The Bank of Industry (BoI) has launched its N1-billion solar energy fund to boost its off-grid electricity generation project.

The fund would be made available to firms partnering with the bank in the development of solar energy services across the country.

At the event in Lagos, Waheed Olagunju, acting managing director of the bank explained that the fund is a concessional financing initiated by the bank as a result of poor cash floor in the rural areas.

Olagunju said the project considers supply of electricity to Micro, Small and Medium Enterprises, MSMEs, to boost their production and make them competitive.

He said the initiative will help reduce cost of business, as current study shows that alternative power source costs 40 percent of expenditure by the manufacturing sector.

The bank according to him, spent about N240 million for six pilot solar projects in the geo-political zones of the country in 2016.

According the managing director, 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.

He disclosed that the cost of electricity accounts for about 40 percent  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” he said.

Olagunju stated further that renewable energy provides 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.

He stressed that it is therefore important to support the provision of sustainable and reliable energy for MSMEs, which is why the bank 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, he noted.

The provision of solar electricity, according to him, 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.

The bank is also replicating the initiative in other rural communities in collaboration with its 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 it launched.

“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” he said.

Earlier, the banks divisional head, large enterprises, Joseph Babatunde said the fund is targeting to grow the agriculture sector, cottage industries boost activities of artisans like the service industry,hair dressers etc.

Babatunde said the bank aims to achieve through the intervention, job creation, improved living standards of the people, revamp the economy and ultimately alleviate poverty.