Africa’s infrastructure ambitions are being constrained not only by a shortage of capital but by how much that capital costs, Nigeria’s finance minister said, as governments across the continent seek funding to expand energy supply and accelerate development.
Taiwo Oyedele, Nigeria’s finance minister and coordinating minister of the economy, told a United Nations dialogue on climate finance in New York on Wednesday, September 23, 2026 that African countries face what he described as a ‘prejudice premium’, ‘narrative cost’ and ‘stereotype tax’ when raising finance for critical infrastructure. His argument shifts the infrastructure debate from how much money Africa can attract to the price and terms at which it can borrow it.
That distinction matters because infrastructure projects are unusually sensitive to financing costs. Power plants, transport networks and other large projects typically require substantial upfront investment while generating revenues over many years. A higher cost of debt can therefore turn a project that is economically viable at one interest rate into one that cannot attract financing at another.
Currency risk makes the equation harder. Many African infrastructure projects generate revenues in local currencies but rely partly on dollar or euro financing. A sharp depreciation can increase the local-currency cost of servicing foreign debt even when the underlying project is performing as expected. For investors, the result is a higher hurdle rate. For governments, it can mean either postponing projects, providing larger subsidies or guarantees, or taking on more debt to make projects financially viable.
This is particularly consequential for Africa’s energy deficit. Governments face the twin pressure of expanding electricity access and financing a transition towards cleaner energy, while many economies still have large unmet demand for reliable and affordable power.
Oyedele argued that investment in gas and other transition energy sources should form part of that response, reflecting Nigeria’s position that African economies need to expand energy supply while progressively moving towards cleaner sources. The financing problem, however, extends beyond the energy sector.
Expensive capital can raise the cost of roads, ports, water systems, telecommunications and industrial infrastructure, increasing the amount governments and private investors need to commit before an asset begins generating returns.
This makes the structure of financing as important as its volume. Long-term and concessional capital can support projects whose economics are weakened by commercial borrowing costs, while shorter and more expensive financing can leave governments with large debt-service obligations without closing the infrastructure gap.
Oyedele’s ‘stereotype tax’ argument also raises a broader question about how risk is priced. African countries do face genuine risks, including currency volatility, regulatory uncertainty, limited fiscal space and shallow domestic capital markets. But applying a broad risk premium across countries or projects can make it harder to distinguish between the risks of a specific investment and perceptions about an entire market.
That distinction matters for Nigeria, which is trying to attract private capital while managing inflation, exchange-rate risks and high domestic borrowing costs. The answer is unlikely to be simply cheaper foreign borrowing. Infrastructure financed in foreign currency but backed by local-currency revenues can transfer exchange-rate risk to governments, companies or consumers.
Deeper domestic capital markets could reduce some of that exposure by allowing projects with local-currency revenues to obtain longer-term funding in naira. Better project preparation, predictable regulation and stronger revenue structures would also reduce risks that are specific to individual investments rather than to Africa as a whole.
The policy challenge is therefore two-sided: Africa needs to make its projects less risky while the international financial system needs to avoid making African capital unnecessarily expensive. For Nigeria, that distinction is becoming increasingly important. Attracting more capital will not automatically close the infrastructure gap if the cost of that capital absorbs too much of the expected economic return.
The real test for Africa’s infrastructure financing is consequently not the headline amount of money committed. It is whether capital can be made sufficiently long-term, affordable and appropriately structured to turn infrastructure projects from financing propositions into investable assets.