and enhance social investments without increasing public debt.
Dr. Akinwumi Adesina, President of the AfDB, has also advocated for a broader use of blended finance tools across Africa. “We must crowd in private investment for Africa’s future. Blended finance is not charity; it is smart economics that aligns social impact with financial returns,” Adesina said in a recent statement.
Economists, however, caution that successful implementation requires political will, policy stability, and institutional transparency. They warn that corruption, bureaucratic inefficiencies, and weak project evaluation mechanisms could undermine the effectiveness of blended finance if not properly addressed.
According to Dr. Sarah Alade, a former deputy governor of the Central Bank of Nigeria, blended finance can only thrive if governments ensure accountability and create an enabling environment for investors. “Private sector confidence depends on clear policies, predictable returns, and minimal administrative barriers. Nigeria must prioritize these factors if it intends to attract sustainable capital,” she noted.
The IMF report concluded that if effectively implemented, blended finance could help developing nations like Nigeria reduce their dependence on external borrowing, build resilience to climate shocks, and stimulate inclusive economic growth. It also urged multilateral institutions, including the World Bank, AfDB, and regional development funds, to provide technical assistance to help countries design and execute blended finance frameworks.
As Nigeria continues its economic diversification efforts, the adoption of blended finance is expected to play a significant role in mobilizing long-term investments, boosting job creation, and advancing the nation’s sustainability agenda. With the global shift toward green and inclusive economies, experts believe that this approach could mark a turning point in Africa’s quest for self-sustaining growth and development.
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