To optimise Nigeria’s electricity potential, the country needs to critically examine the terms and conditions attached to foreign incentives entering the power sector, a new study published in the Energy Research & Social Science Journal has stated.
According to a statement on Wednesday, the study, titled ‘Energy Transition in the Global South: Donor Bargains and the Future of the Aid Machine’, was authored by the founder of PUTTRU, Monica Maduekwe.
The Energy Research & Social Science Journal is a peer-reviewed Elsevier journal that focuses on interdisciplinary links between energy systems, markets, business, and society, spanning topics such as energy transitions, policy, climate change, and social acceptance.
The study also examined several West African countries to demonstrate how financial stress influences aid negotiations and how these negotiations, in turn, impact institutional performance in the power sector.
The research explained that countries under heavy financial pressure are more likely to accept aid conditions that reduce their ability to plan effectively and build long-term technical capacity, “and over time, this traps power sectors in cycles of reform that look good on paper but deliver little improvement in practice.”
“Aid becomes costly because of the bargaining process. The terms under which aid is negotiated shape institutional outcomes long after projects end. If countries do not pay attention to how aid is negotiated, financial stress can lock them into a vicious cycle where aid undermines the very institutions needed for development,” the study stated.
The research revealed that not all aid-recipient countries are treated the same and that negotiation tactics, leverage, and processes vary, with one of the most decisive factors shaping these differences being financial stress.
“Countries with high debt levels and heavy aid dependence typically have less bargaining power. When financial pressure is acute, governments are less able to resist conditions that may undermine institutional authority, coordination, and long-term capacity. In such situations, donors may impose conditions that appear reasonable in the short term but, over time, erode governance systems, weaken institutions, and limit a country’s ability to deliver sustained development outcomes, including reliable electricity,” it added.
The study warned of a dangerous feedback loop, noting that financial stress weakens a country’s negotiating position. “Weak negotiating positions lead to harmful aid conditions; those conditions erode institutional capacity; weakened institutions reduce the country’s ability to develop and to eventually break free from aid dependence,” it said.
The study called on aid-recipient countries, including Nigeria, to approach aid negotiations more strategically, especially during periods of financial stress.
It emphasised that governments must assess their vulnerabilities, understand their leverage and recognise that poorly negotiated aid can compromise long-term development prospects. PUTTRU is Africa’s foremost financial solutions provider to the energy sector.
