Govt should incentivize low-interest loans for solar companies and green innovators – Grace Oluchi Mbah

As Africa continues to battle the effects of global warming while taking climate action to check the release of greenhouse emissions, the Co-founder and Executive Director of Climate Action Africa (CAAF), Grace Oluchi Mbah has called on the Federal Government to provide more low-interest loans for solar companies trying to provide alternative and cleaner energy sources. The CEO said this at a media parley held in Lagos.

The cost of purchasing solar panels and building a complete solar system has continued to skyrocket in the country. One of the least categories of solar systems for powering homes, the 1KVA system, costs between 450,000 naira to 510,000 naira. The 2KVA plan costs in excess of N1,000,000. This effectively puts solar systems beyond the reach of average Nigerians who continue to deal with high inflation, stagnant income and ever-reducing purchasing power.

Noting that the reason for the high cost of solar systems is because the components like panels, inverters and batteries are all imported, Grace Oluchi Mba said to this end, it becomes imperative that the government started providing low-interest loans to companies solving these problems.

“When the government wanted us to invest in the creative sector they created things like funds for the investment in the creative sector. I think it is important in a time like this that there be a lot more alternative financing options from the government and private sector, some of them low-interest because currently the interest rate is 24 per cent and that is really high for young innovators and startups. So what are the options that we can have in terms of remodeling financial offerings and products for innovators in this sector? There are few options available but there needs to be more,” Grace said.

She went on to criticize the Nigerian Climate Act passed by former president Muhammadu Buhari, pointing out that for all its lofty ambitions, it was severely lacking in the area of financing.

Alternative financing for solar companies and green initiatives

Speaking of alternative financing for green energy companies, Grace pointed out that banks which are usually the major sources of financing, might not be the best sector to look to financing as they are not likely to take the risk. She therefore called for more VCs and funds to consider investments in green and sustainable solutions to the climate problems.

“There is the Green Climate Fund GCF which is currently one of the largest funds to invest in green and clean and sustainable businesses. I know that a few organisations in Nigeria like Access Bank have made some announcements about this. Heirs Holding has a pavilion at COP and I know that part of their fund, even through the Tony Elumelu Foundation, has a particular amount focused on green and sustainable solutions as well,” Grace Oluchi Mbah said.

She, however, called for more such sources of alternative financing. Speaking of ways that the government could create incentives for investors looking to fund these solutions that would help achieve the national climate agenda, Grace noted that one of them is through guarantee funding which is a situation in which the government guarantees loans that are going out to green solutions.

She said the government could do this through the Africa Guarantee Fund (AGF) and other various guarantee funds that exist. She noted that Nigeria ought to have one and if there are none, they could be created through the Bank of Industry which already has a program for green solutions and businesses going into that space.

“The government itself has been known to create funds that they pass through commercial banks at low–interest rates for investment into areas like the creative sector, agriculture etc. So this is the case. The president announced the Great Green Wall project. I have yet to see the fine print of what its financing looks like, but those are some of the ways they could motivate investors to increase investment in these areas,” she finished.

See also: Climate Action Africa urges broader stakeholder collaboration to address Nigeria’s climate crisis