A new diagnostic tool designed to help governments critically assess the long-term institutional impacts of aid conditions before agreements are finalised in the electricity sector has been developed by a Nigerian energy expert, Monica Maduekwe.
 
Maduekwe, the founder of PUTTRU, Africa’s frontline platform providing expert financing solutions to the continent’s energy sector, explains that the tool called ‘Donor-Bargain Model’ helps policymakers identify when aid is likely to become institutionally costly and how conditions can be structured to support, rather than undermine long-term sector performance.
 
This is contained in a new study titled, ‘Energy Transition in the Global South: Donor Bargains and the Future of the Aid Machine’ authored by Maduekwe and published in Energy Research & Social Science, a peer-reviewed Elsevier journal, focusing on the interdisciplinary links between energy systems, markets, business, and society.
 
According to the research, countries under heavy financial pressure are more likely to accept aid conditions that reduce their ability to plan effectively, coordinate agencies, 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,” she explains.
 
Maduekwe’s research reveals that not all aid-recipient countries are treated the same and that negotiation tactics, leverage and processes vary, adding that one of the most decisive factors shaping these differences is 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.

“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,” Maduekwe submits.
 
Although Nigeria’s power sector requires an estimated $10 billion in yearly investment to function optimally, public funding falls far short, leaving the sector heavily reliant on grant-funded technical support, which needs to be properly assessed for the right impact.