Clean energy development in Nigeria has received a boost thanks to the African Development Bank’s recent grant. The bank’s Sustainable Energy Fund (SEFA) for Africa has approved the sum of $500, 000 to this effect.
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This grant will go to support the Nigeria Energy Access Fund (NEAF) that will make strategic investments in sustainable energy in Nigeria, particularly in the country’s burgeoning off-grid and mini-grid sectors.
NEAF is a new private equity fund developed by All On, a Nigerian impact investment firm financed by Royal Dutch super oil major, Shell. NEAF will make strategic investments in sustainable energy in Nigeria, particularly in the country’s burgeoning off-grid and mini-grid sectors.
The SEFA grant will support specific work streams to set NEAF in motion and enhance its engagement with private and public sector investors. NEAF will be a first-of-its-kind facility to provide eligible projects and businesses with equity solutions that are currently unavailable in the market.
“Nigeria requires bespoke and innovative market-based solutions to provide its off-grid population, estimated at 100 million, access to sustainable sources of energy. The SEFA grant will be instrumental in the constitution of NEAF, and ultimately, the mobilisation of much-needed private sector investment for the sector,” said Wale Shonibare, the Bank’s acting Vice President for Power, Energy, Climate Change and Green Growth.
Once operational, NEAF is expected to complement the Bank’s wide range of sustainable energy initiatives currently being implemented in Nigeria. In November 2018, the Board of Directors of the Bank approved a $200 million package to support Nigeria Electrification Project (NEP), designed to help scale-up green mini-grid solutions with subsidies, among other measures.
In May 2018, SEFA approved a $1.5 million grant to support the first phase of the Nigerian government’s Jigawa 1-GigaWatts Independent Power Producer Solar Procurement Programme.
SEFA’s support to NEAF is aligned with the New Deal on Energy for Africa and the Bank’s High 5 priorities, especially ‘Light Up and Power Africa’ and ‘Improve the Quality of Lives of Africans.’ The project conforms to the Bank’s Energy Sector Strategy and will boost the Nigerian government’s power sector recovery plans.
“It is critical that Nigerians take steps to understand and embrace the new starting points for energy provided by stand-alone renewable technology and mini-grids. We believe these solutions provide a viable, bottom-up solution to the patchy availability of electricity in Nigeria,” said Pedro Omontuemhen, partner and lead, Power and Utilities at PwC, a multinational professional services firm.
Africa’s most populous nation needs to create an enabling environment for off-grid development, including clearer criteria for mini-grid development, support for skills and training and more supportive regulation to allow private players to unlock the off-grid market potential.
Nigeria also needs to recognise the value of and promote the growth of mobile infrastructure, microloans and payment solutions in supporting energy access because mobile infrastructure is proving crucial in the take-up of standalone home systems, giving providers a low-cost channel for customer relations and an ability to automatically manage non-payment.
Mozambique is already implementing a similar model. This is why Fenix International, a subsidiary of ENGIE has partnered with Vodacom and Vodafone M-Pesa South Africa to tackle the challenges of distribution, connectivity and mobile payments that have left rural Mozambicans underserved by affordable energy products in the past.
