COMPANIES IN THE NEWS: BANK OF INDUSTRY

By Scroll reporter Lagos, Nigeria.

Acting Managing Director Bank of Industry Waheed Olaguju’s speech at the official launch of the 1billion Solar Energy Fund for MSMES:

I am quite delighted to welcome you all to the official launch of the Bank of Industry’s N1.0 billion Solar Energy Fund for Micro, Small and Medium Enterprises (MSMEs).

• MSMEs play a major role as the engine through which most countries in the world thrive. Their growth and development are crucial to the level of industrialization, modernization, income per capita, equitable distribution of income, welfare and quality of life enjoyed by the citizenry.
• Consequently, the performance of the MSME subsector is closely associated with the development of a nation. In Nigeria, the growth of this sector has been hampered over the years by a combination of factors, one of which is access to reliable electricity.
• 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.

• The cost of electricity accounts for about 40% 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.

A robust mix of energy sources combined with an improved end-use efficiency, would be required to meet the country’s energy needs, and this is where the utilization of renewable energy sources come into play.

Renewable Energy provide healthy and sustainable alternative to the continuous use of fossil fuels, with long term cost saving advantages, especially in the absence of reliable power supply which is an essential ingredient for growth.

• It is therefore important to support the provision of sustainable and reliable energy for MSMEs, which is why the Bank of Industry has decided to provide the Solar Energy Fund to MSMEs. 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. The provision of solar electricity 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.
• This initiative is being replicated in other rural communities in collaboration with our 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 we are here to launch.
• 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.
• The projects will be implemented in collaboration with eight (8) competent solar energy project developers who have been carefully selected through a competitive and transparent process. They will be responsible for implementing the solar projects by providing MSMEs with solar solutions using appropriate business models.
• The utilization of solar energy solutions as against diesel and petrol for powering their items of equipment offers long term cost savings, though initial capital outlay may be relatively high. The provision of medium to long term loans to meet this initial capital outlay would drive affordability and flexibility, thereby enhancing productivity of existing MSMEs while also encouraging the establishment of new enterprises. Solar solutions are also faster to deploy . They can be installed and commissioned within six months.
• It is important to note at this point that this initiative is in line with the following Sustainable Development Goals (SDGs) of the United Nations which have been adopted by most countries in the world, including Nigeria :

1. Ensuring access to affordable, reliable, sustainable and modern energy for all.
2. Taking urgent action to combat climate change and its impact.

iii.         Promoting inclusive and sustainable economic growth; Full and productive employment and decent work for all.

1. Building resilient infrastructure; Promoting inclusive and sustainable industrialization; and fostering innovation.

• To achieve the above Sustainable Development Goals, it is imperative that Nigeria begins to take proactive steps towards incorporating alternative energy solutions into its energy mix to drive vibrant businesses. This would also contribute towards achieving our Intended Nationally Determined Contributions as pledged at the 2015 Paris Agreement to join the rest of the world in combating the menace of climate change.

• The initiative is also in tandem with one of the high 5 priority areas of the Africa Development’s Bank (AfDB) known as the ‘Light up and Power Africa initiative’. This is to be implemented via its climate finance program tagged ‘New Deal on Energy’ which aims to bridge the financing gap needed to address the energy deficit in Africa, thereby achieving universal access to energy by 2025.

• We therefore use this opportunity to call on all well – meaning citizens and institutions within and outside the country, to partner with BOI towards the provision of clean and sustainable energy for both domestic and industrial uses in Nigeria.