Nigeria’s Decentralized Renewable Energy market (DRE), the largest in Africa and second largest globally, has witnessed progressive growth in recent years, with 1.7 million off-grid solar products sold between 2015 and 2017 and annual growth of 36% between 2014 and 2016. However, with over 75 million of its population living off-grid as at 2016 and increasing with the country’s annual population growth, the current level of finance in the DRE market tremendously falls short of what is required to commercially unlock it. Despite efforts by development organizations through pilot projects and technical assistance programs to strengthen the market, and regulations by the government including a Mini-Grid Policy currently being implemented for rural electrification, commercial finance is yet to significantly flow into Africa’s most promising off-grid market. Challenges in raising patient capital from local financial institutions has increased the need for foreign finance; however foreign exchange risks have limited the availability of these funds and underscored the need to focus more on unlocking local sources of finance especially following the negative impact of the 2016 economic recession on the market which saw the naira equivalent of foreign loans go up by almost 250% making many local enterprises adverse to long-term foreign finance.
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