A NGN1 billion solar energy fund has been launched by Nigeria’s Bank of Industry (BoI) with the aim of boosting the country’s off-grid electricity generation project. According to BoI, the fund would be made available to firms partnering with the bank in the development of solar energy services across the country.
Waheed Olagunju, acting managing director of the BoI described the fund as a concessional financing initiated by the bank as a result of poor cash floor in the rural areas. According to him, the project considers supply of electricity to Micro, Small and Medium Enterprises (MSMEs) to boost their production and make them competitive.
“The initiative will help reduce cost of business, as current study shows that alternative power source costs 40 percent of expenditure by the manufacturing sector,” he said.
He revealed that the BoI spent about N240 million for six pilot solar projects in the geo-political zones of the country in 2016. He noted that many Nigerians and Nigerian businesses that can afford other alternative energy sources have resorted to the use of electric generators at exorbitant costs.
“It was estimated that in 2015, manufacturers spent as much as N3.5trillion to generate alternative power due to the challenges in the supply of public electricity,” he said.
“The cost of electricity accounts for about 40 percent of operational expenses for most MSMEs, resulting in reduced profit margins, uncompetitive and generally unsustainable ventures.
“For Nigeria to therefore achieve sustainable and inclusive development, there is an urgent need to substantially increase the supply of modern and affordable energy services from sources that are affordable, accessible and environmentally friendly.”
“The Bank is already playing an active role in Lighting up and powering Nigeria through the provision of solar energy solutions for rural communities, having successfully deployed solar solutions worth N240 million to six (6) off-grid communities, one (1) each in Niger, Osun, Gombe, Anambra, Edo and Kaduna States, under its pilot scheme.
These communities with an average of 200 homes each previously had no access to electricity, but since the provision of clean, reliable and sustainable solar electricity, the lives of the indigenes of these communities have changed significantly, he noted.
The provision of solar electricity, according to him, has reduced energy costs, created more micro businesses, improved healthcare and quality of education, and generally provided a new lease of life for indigenes of these otherwise unserved communities.
The bank is also replicating the initiative in other rural communities in collaboration with its development partners, UNDP and relevant State Governments, and it is now being scaled up to provide energy for MSMEs across the country, commencing with the N1.0 billion Solar Energy Fund that it launched.
“It is because BOI is a well managed emerging world class DFI that the institution is able to come up with highly concessional funding solutions with interest rate as low as 7% and equally flexible terms and conditions.
This also explains why BOI is able to partner with UNDP under which we are able to access increased level of financial support that peaked at $1.2 million USD last year. Blending the grant with BOI’s debt financing enables us to charge low interest rate” he said.
