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Nuru - République démocratique du Congo
Fragile countries like Nigeria have to contend with a high level of energy insecurity - a result of their many social, economic, security and health challenges. Energy supply solutions are limited for the private sector, and diesel generators are often used to replace a faulty or expensive electricity grid. Photovoltaic solar energy is a valuable alternative, however, its adoption is often delayed by regulatory uncertainty, unpredictable changes in grid prices and exchange rate fluctuations.

Is Nigeria a fragile country? It is Africa's largest economy – bigger than South Africa and Egypt – with a population of 222 million, 37 billion barrels of oil reserves (Nigeria is Africa's No. 1 oil producer), mining reserves and an area of 924,000 square kilometres. With a variety of climates (from the humid southern tropical coast, suitable for cocoa and palm oil, to the Sahelian savannah in the north and the central highlands where food and cereal crops are more readily grown), the country is an economic powerhouse with a massive domestic market, a broad industrial base, a business culture and quality management.



The fragile nature of present-day Nigeria is attributable to the accumulation of overlapping and mutually-reinforcing problems to which the country is exposed. Insecurity, poverty, energy deficiency, corruption, a lack of infrastructure, a shortage of foreign currency and the related problems of a depreciating currency are challenges that seem impossible to resolve independently of one another.

And yet, there is general agreement among economists concerning the solutions. The increase in Nigerian energy production thanks to improved security and massive but highly profitable investment upstream (oil and gas production), midstream (densification of the pipeline network), and downstream (modernisation of refineries), would reduce the balance of payments deficit, stabilise the currency, reduce energy prices, create jobs, boost the competitiveness of industry and, in so doing, boost national wealth and reduce poverty.

However, these interconnections can also work in the opposite direction. Because the security situation in the Niger Delta region is not improving, investment in onshore oil fields is being reduced, as evidenced by the recent decisions by Shell and TotalEnergies to divest some of their interests in onshore and shallow water oil fields. Nigeria has not reached the oil production quota allocated by OPEC (an average of 1.3 million barrels a day in 20231, increased to 1.5 million in November 2023). The country is struggling to get its natural gas to major centres of consumption. The gas is flared at a loss at oil production sites, while also releasing greenhouse gases. By failing to maintain and modernise the refineries operated by the national oil company NNPC, whose production has fallen from one year to the next, imports of refined oil are increasing and weighing on the country’s balance of payments in dollars. The Nigerian currency, the naira, was devalued twice between June 2023 (-44%) and January 2024 (-39%) and it continued to lose value in February 2024. The private sector is directly impacted by this situation. The cost of a litre of diesel in Nigeria rose from 790 to 1,227 naira per litre between August 2022 and February 2024.



The situation in Nigeria's electricity sector is symptomatic of the fragile nature of the economy. The 42 gigawatts of installed capacity generated by 22 million generators need to be compared with the 5.4 gigawatts supplied by the electricity grid. Private individuals, businesses and public authorities have to take the place of failing electricity distribution companies (DISCOs) by acquiring their own generators, which run for an average of 4 to 8 hours a day due to power cuts. The cost of this electricity, based on imported diesel and paid for in dollars, is more than 20 cents per kilowatt-hour. This cost fluctuates with the price of a barrel of oil, but crucially, it increases in local currency in proportion to the depreciation of the naira, a major headache for companies focused on the domestic market and for private individuals whose income is not dollarised.

How are Nigerian businesses coping in this environment? It's a daily challenge, as we learned from senior executives of Valentine Chicken in the agri-food sector, JMG in the capital goods assembly sector and Baze University in Abuja. Most of the equipment needed to produce electricity, particularly solar panels, is imported and paid for in dollars. Payment for these purchases is contingent on the availability of dollars from commercial banks, which try to secure allocations from the Central Bank of Nigeria (CBN). In June 2023, this critical situation led to the removal of the Head of the CBN, a devaluation of the currency and a floating exchange rate regime.




ZIZ Energie is lighting up secondary towns in Chad

The electrification rate in Chad is very low: 6% compared with an average of 48% in sub-Saharan Africa. The grid is currently concentrated around the capital, N'Djamena. Decentralised energy is therefore a key national challenge. The Chadian company ZIZ Energie - which has been specialising in the development, construction and operation of mini-grids for 16 years - delivers clean, reliable renewable energy to households, administrations and businesses in secondary towns (an estimated 70,000 beneficiaries).

In 2023, Proparco granted a €1.5 million loan to this SME, which has over a hundred employees. This money is helping to electrify basic infrastructure that powers bakeries, universities and hospitals. The commercial and industrial (C&I) services ZIZ Energie intends to develop are helping to bolster Chad's industrial fabric. They provide the resources for launching a decentralised energy infrastructure aimed at developing, building and operating mini-grids in the country's secondary towns. This project, which qualifies as “100% climate mitigation”, should reduce the need for diesel generators, stabilise energy rates and reduce the population's energy dependency.




Nigerian companies can sign a power purchase agreement (PPA) with independent power producers (IPPs) specialising in photovoltaic solar power for commercial and industrial businesses (solar C&I). The constant fall in the dollar cost of photovoltaic panels and their installation is resulting in a cheaper alternative to the electricity grid and diesel generators, provided a commitment is made for 10 to 15 years at fixed prices indexed either to the dollar or to inflation. Nigerian regulations authorise these purchase contracts for businesses' own needs and they allow third parties to build and operate these private power plants.

However, a company's energy policy in Nigeria depends on a number of assessment criteria: anticipating grid prices set by the regulator, the number of hours of power cuts per day, the price of a litre of diesel in dollars and local currency, rates charged by IPPs for PPAs (which vary according to solar irradiance), availability of the space required to install a photovoltaic power plant, the creditworthiness of the company and financing costs.

These factors, which influence decision-making, change very quickly and frequently - for example, changes in the dollar/naira exchange rate automatically increase the cost in local currency of a PPA billed in dollars. If an economic agent compares the rates charged by an independent producer with those of the electricity grid, this comparison becomes unfavourable for a PPA the day after a currency devaluation, especially as the Regulator tends to defer passing on primary energy supply costs in grid electricity rates. Similarly, the price of diesel consumed in generators is a function of the applicable taxes or subsidies, and economic agents necessarily bet on changes in public tax or subsidy policies. All of this affects and delays economic decisions in favour of renewable energies.

Another determining factor in private sector energy strategy is expectations regarding electricity sector reform. In Nigeria, electricity distribution is entrusted to DISCOs, whose economic health varies from state to state. The reform of the electricity sector, ratified in June 2023 by the Tinubu government, plans to leave responsibility for the electricity sector to the states themselves. Uncertainty over the new regulations that will come into force in each state of the Nigerian Federation is encouraging certain players, rightly or wrongly, to opt for the status quo.

Private sector lack of visibility over the grid’s capacity to meet its requirements and the future cost of this energy is symptomatic of a fragile country like Nigeria – a characteristic encountered in most sub-Saharan Africa countries. The choices made in this uncertain environment will determine the margins of businesses over the coming years and affect their competitiveness. Introducing solar photovoltaics into the economic equation is a good thing because costs are lower than grid rates and generator costs in most circumstances, however, this is insufficient to trigger investment decisions and commitments given the uncertainty created by exchange rate fluctuations, regulatory action and national energy policy choices. To respond to this uncertainty as effectively as possible, financing institutions are reducing financing timeframes as much as they can and adapting their offers to private sector solar projects




Nuru - moving towards clean and affordable energy in DRC

Nuru ("light" in Swahili), the company behind the Democratic Republic of Congo’s (DRC) first urban solar photovoltaic network, is a key player in providing access to clean, reliable and affordable energy for people in the east of the country, which is plagued by ongoing armed violence.

In July 2023, Nuru closed a Series B equity financing programme of more than US$ 41 million. This fund will enable Nuru to step up implementation of energy projects with a total capacity of 13.7 MWp. These projects will significantly expand the company's existing operational facilities in eastern DRC and help to address the country's huge energy deficit.

The US$ 41 million in funding comes from market-leading equity investors including SFI, Global Energy Alliance for People and Planet (GEAPP, backed by the Rockefeller, Ikea and Bezos Earth Fund foundations), the Renewable Energy Performance Platform (REPP), Proparco, Voltalia and the Energy Access Ventures (EAV) and Gaïa impact funds.

"Once you come here [to the DRC] and see the hunger for energy, the potential for growth, you can finally look past the risks and see what a transformative investment this will be, a real, genuine business opportunity," says Archip Lobo, co-founder of Nuru.

The mission of Nuru and its investors is to help develop access to energy while diversifying and decentralising the DRC's energy mix, thereby supporting the aims of the Democratic Republic of Congo's National Strategic Development Plan in terms of renewable energy capacity.



Olivier Leruste

Olivier Leruste

Managing Partner of Echosys Invest and co-founder of Echosys Advisory


Managing Partner of Echosys Invest and co-founder of Echosys Advisory, Olivier Leruste is an expert in financing solutions and raising funds for renewable energy projects. Before co-founding Echosys Advisory in 2020, he was head of financing for French developer Akuo, where he raised over €2 billion to finance solar, wind, hydroelectric and biomass power plants. Before this, Olivier was a banker in the Energy & Commodities division of BNP Paribas in New York and Mexico, and an economist with Crédit Lyonnais. Olivier holds a Master's in Management and Economics from HEC Paris.


Afrigreen Debt Impact Fund is a €100 million debt fund created by Echosys Invest and managed by RGreen Invest, a French portfolio management company. The Fund supports renewable energy projects in Africa, with a specific focus on commercial and industrial (C&I) solar power. Proparco, the EIB, IFC, BIO, FMO, Société Générale and BNP Paribas are the fund's main investors. The teams are based in Abidjan and Paris and began operating the Fund in April 2023.

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