Association seeks support for funding of renewable energy developers
NAN-HE-13
Funding
By Kingsley Okoye
Abuja, March 23, 2017 (NAN) The Renewable Energy Association of Nigeria (REAN) has called on financial institutions to support investments by renewable energy developers to produce renewable technologies in the country.
REAN’s President, Mr Segun Adaju, in a communique obtained by the News Agency of Nigeria in Abuja on Thursday, said access to finance was a huge challenge for the development of renewable energy sector in Nigeria.
Adaju said for the sector to develop and provide the required electricity to Nigerians, companies and developers operating in the sector needed funding to build their business and provide services to consumers.
According to him, financial institutions are unwilling to lend due to a lack of understanding of the sector’s needs.
He said that it was important for aids providing agencies, development finance institutions and state-owned finance institutions to de-risk the sector to attract investment.
This he said, can be done by the banks and other financial institutions providing loan guarantees or first-loss facilities that enable investors to provide new forms of more affordable capital.
According to him, the Central Bank of Nigeria (CBN) and the Ministry of Finance need to also engage with Renewable Energy (RE) companies to understand their needs and take them into account when drafting policies that affect the sector.
Adaju said that improved access to capital would make the supply of RE products more consistent and reliable.
He said the availability of funds would also help project developers to bear upfront capital costs, and enable companies to make products and services more affordable through offering more consumer financing, leading to accelerated market growth.
According to him, to improve access to finance, REAN specifically recommends that CBN extends preferential access to foreign exchange to RE companies.
He said it was also necessary for the CBN to support the Bank of Industry (BOI) to increase the allocation of the Micro, Small and Medium Enterprises (MSME) funds specifically for RE.
He said that aid agencies, development finance institutions and the CBN should also provide more credit guarantees and de-risking mechanisms for the sector.
He said it was also necessary for investors to build dedicated capacity and skills to assess risks in the RE sector, work closely with REAN to learn more about the sector to develop innovative financing solutions.(NAN)
KC/IA
Edited by Idris Abdulrahman