Phillipe Valahu is the Chief Executive Officer of the Private Infrastructure Development Group (PIDG), a multilateral infrastructure development and finance organisation that focuses on mobilising private investment for infrastructure in emerging markets. In an interview with ISAAC CHIBUIFE, he speaks on infrastructure financing, domestic capital mobilisation, climate finance, public-private partnerships (PPPs), and the need to unlock local institutional capital to drive Nigeria’s infrastructure development.
How do credit enhancement facilities stimulate investments that serve Nigeria’s national development priorities?
Infrastructure projects in Nigeria often face a rating gap. A project might be technically sound but carries a credit rating that is too low for pension funds, which have a fiduciary duty to minimise risk. Credit enhancement, via facilities like InfraCredit, bridges this gap by providing a AAA-rated guarantee. For example, credit guarantees cover the non-payment of a debt if the borrower defaults, essentially taking on risk on behalf of the lender.
This stimulates investment by firstly allowing for credit substitution, where the project takes on the high credit rating of the guarantor. Second, it extends tenors. Where a commercial bank might only lend for five years, a guaranteed bond can stretch to 15 or 20 years, matching the project’s life cycle. Finally, local currency loans address the foreign exchange (FX) risk by ensuring that an infrastructure project that earns revenue in Naira also pays its obligations in Naira, removing the volatility risk that can lead a project to default.
Nigeria issued a Sovereign Green Bond in June 2025 to support its Energy Transition Plan, targeting net-zero by 2060. As the top multi-donor fund in blended climate finance deals, how will PIDG align its West African pipeline with Nigeria’s ambitious green bond programme?
Nigeria’s Sovereign Green Bond is an important step in mobilising domestic capital for its Energy Transition Plan, but sovereign issuance alone cannot meet the scale of its infrastructure and climate finance needs. Bridging this gap requires a parallel expansion of bankable private-sector projects and deeper participation from domestic institutional investors. PIDG’s focus is therefore on complementing government issuance by strengthening the private-sector side. InfraCredit is one example of how we helped unlock long-tenor, local-currency infrastructure financing. Through its range of solutions such as technical assistance, concessional capital, project development and debt and credit enhancement, PIDG helps projects meet the credit, risk and tenor requirements of pension funds and insurers. This enables more private-sector green and infrastructure issuances and supports sustained investment in renewable energy, transport, logistics and climate-efficient infrastructure central to Nigeria’s climate ambitions.
You have a partnership with the AfDB Group to scale up domestic capital mobilisation, leveraging sovereign wealth funds, pension schemes, insurance assets and other savings vehicles estimated at over $2 trillion across Africa. How is this initiative progressing?
We are working closely with the African Development Bank Group in several areas. Domestic capital mobilisation remains a key area of collaboration, with multi-partner efforts underway in West Africa as well as Southern Africa. We are exploring the establishment of more credit enhancement facilities across the two regions. I’m hopeful the next few months will yield positive outcomes for greater local investment in climate-resilient infrastructure.
How does PIDG intend to unlock a significant portion of Nigerian domestic institutional capital, and what are the biggest structural barriers — regulatory, legal or capacity-related standing in the way?
Our strategy for unlocking domestic capital is built on the principle of credit enhancement. Nigerian pension funds and insurance companies historically favoured government treasuries because they offered high yields with zero perceived risk.
Infrastructure, by contrast, was seen as high-risk and illiquid. Three primary barriers that, if addressed, can unlock the trillions of naira held by Nigerian pension fund administrators are:
The first is regulatory constraints. PENCOM (the pension regulator) has strict limits on infrastructure exposure. We work with regulators to demonstrate that guaranteed bonds can be low-risk assets, encouraging higher allocation limits.
The second is the capacity gap: Many local banks and asset managers lack the specialised skills to perform due diligence on complex PPPs. PIDG provides technical assistance to upskill local financial actors, as well as collaboration on transactions to learn via live cases.
Third is perceived risk. Recovery rates for private lending in emerging markets average 72.9%, with over half of defaulted projects seeing a recovery rate of over 90%, PIDG companies like the Emerging Africa and Asia Infrastructure Fund (EAAIF) cite Moody’s data showing that the infrastructure debt default rate in Africa stands at 1.9%, which is comparable to European rates and indeed demonstrate this through transactional performance as has InfraCredit.
PIDG is owned by six governments at a time when the global financial architecture for development is under severe strain from European and US aid cuts. What more can be done to develop capital markets and innovate in finance to ensure that investment keeps flowing to Africa?
There is a huge unmet need for infrastructure finance in Africa. To address that, we must move beyond the traditional aid mindset towards a mobilisation mindset. Every dollar that the government comes in with, which is a dollar from taxpayers, must be used such that we can mobilise up to six dollars of private sector capital. And that’s critical because the overseas development assistance should only be given to the extent that is needed to mobilise private capital.
Traditionally, mobilisation was always about mobilising capital from the north to the south. A welcome change that I have seen over the past few years, and that PIDG has been demonstrating too, is that mobilisation is not just north to south, but it’s also south to south. However, sometimes, African family offices or institutional capital, such as pension funds, that want to invest in African infrastructure assets are not able to because the regulatory framework is missing. That is something that we need to work on, to be able to allow that domestic pool of capital to be mobilised to finance local infrastructure.
Nigeria’s new Infrastructure Concession Regulatory Commission Public Private Partnership (ICRC PPP) guidelines aim to fast-track bankable infrastructure projects. Drawing on PIDG’s experience, what are the most common weaknesses you observe in PPP structuring in Africa? What must be improved to move projects quickly to financial close?
With over 25 years as a project developer and investor, PIDG sees many PPPs in Africa stall before financial close due to weak early-stage preparation. Common issues include underdeveloped feasibility studies, unclear revenue and risk allocation, limited institutional capacity and poor alignment with lender and investor requirements. PIDG helps address these gaps across the project lifecycle, e.g., by supporting upstream design, funding pre-feasibility and preparation, strengthening transaction structuring and covering issuance costs, while also providing debt and guaranteeing financings. For high-impact but commercially challenging projects, limited concessional capital can also help bridge viability gaps and crowd in private finance, while maintaining minimal concessionality. Stronger upfront preparation, clearer risk sharing and blended finance solutions are key to moving PPPs more quickly from concept to bankable reality.
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