Investing in Nigeria’s clean energy projects for sustainable development

March 10, 2019

World leaders are committed to curbing global warming by driving down greenhouse gas emissions, as climate projects won record financing from the world’s big development banks last year, with funds committed up by 60 per cent since the 2015 Paris climate accord, a joint report by six development Banks states.

With the Paris climate accord in mind, individual countries have continued to look for ways to curb emissions, especially in low and middle-income countries.

According to the African Development Bank, climate financing by the world’s largest Multilateral Development Banks in developing countries and emerging economies rose to an all-time high of $43.1 billion in 2018, boosting projects that help developing countries cut emissions and address climate risks.

As the most populous country in Africa, Nigeria has gained attention in its fight to combat climate change and carbon emissions, as individuals, groups and companies continue to increase their ambition to come up with solutions and financing for green investments.

The World Bank’s Practice Manager for Africa and Environment Resources, Benoit Bosquet, once noted that Nigeria needs to build resilience now, to the harsher climate of the future, and if it fails to do so in time, climate change can worsen Nigeria’s vulnerability to weather swings and limit its ability to achieve and sustain the objectives of the Vision 20:2020.

As part of efforts to support green investments, the Private Financing Advisory Network (PFAN), – a global network of expert consultants, provides free business coaching and investment facilitation to entrepreneurs developing climate adaptation and clean energy projects in low- and middle-income countries.

Initiated by the United Nations Framework Convention on Climate Change (UNFCCC) and the Climate Technology Initiative (CTI) in 2006, PFAN facilitates green investments across the world, primarily catalysing these private sector investments to support the United Nations’ Sustainable Development Goals (SDGs).

Leveraging just over $10m in Nigeria in the past two years, PFAN has worked towards finding and assisting clean energy businesses in the country, working with business owners, to improve business plans such that they are built into credible financeable and investable businesses for the long term.

PFAN currently has 11 coaches in Nigeria, who are focused on developing businesses that are more mature and ready for financing. A team of investment facilitators then connects those businesses to PFAN’s network investors. Every year, PFAN gives the most promising projects in West Africa the chance to pitch directly to investors at the West Africa Forum for Climate and Clean Energy Financing. The next edition will take place on 26 September in Abidjan, Côte d’Ivoire, hosted by the African Development Bank.

“The coaches develop relationships with the developer of the project. The relationship transcends just the PFAN process where PFAN is still in contact with a number of the businesses it has worked with even after 2-3 years”.

“PFAN is currently working with 17 projects in Nigeria, selected from roughly 80 applications. The projects are at different stages along the path of different development processes, from early stage to mature,” Olugbolahaun Mark-George, Country coordinator PFAN, Nigeria says.

PFAN’s Impact in Nigeria

Nigeria offers great investment opportunities in the clean energy and climate adaptation space. PFAN co-operates with other donor programmes in the sector, such as the Kigali Cooling Efficiency Programme (K-CEP), and assists developers who are in the space by showcasing them and helping them get the funding for their businesses.

PFAN has secured a number of investments for projects across various states in Nigeria that are
benefitting the communities where they are established.

Green Energy & Biofuels, GEB, based in Lagos that manufactures and distributes an innovative clean cook stove which uses ethanol gel (a clean energy source made from biomass) as fuel, and has reached over 600,000 households.

By providing climate friendly cooking technology and fuel, the project has led to significant reductions in CO 2 emissions. Starting as a very small business in 2015, GEB raised $5 million with PFAN assistance for its expansion, and is now in the process of building an international factory that is creating new jobs in Nigeria and also helping to take out emissions from the atmosphere.

For Femi Oye, Co-founder Green Energy & Biofuels, PFAN has helped his business grow from nothing. According to him, “We needed to attract the right kind of investment. From inception till when we got to hear about the Private Financing Advisory Network, PFAN, it was a tough journey”.

“Before PFAN came into the picture it was really challenging to have any visible impact recorded, because if you don’t have the right partnership, the right funding to scale the business and structure that can help you envisage and predict what the future will look like and of course to overcome them, then the impact might be difficult or impossible”.

The country’s energy situation has become worrisome, with power constituting 40 per cent of the cost of operating a business. The only way to get quick, efficient, long term and sustainable power, especially in rural areas, is to go renewable.

Nigeria today, according to the Renewable Energy Association, REA, has an $18bn potential market for mini-grids alone.

Green Village Electricity (GVE) has begun to tap into this opportunity by building solar mini-grids in rural areas to fix Nigeria’s power problem. Reaching just about 10 houses initially with a few bulbs, GVE raised $5 million in investment with PFAN’s assistance and today the developer has become the largest solar mini-grid operator in Nigeria, and supplies electricity to entire villages.

A 5 mw project which is about to take off in Ijebu Ode is changing the face of the village in which it is located. It will supply 5,000 households with electricity, create economic activities for the communities and also supply electricity to a private company; one of the largest international brewers in the country and to a University.

Ifeanyi Orajaka, CEO, Green Village Electricity (GVE) says his experience working with PFAN, has been an exciting journey. “It has helped us tremendously. We usually encourage any young and boarding entrepreneur who is interested in playing in the clean energy and climate adaptation space, to always look out for the PFAN course because the support is very phenomenal”.

“We’re currently a hybrid company and PFAN hasn’t left us. They are still providing follow on support that is very significant to helping us manage the level of growth and also help guide us in the attainment of our medium and long term corporate strategies,” Ifeanyi added.

“PFAN is one of the opportunities that we have where we see the public and private sectors all working together to provide credible long term solutions for clean power for our nation, continent and the world in general. We’re calling on more investors to be involved in the process in Nigeria and part of that is to work with banks and to also look at the private equity that exists and to bring them on board,” Olugbolahuan Mark-George, Country coordinator PFAN, Nigeria said.