An Examination Of Project Financing In Nigeria


According to the International Project Finance Association (IPFA), project finance is defined as the financing of infrastructure projects using a combination of debt and equity capital that is repaid by the cash flow generated by the project[1]. Project Financing can also be said to be a fund-raising mechanism for specified projects, usually in infrastructure and industrial projects. What sets this mode of financing apart is that the primary repayment source is from the project’s assets and cash flows as opposed to the common corporate financing where the creditworthiness of the sponsor or company is the primary source of repayment.

Project financing in Nigeria plays a crucial role in addressing the country’s infrastructure and development needs, attracting investment, and fostering economic growth in the country.


The major considerations concerning project financing in Nigeria include Project Identification and Feasibility Study, Project Structuring, Regulatory Compliance, potential sources of financing, comprehensive risk assessment, negotiating of key project contracts, due diligence on the project, and a host of other factors.

Embarking on project financing in Nigeria involves a series of well-defined steps, which include:

  • Identify a viable project.
  • Conduct a feasibility study to determine the viability of the project.
  • Map out and prepare the legal and corporate structure for the project.
  • Compliance with applicable laws and regulations.
  • Identify sources of financing for the project.
  • Draft and negotiate contracts relevant to the project.
  • Conduct due legal and financial diligence.
  • Execute financing agreements and disburse funds for project development.
  • Project development.
  • Allocate project revenues to meet debt service obligations[2].


In Nigeria, the following are some notable Project Finance Projects;

    1. Lagos-Ibadan Expressway connecting Lagos and Ibadan.
    2. Second Niger Bridge that spans across the Niger River Asaba in and Onitsha.
    3. Azura-Edo Independent Power Plant in Edo State.
    4. Dangote Refinery led by the Dangote Group.
    5. Nigerian Communications Satellite.
    6. Redevelopment of Federal Medical Centers.
    7. Lekki Deep Sea Port.
    8. Abuja-Kaduna Airport upgrade project.
    9. Lagos-Kano Railway.
    10. Eko Atlantic City Project[3].


Generally, there is no specific law that applies to Project financing exclusively in Nigeria. However, transactions relating to project finance are governed by the law of contract, company law, and case law[4]. There are also agencies that regulate project financing and project financing-related transactions, and some are discussed below.

  1. The Infrastructure Concession Regulatory Commission (ICRC): It is the main regulatory agency responsible for promoting and regulating public-private partnerships (PPPs) and private sector participation in the development of infrastructure projects in Nigeria. With regulating public-private partnerships serving as the bedrock of project financing in Nigeria, the ICRC serves as the major administrative and institutional regulation of project financing in Nigeria. Its duties include Regulatory Oversight, Project Appraisal and Approval, Capacity Building, Project Monitoring and Compliance, Policy Advocacy and Promotion of Investment.
  2. Companies and Allied Matters Act and the Investment and Securities Act: Project financing involves companies and investments and the Act that governs both the Companies and Allied Matters Act and the Investment and Securities Act, are essential in the regulation of project financing. While the Companies and Allied Matters Act regulates the investment companies or the companies responsible for the implementation of the project, the Investment and Securities Act regulates the investment and investment procedure.
  3. Securities and Exchange Commission (SEC): It is a regulatory body governed by the Investment and Securities Act, which regulates capital market activities, including project financing.
  4. Central Bank of Nigeria (CBN): It generally regulates foreign exchange transactions and monetary policies that relate to project financing.
  5. Central Bank of Nigeria (CBN) Regulations: The CBN issues regulations related to foreign exchange controls, which can affect the repatriation of project profits and the ability to obtain foreign currency for project expenses.
  6. Taxation Laws: These laws include the Companies Income Tax Act, Value Added Tax Act, and Personal Income Tax Act which can impact project financing as individuals and companies are involved in project financing and liable to pay tax.
  7. Federal Inland Revenue Service: This is the body responsible for tax administration and it regulates taxes relating to project financing. The tax treatment of project financing can, however, vary depending on the nature of the project and the tax incentives available.
  8. National Electricity Regulatory Commission (NERC) Regulations: For power projects, the NERC regulations play a crucial role in the projects related to the power sector, including licensing, tariffs, and compliance requirements.
  9. Petroleum Industry Act (PIA): enacted in 2021, it provides regulations for the oil and gas sector, including provisions related to project financing, taxation, and local content development.
  10. Land Use Act: This act is responsible for regulating land ownership and use in Nigeria as it relates to projects that require land acquisition or usage rights.
  11. National Environmental Standards and Regulations Enforcement Agency (NESREA) Act: established the National Environmental Standards and Regulations Enforcement Agency, the body responsible for enforcing environmental regulations in Nigeria. Project financing must comply with environmental laws.


A major challenge faced by project financing in Nigeria is the frequent changes in regulations and policies that fill project developers and investors with uncertainty as to delay in project implementation and increase in costs. This is largely due to the fact that project financing is largely regulated by diverse laws and regulations that are unrelated and a change in any can adversely affect ongoing or even completed projects.

Another is the lack of a unified regulatory and even institutional framework that governs project financing in Nigeria. This makes it very difficult to effectively regulate it as many of the laws are sector-specific and subject to varying factors[5].

Furthermore, many projects under project financing are landed or real estate inclined and the complexities facing land acquisition and ownership in Nigeria constantly pose legal nightmares to project financing investors and developers.

Additionally, the bureaucracies that colour the grant of government approvals and permits can be worrisome, leading to unnecessary delays in obtaining necessary clearances, which can impact project timelines and financing and these are not adequately covered by laws in Nigeria.


The inadequacy or lack of a centralized legal or institutional framework for the regulation of project financing in Nigeria makes it near impossible to adequately regulate project financing in Nigeria as all that is available are laws that affect transactions surrounding project financing. There is therefore a need for appropriate centralized laws that can aid project financing in Nigeria and encourage foreign investment.

  1. Pekun Bakare: The Nigerian Project Finance Landscape
  2. Chinedu Kema ‘ Project finance in Nigeria : Overview’ < > accessed on 19 August 2023
  3. ICLG ‘ Project Finance Laws and Regulations Nigeria 2023’< >
  4. Start Credits ‘ Project financing in Nigeria’<,also%20apply%20to%20project%20finance%20transactions%20in%20Nigeria. > accessed on 19 August 2023
  5. Chinedu Kema ‘ Project finance in Nigeria : Overview’ < > accessed on 19 August 2023

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