FCMB is showing the way out of the anguish of erratic electricity supply and the pains of high cost of diesel by scaling up clean energy financing while also taking its braches off the national grid and diesel generators to solar power. SULAIMON OLANREWAJU reports.
Expressing the agony foisted on the manufacturing sector and the country as a whole by erratic electricity supply and high cost of diesel, Mr. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), said the sharp increase of over 200 per cent in the price of diesel would result in the closure of many companies, leading to reduction in capacity utilisation, further decline in Gross Domestic Product (GDP), large scale unemployment across 76 sub-sectors and increase in crime rate, among others implications.
The MAN DG, who said this in a statement issued recently, also expressed fears that the situation would lead to a further decrease in foreign exchange earnings from the manufacturing sector, as high cost of production feeds into export commodity prices.
There is no doubt that electricity supply energizes a nation and that the quality of life in a country is a function of the level of its energy development. This is because energy guarantees basic comfort. It is an essential element of contemporary life that fuels productive activities such as commerce, manufacturing, agriculture, education, healthcare and more.
Indeed, Nigeria, a developing economy with the lowest access to electricity globally, according to the Energy Progress Report 2022 by Tracking SDG 7, will benefit significantly from targeted off-grid interventions. It would ensure access to electricity for about 92 million persons out of the country’s 200 million population lacking access to power.
While the government seems to be confused on how to tackle the twin problem of poor electricity supply and high cost of diesel as well as the attendant challenges, First City Monument Bank, a subsidiary of the FCMB Group, appears to have found a solution to the problem.
The bank has embarked on decarbonisation and scaling clean energy rather than relying on grid and fossil fuel as the major sources of energy. Consequently, the bank has cut its carbon footprint considerably and scaled its financial commitment to businesses committed to clean energy.
To prove that the strategy is working, FCMB has moved 150 (73 per cent) of its pan-Nigeria branch network from grid/diesel generators to solar power. As a result, it is ahead of industry peers in the race toward a low-carbon future where clean energy takes centre stage.
The lender is backing clean off-grid energy solutions to bridge the supply gap in Africa’s most populous nation as the demand for household and commercial energy rises exponentially. This is a radical departure from the country’s predominant energy source – fossil fuels.
Speaking about this, Ladi Balogun, FCMB Group Chief Executive and contributing expert at the University of Oxford (Leading Sustainable Corporations Programme), said access to energy drives economic growth and development. He urged more commitment to clean energy finance to improve the quality of life and accelerate growth and development in developing and underdeveloped economies.
To bridge the energy gap, First City Monument Bank partnered with development finance institutions to provide targeted financing to improve Nigeria’s energy access through mini-grids and energy-efficient projects. The partner institutions include African Development Bank, Proparco and International Finance Corporation. In addition, there were project collaborations with the Nigerian Electrification Programme (NEP) and Nigeria Energy Support Programme (NESP) under the Rural Electrification Agency, Solar Naija Programme and the Central Bank of Nigeria.
Yemisi Edun, Managing Director of the bank, described FCMB’s bold intervention in the renewable energy sector as the solution to the energy shortfall challenge facing individuals and businesses in Nigeria. She believes it will unlock the sector’s potential and pave the way for more private sector investments in renewable energy projects.
Remarkably, the FCMB Group subsidiary has executed credit enhancement agreements worth over N21 billion to improve energy supply, enhance cost efficiency and access to clean energy. Its financing proposition allows value chain players in the renewable energy sector to access loans of up to 70 per cent of their project cost without collateral under the World Bank/Rural Electrification Agency (REA) of Nigeria scheme.
Between June and July this year, the lender provided credit lines worth about N1.7 billion to firms operating in the renewable energy sector. Out of the funds, over N265m went into mini-grid projects, with a total PV capacity of 392KWp, in Rivers, Niger, Ebonyi state and Ondo states. It also financed three hybrid energy efficiency projects in Lagos and Abuja with about N330m. These projects increased access to sustainable energy sources for about 3,000 households and Small and Medium Scale Enterprises (SMEs) across the country. They now enjoy a constant electricity supply from clean and environmentally friendly solar, hydro and biomass sources.
A purpose beyond profit corporation, FCMB Group is building and driving an ecosystem that fosters inclusive and sustainable growth across Nigerian communities.
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