Heike Harmgart: I’m Amazed Nigerian Businesses Thrive Despite High Power Cost

The Managing Director for Sub-Saharan Africa at the European Bank for Reconstruction and Development (EBRD), Heike Harmgart, outlines the bank’s expansion plans, investment pipeline for Nigeria, and explains why fixing the power sector is critical to unlocking private investment. Nume Ekeghe presents the excerpts

Your new Lagos office is part of your Sub-Saharan Africa (SSA) strategy. What is the roadmap for opening additional offices, which countries are next?

The Lagos office is the first of our five new countries of operation, namely Nigeria, Kenya, Senegal, Côte d’Ivoire and Benin. I am travelling from here to open the Dakar office next week, so Senegal is next. We will officially open our Nairobi office in September, while Abidjan and Cotonou will follow in October and November. By the end of the year, we expect to have opened offices in all five countries. Ghana will become the sixth office. The application for Ghana to become a member and shareholder is currently before Parliament, so we are waiting for that process to conclude. We are already open for business in all five countries and, in our very first year of operations, we have invested roughly $500 million across different markets in a variety of sectors in SSA.

Also, with the African Continental Free Trade Area (AfCFTA) now operational, how does the EBRD intend to align its investments with the agreement to boost intra-African trade?

On the African Continental Free Trade Area, supporting intra-African and global trade is one of our priorities. One of the first transactions we signed in Nigeria was a $100 million trade finance line with Access Bank. That facility will enable Access Bank to access confirming banks across Africa and internationally, making it much easier for Nigerian importers and exporters to obtain pre-import and post-export financing. Next week, we will also sign a smaller trade finance facility with Ecobank in Senegal, while our board has approved another major trade finance transaction for KCB in Kenya. Trade finance is therefore one of the key instruments through which we intend to support African trade.

The development finance space in Africa is already crowded with institutions such as the AfDB, IFC and AFC. What unique value does the EBRD bring?

On the question of competition, I would say we complement rather than compete with existing institutions. We have been investing in North Africa for the past 12 years, committing roughly $2 billion annually across Egypt, Morocco and Tunisia. When we entered those markets, people also asked why we were going there when institutions such as the African Development Bank and IFC were already present. Today, we invest about $2 billion every year there. There are three main ways we differentiate ourselves. Firstly, we have very strong local operational teams. Hamza and I only relocated from Cairo in October, yet we already have 16 staff in Lagos and have hired about 100 professionals across the continent. These are Nigerian investment bankers, Senegalese lawyers, Kenyan environmental specialists and many others. They understand their markets and lead our transactions. Secondly, we place significant emphasis on local currency financing. We are already working on accessing the Nigerian naira and Kenyan shilling because local currency lending is an important contribution we can make. Thirdly, because we have strong local teams, we are able to finance much smaller transactions even projects of around $1 million rather than focusing only on very large deals. Our previous expansions have shown that, after a few years, we consistently identify opportunities that others may have overlooked because of our local presence and expertise.

You mentioned investing around $2 billion annually in North Africa. How much has been invested in Nigeria so far, and what are your targets now that you have established an office in Lagos?

The $2 billion annual investment relates to Egypt, Morocco and Tunisia combined. Nigeria only became an EBRD shareholder in July 2025 and became a country of operation in October 2025. Before then, we could not invest in Nigeria. Since October 2025, we have invested including the trade finance approximately $280 million, of that amount, $100 million was invested between October and December 2025, while another $180 million has been invested since January.

We are entirely demand-driven. We do not allocate a fixed investment envelope for each country. If there are many good projects, we will invest more. We have only recently established our office and recruited our team, so it will take time to build our pipeline. Nevertheless, I am very proud of the team have already achieved $280 million in investments within less than a year. This year is looking good, and I think it would scale up in time. We expect investments this year to exceed $300 million.  Over the next three years, our expectation is that we would do a minimum total of $1.5 billion in Nigeria. That is an estimate, and I hope we exceed it. We have the capital, ambitious shareholders and we just had a meeting with Nigeria’s Minister of Finance, who represents Nigeria on our Board and we want to respond. We have capital and we want to work on good projects. We are willing to take some risks, but we also have to be balancing how much risk we are taking.

 Will financing for Project Bridge remain focused on the Federal Government and Banks, or could similar support be extended to state governments?

Globally, around 80 per cent of our financing goes to the private sector, while roughly 20 per cent goes to governments. That ratio may differ from year to year depending on available projects. We also finance cities directly. For example, we have projects with Alexandria in Egypt and Tangier in Morocco involving transport, waste management and electricity. Depending on the financial strength of a city, we may lend with or without a sovereign guarantee. Given Lagos State’s financial standing and domestic credit profile, it is certainly possible to work directly with the state government.

Nigeria has enormous investment opportunities. What do you consider the biggest obstacles to attracting more private investment? What would you like the government to improve?

One issue that has particularly stood out to me is the power sector. I have been surprised by how much Nigerian businesses spend on electricity because many must generate their own power. Challenges around generation, transmission and distribution significantly increase operating costs. At the moment, the limited capacity of the transmission grid, the losses on the distribution network. I’m even more impressed by Nigerian businesses that they are, so you know, successful given what they pay for power.  So that has been a bit of a surprise to me coming from Egypt.  I have to say it is a big challenge that I think we need to help Nigerian businesses to reduce the cost of power, because that is really holding a lot. The government, can do something to it, I mean, also some of the infrastructure, like transmission, distribution, but then also, of course, the private sector can come and invest in this sector, but I think this is a big, at least sort of, for me, new, and having lived in countries where there is constant electricity supply, and then seeing how much, if you talk to an entrepreneur in Nigeria, how much they pay for power.