Blended finance: A model for Nigeria’s public sector

In the first quarter of 2024, Nigeria allocated more than 70 percent of its revenue to servicing debt, a staggering figure that leaves little room to fund critical development sectors such as healthcare, education, infrastructure, and public service delivery. This fiscal pressure is not unique to Nigeria; it mirrors a broader challenge across much of Africa, where public sector ambitions are limited by scarce financial resources.

This fiscal reality demands not just concern but innovation. Against this backdrop, traditional funding mechanisms are no longer sufficient. This is where blended finance comes in. By strategically combining public funds with philanthropic capital and private investment, blended finance can unlock a multiplier effect, turning constrained government budgets into powerful engines of progress.

At the Aig-Imoukhuede Foundation, we have witnessed firsthand the impact of this model through partnerships that strengthen public institutions, support innovative service delivery, and infuse private sector discipline into public outcomes.

This article explores the transformative potential of blended finance for Nigeria’s public sector and offers a roadmap for how the government, development partners, and investors can co-create solutions that deliver both value and impact.

Understanding the blended finance model

At its core, blended finance is a creative way of making public and private capital work better together. It involves using concessional funds from governments or philanthropic sources to attract private sector investment into projects that can deliver positive social and economic outcomes.

This model is particularly pertinent in Nigeria, where the pressure on public finances is immense. Blended finance helps bridge this gap by mobilising diverse resources, de-risking investments, and making previously overlooked sectors more attractive. It does not replace government funding; it amplifies it, unlocking new pools of capital that might otherwise remain on the sidelines.

The result? Smarter collaboration, stronger institutions, and solutions that are not only financially viable but also socially meaningful.

What makes blended finance powerful?

Blended finance derives its strength from the way it mobilises diverse sources of capital, manages risk, delivers outcomes, and creates synergy across sectors. Government funding and philanthropic capital serve as catalysts to attract private investment, often at a much larger scale than would otherwise be possible. Crucially, blended finance frameworks are designed with a strong focus on development outcomes, not just financial returns. This approach ensures that initiatives are driven not just by profit, but by measurable social and economic impact, with projects addressing real needs and delivering social and economic value for communities.

Central to the success of blended finance is the emphasis on partnership; it thrives on multisectoral collaboration, aligning the goals and resources of government institutions, donors, private investors, and civil society organisations. This alignment of purpose creates synergy, fosters innovation, and ensures shared ownership of both risks and rewards.

Success stories: When the model works

The power of blended finance is not merely theoretical; it is being explored across the globe and increasingly within Nigeria. In recent years, growing collaboration between public institutions, development partners, and private investors has laid the foundation for more innovative approaches to service delivery. A notable example is the ongoing initiative to strengthen primary healthcare delivery in Edo State, a blended finance partnership between the Edo State Primary Health Care Development Agency (ESPHCDA), HealthPort Africa, and the Aig-Imoukhuede Foundation.

Before this intervention, many Primary Healthcare Centres (PHCs) in Edo State faced critical challenges: crumbling infrastructure, persistent shortages of essential medicines and equipment, and the lack of skilled personnel. Patients were often forced to travel long distances or rely on informal care, undermining public confidence in the system.

Through this strategic blended finance model, the Aig-Imoukhuede Foundation has served as a catalytic philanthropic partner, providing funding and strategic oversight for the refurbishment of eighteen PHCs. This support is helping to bring primary healthcare facilities closer to acceptable operational standards and creating a platform for further investment. HealthPort Africa, a health-tech company, is providing oxygen beds across other healthcare centres within the state to improve oxygen therapy, while the Edo State Primary Health Care Development Agency (ESPHCDA) ensures an enabling environment through regulation, oversight, and integration with the state’s broader health strategy.

While the full implementation is still underway, early improvements are already visible at the four fully revitalised pilot sites, setting a promising precedent. Today, these four PHCs are beacons of hope, offering consistent, quality care. Communities have regained trust in their local health systems, leading to increased patient visits and improved health outcomes, particularly for vulnerable populations. Notably, while the Health Port’s oxygen bed initiative is not yet fully completed, the partnership is expanding access to oxygen therapy through connected infrastructure within the state’s healthcare network.

This model is now being adapted for replication across the additional 14 adopted PHCs in Edo State. As the partnership initiative progresses, it continues to demonstrate how the government can deliver on its mandate to provide quality healthcare, philanthropic organisations can achieve their missions by catalysing impact, and private organisations can meet both CSR and business goals through structured engagement.

Globally, the India Stack, India’s groundbreaking digital public infrastructure, provides another compelling example. This revolutionary system, which includes digital identity (Aadhaar) and unified payments (UPI), was funded through a blend of government tech budgets, venture capital, and philanthropic grants. The government initiated and provided the core infrastructure, ensuring public good and widespread adoption. Venture capital then fuelled thousands of innovative private sector applications built on top of this public infrastructure, creating new businesses and services. Philanthropic grants often supported pilot programs or ensured the inclusion of marginalised communities, bridging access gaps. By 2022, its Unified Payments Interface (UPI) processed $1.7 trillion in transactions, empowering millions of small businesses and individuals. Nigeria’s ongoing digital ID rollout, currently supported by blended finance, could similarly revolutionise service delivery, from more efficient tax collection to transparent social welfare distribution, with strategic private sector involvement.

These examples reflect how innovative financing models can unlock transformational change when structured with a shared vision, robust governance, and clear metrics for impact.

Creating an enabling environment

Trust is the currency of blended finance. To build this trust, Nigeria must prioritise transparent processes, strong oversight, and capacity development. Government and civil service leaders must be equipped with the financial and technical literacy required to design and manage such initiatives. Also, platforms must be established to align strategies and pool resources between the government, investors, and development partners. Regulatory clarity is essential to build investor confidence and reduce bureaucratic friction.

A call to action: Seizing the opportunity

As Nigeria charts its path towards sustainable development, blended finance should be at the forefront of its public sector strategy. It offers not just a buffer for budget shortfalls but a paradigm shift in how we view development funding. It allows us to move from a narrative of scarcity to one of shared responsibility and abundance.

Policymakers are encouraged to create the frameworks that nurture these investments. Philanthropic actors must step in not just as donors but as strategic enablers. Private investors should recognise that the most rewarding markets are often those where impact and opportunity converge.

Blended finance is not a silver bullet. But it is a powerful tool. And in the right hands, it can help shape a future where effective governance becomes the cornerstone of national prosperity.

Bukky Akinsemoyin is the Director of Funding and Partnerships at the Aig-Imoukhuede Foundation, where she leads efforts to build strategic alliances that unlock capital and scale impact across Africa’s public sector.