Nigeria Urged to Renegotiate Donor Conditions in Power Sector

To fully harness Nigeria’s electricity potential, the country must carefully review the terms and conditions attached to foreign aid in the power sector, according to a recent study published in the Energy Research & Social Science Journal.

The study, titled “Energy Transition in the Global South: Donor Bargains and the Future of the Aid Machine”, was authored by Monica Maduekwe, founder of PUTTRU. The journal is a peer-reviewed publication by Elsevier that explores the intersections of energy systems, markets, policy, climate change, and societal impacts.

The research analysed several West African countries to show how financial pressures affect aid negotiations and, in turn, shape institutional performance in the power sector. It found that nations facing significant financial stress are more likely to accept aid conditions that limit long-term planning and technical capacity, often trapping power sectors in reform cycles that look promising on paper but fail to deliver real improvements.

The study notes, “Aid becomes costly because of the bargaining process. The terms under which aid is negotiated influence institutional outcomes long after projects end. Without careful attention, financial stress can lock countries into cycles where aid undermines the very institutions needed for development.”

It highlighted that aid negotiations are not uniform; differences in leverage, tactics, and processes mean countries under high debt and heavy aid dependence have weaker bargaining positions. In such cases, donors may impose conditions that seem reasonable short-term but, over time, can erode governance, weaken institutions, and limit the ability to deliver reliable electricity and sustained development.

The research warned of a dangerous feedback loop: financial stress reduces negotiating power, harmful aid conditions follow, institutional capacity is weakened, and the country’s ability to achieve independence from aid diminishes.

The study urged Nigeria and other aid-recipient countries to adopt strategic approaches to aid negotiations, especially during periods of financial strain. Governments must evaluate vulnerabilities, understand their leverage, and recognise that poorly negotiated aid can compromise long-term development goals.

PUTTRU is Africa’s leading provider of financial solutions for the energy sector.