Nigerian commercial banks are increasing their involvement in renewable energy financing as the Federal Government works to close a funding gap of about $20.5 billion needed to improve electricity supply across the country.
Deposit Money Banks (DMBs) that previously financed the acquisition of electricity distribution and generation companies continue to face challenges because of the power sector’s liquidity problems. However, some banks are now shifting their focus toward renewable energy projects as an alternative area of investment.
The latest development is a N50 billion financing agreement between the Rural Electrification Agency (REA) and Alpha Morgan Bank. The facility is designed to support renewable energy initiatives in communities with limited or no access to reliable electricity.
The Federal Government estimates that approximately $23 billion is required to address Nigeria’s electricity deficit. So far, only about $2.5 billion has been secured, leaving a funding shortfall of roughly $20.5 billion, equivalent to about 89 per cent of the total requirement.
The agreement with Alpha Morgan Bank is part of a broader effort to attract private-sector funding and supplement government and donor-backed electricity programmes. Other financial commitments include a $100 million facility from Stanbic IBTC, a N100 billion commitment from Lotus Bank, and approximately $188 million in financing from FCMB for renewable energy projects.
Under the new arrangement, Alpha Morgan Bank will make up to N50 billion available as revolving project finance for eligible renewable energy developers working under REA programmes, particularly the Distributed Access through Renewable Energy Scale-up (DARES) initiative.
Individual developers may qualify for financing of up to N10 billion, with repayment periods of between 12 and 24 months, depending on the bank’s credit assessment. Alpha Morgan Bank will also finance as much as 70 per cent of the counterpart funding required for qualifying projects.
Speaking at the agreement-signing ceremony in Abuja, REA Managing Director and Chief Executive Officer, Abba Abubakar Aliyu, highlighted the significant financial resources required to expand electricity access and improve reliability nationwide.
Aliyu explained that Nigeria needs around $23 billion to strengthen its power infrastructure and extend electricity access, but less than $2.5 billion is currently available. This leaves an estimated financing gap of $20.5 billion.
He said the government was therefore working to attract more private-sector capital through commercial banks while awaiting an additional $1.19 billion financing package from the Japan International Cooperation Agency (JICA). The expected funding will support both interconnected and standalone mini-grid projects.
According to Aliyu, the partnership with Alpha Morgan Bank is intended to provide developers with a more efficient route from project approval to actual implementation.
He also noted that electricity demand is expected to increase significantly as Nigeria’s population grows and digitalisation expands. The rising use of artificial intelligence, data centres and other technology-driven services is expected to place further pressure on electricity supply.
Representing Alpha Morgan Bank, Executive Director Doyin Anyaehie said the partnership demonstrates the bank’s commitment to helping address one of Nigeria’s major development challenges.
She stressed that dependable electricity is essential for economic expansion, particularly for small businesses and rural communities that often struggle to afford costly alternative sources of power.
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