The International Monetary Fund (IMF) has called on Nigeria and other developing countries to expand the use of blended finance mechanisms as a means of driving sustainable economic growth, bridging infrastructure gaps, and tackling climate change challenges. The global financial institution said the approach could unlock vast private sector capital to complement limited public resources and concessional funding.
In its latest policy paper, the IMF noted that many developing economies, including Nigeria, face rising debt pressures, limited fiscal space, and growing demands for infrastructure and social spending. It argued that blended finance — which strategically combines public, private, and philanthropic funds — offers a practical solution for mobilising capital toward critical sectors such as renewable energy, agriculture, and healthcare.
According to the IMF, global investment needs to meet the Sustainable Development Goals (SDGs) by 2030 exceed $4 trillion annually, but only a fraction of that is currently available through traditional financing. Blended finance, it said, could help de-risk projects in developing markets and attract more institutional investors by balancing financial returns with social and environmental outcomes.
Speaking on the findings, IMF Managing Director Kristalina Georgieva emphasised that blended finance has become an indispensable tool for achieving inclusive and sustainable development. She urged governments to develop transparent frameworks and regulatory reforms that would encourage partnerships between the public and private sectors.
“Developing countries like Nigeria must create enabling environments that allow private investors to participate confidently in large-scale projects. Blended finance can bridge the gap between ambition and affordability, particularly in infrastructure and clean energy,” Georgieva stated.
She also noted that the IMF is working with international partners, including the World Bank and African Development Bank (AfDB), to design country-specific blended finance strategies that align with national development plans.
Nigeria has recently shown growing interest in blended finance models, especially within its energy transition and infrastructure investment frameworks. The Federal Government’s Energy Transition Plan, which seeks to achieve net-zero emissions by 2060, relies heavily on public-private partnerships and concessional financing to fund renewable energy projects across the country.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, reaffirmed Nigeria’s commitment to leveraging innovative financial mechanisms to support inclusive growth. He explained that the country’s investment drive is now focused on attracting long-term capital for sectors that can generate employment and enhance productivity.
“We recognise that traditional public financing is no longer sufficient to meet our development needs. Through blended finance and strategic partnerships, we can de-risk vital sectors, attract investors, and ensure sustainable development,” Edun said.
He added that Nigeria is in talks with global development partners to strengthen frameworks for green bonds, climate financing, and infrastructure funds that can attract institutional investors.
Economists and financial experts have also supported the IMF’s call, noting that Nigeria’s development challenges require more innovative financing solutions. They argue that blended finance could provide the structure needed to mobilise dormant private capital toward impactful projects while ensuring accountability and measurable outcomes.
Dr. Amina Sadiq, a development finance analyst, said blended finance is especially relevant for Nigeria’s renewable energy and agricultural value chains, which remain underfunded despite their massive potential.
“Blended finance instruments — such as guarantees, first-loss capital, and concessional loans — can make high-impact projects more bankable. This will help Nigeria attract global investors who might otherwise shy away from perceived risks,” Sadiq explained.
She, however, cautioned that for blended finance to succeed, Nigeria must strengthen governance, ensure transparency in project selection, and improve coordination among key institutions.
The IMF report further highlighted success stories from other countries, including Kenya, India, and Bangladesh, where blended finance has successfully attracted private investment into renewable energy, healthcare, and digital infrastructure. It urged Nigeria to replicate similar frameworks to enhance investor confidence.
The global lender also encouraged Nigeria and its peers to prioritise climate-resilient projects and adopt robust monitoring systems to track progress and ensure accountability.
To this end, the IMF announced plans to support countries through technical assistance and policy guidance on how to design and implement blended finance strategies effectively. The initiative will include capacity-building programs, knowledge-sharing platforms, and partnerships with multilateral and regional institutions.
Nigeria’s participation in the IMF’s new sustainability financing initiative is expected to deepen access to funding for critical projects while reducing dependence on high-interest borrowing.
Experts say if implemented effectively, the adoption of blended finance could mark a turning point for Nigeria’s economic diversification efforts. It would enable the country to channel more resources into green infrastructure, job creation, and technological innovation, ultimately fostering inclusive and sustainable growth.
As the IMF continues to push this agenda, Nigeria’s ability to align its fiscal and policy frameworks with global sustainability goals will determine how much it can benefit from the evolving landscape of international development finance.
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