Nigeria Government-Donor-Funded Solar Initiatives
We looked at two cases – the Nigeria Electrification Project (NEP) and the Solar Power Naija Programme (SPNP). In the former, the financiers were foreign partners; in the latter, the financier was a local player. In both cases, the aim was to stimulate economic growth by increasing access to energy. Both were also implemented by the Rural Electrification Agency (REA).
NEP is a public-private initiative of the Federal Government (FG) to bridge the energy access gap by providing electricity to households, MSMEs, and health and education facilities in underserved and unserved rural communities through mini-grids, captive power plants, productive appliances, and solar home systems (SHS). The project was financed by the World Bank and the AFDB to the amount of $550 million. The NEP has 5 initiatives and 11 sub-initiatives, many of which were initiated before the NEP. The SPNP, funded by the Central Bank of Nigeria, was launched to support economic recovery in response to the COVID-19 pandemic. The initiative was to be part of the Economic Sustainability Plan (ESP), which aimed to provide 5 million new solar-based connections in off-grid communities.
Partners
Typical Target:
- Selected underserved communities
- Primary healthcare centers
- Community-based projects
Thematic focus:
Many of the NEP’s sub-initiatives had healthcare themes but the minimum subsidy tender and the performance-based grants were not tied to a definite theme. The SPNP initiative had no clear thematic focus but was supposed to support the growth of the local economy.
Status:
- The NEP is currently in the construction and implementation phase.
- Based on the published timeline, the SPNP is expected to have been completed.
Impacts:
NEP (achieved):
- Electricity connections through mini-grids: 58,694
- Electricity connections through SHS: 1,086,235
- Households headed by women with mini-grid:6191
- MSMEs connections through SHS: 6,543
- Energy installed through mini-grid: 11,069 kW
- Energy deployed by SHS:46,868 kW
SPNP:
- This programme was expected to generate an additional ₦ 7 billion in tax revenues per annum and $10 million in annual import substitution.
- It was also expected to expand energy access to 25 million individuals (5 million new connections) by providing Solar Home Systems (SHS) or connection to a mini-grid.
- The initiative was expected to increase local participation in the off-grid solar value chain, facilitate the growth of the local manufacturing and assembly industry, and incentivise the creation of 250,000 new jobs in the energy sector.
- However, there are no publications to determine the impact of the project to date.
Lessons/Recommendations:
The Nigeria Electrification Project (NEP) is an excellent initiative aimed at stimulating growth in communities that would have been ignored by commercial service providers due to concerns about low returns. The initiative was well received, attracting no less than 50 private sector companies to participate in over 349 communities. It also had a strong local implementing partner, the Rural Electrification Agency, which boosted implementation. However, like public-private partnerships targeting rural communities, it suffers from a lack of clear metrics to measure success. A case in point is the Minimum Substitute Tender, which is designed to stimulate economic development in underserved communities but has no clear way of measuring economic progress other than successful connection to the mini-grid, which is a means to an end, not an end in itself. Solar Power Naija Programme (SPNP) was founded on the understanding that energy access is critical to economic development and aimed to stimulate the local economy at a critical time after the pandemic. The initiative also had a capable local implementing partner and was anchored in results-based metrics that were easy to measure. However, four years on, it is not easy to assess the impact of the initiative, the level of private sector participation it has generated, or the funds disbursed to date.
We believe that the adoption of an outcome-based metric, such as wage growth and reduction in hours lost, would have provided a better basis for tracking the success of the NEP. In addition, we recommend that these initiatives be focused on places where economic activity is certain and easy to evaluate, such as markets. To improve the transparency of the programme, we recommend publishing the names of the private sector partners that have won tenders in each selected municipality. This will not only improve transparency but also accountability. For organisations looking to do something similar to the SPNP, we recommend greater transparency from inception to implementation to build private sector confidence. These lessons can help steer the recently launched Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project to greater heights.
For further information:
https://nep.rea.gov.ng
https://nep.rea.gov.ng/federal-governments-5milion-solar-connections-program/project-detail/P179687
