FINANCING SUSTAINABLE NATIONAL DEVELOPMENT IN NIGERIA

KARLRUSHE, GERMANYJULY, 2017

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Outline

� ENERGY IN NIGERIA AND BOI INTERVENTION� ENERGY IN NIGERIA

o Current Overview

o Potential Alternatives (A focus on Renewable Energy)

� BANK OF INDUSTRY SOLAR ENERGY PROGRAMME (SEP)

� YOUTH ENTREPRENEURSHIP IN NIGERIA AND BOI INTERVENTION� ENTREPRENEURSHIP IN NIGERIA

� GOVERNMENT INTERVENTION PROGRAMMESo Youth Enterprise With Innovation in Nigeria (YouWiN!)

o N-Power

o MSME Development Fund

� BANK OF INDUSTRY INTERVENTION IN YOUTH ENTREPRENEURSHIPo Graduate Entrepreneurship Fund (GEF)

o Youth Entrepreneurship Support (YES) Programme

o Youth Ignite Programme

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ENERGY IN NIGERIA

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ENERGY OVERVIEW IN NIGERIA – Nigeria is highly dependent on petroleum for both energy and foreign exchange earnings

CURRENT STATE

� Electricity generation is mostly from 2 sources: Gas thermal plants (approx. 80%) andhydropower (approx. 20%)

o It is estimated that 50,000MW is required to adequately light up Nigeria

o Although there is a 12,522MW total installed power generation capacity,only 5,074MW peak output has been achieved!

o There is an 80% demand /supply gap which needs to be filled

� Nigeria is highly dependent on petroleum as primary source of fuel

o 1.68mbpd was recorded in May, 2017 as production has remained stable inthe region

o Petroleum products contributed approximately 10% of Nigeria’s GDP andaccounted for 70%-90% of government revenue in Q1-2017

o Natural gas reserves are estimated to be 187 trillion cubic feet

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� Significant potential for solar energy

o Solar radiation in Nigeria averages 19.8MJm2/day with sunshine hoursaveraging 6hrs/day

o The assumed potential for concentrated solar power generation isaround 427,000MW

o 1,125MW Greenfield Independent photovoltaic (PV) power projectssigned in 2016

� Moderate wind energy potential

o Wind speeds in the south (coastal and offshore) are between 1.4m/s and3.0m/s

o Wind speeds in the extreme north are between 4.0m/s and 5.1m/s

o The 10MW Katsina Wind Farm project is expected to be completed by theend of 2017

POTENTIAL ALTERNATIVES – Although renewable energy is still in its nascent stage, there is a significant potential for solar energy in most parts of Nigeria

MJm2/day – Megajoule per square metre per day m/s – metre per second

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� Hydropower potential estimated to be 11,250MW (1,900MW exploited): High Potential!

o About 70 micro dams, 126 mini dams, and 86 small sites make up a potential3,500MW small hydro power generation

o It is estimated that only 64.2MW is currently being exploited

� Biomass energy

o The country consumes 43.4 million tonnes per year of fuel wood

o Animal waste production is 227,500 tons per day (6.8 million m3 of biogas)

� Coal energy

o Coal energy generation was abandoned in the 1960s due to Biafra war

o Millhouse Generation Services’ 30MW coal-to-power project is in progress

o Enugu coal reserves can support up to 1,000MW of electricity

ENERGY OVERVIEW IN NIGERIA – Although renewable energy is still in its nascent stage, there is a significant potential for solar energy in most parts of Nigeria

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BANK OF INDUSTRY SOLAR ENERGY PROGRAMME (SEP)

Bisanti Community (Katcha LGA), Niger State, Nigeria

Implementation of solar projects commenced with the deployment of low-cost, off-grid solar pilot electrification projects in six (6) rural communities, one (1) in each of the six (6)

geopolitical zones in Nigeria.

Four (4) Micro-grid solar PV systems with installed capacities of 24kW each, and two (2) Stand-alone PV systems with total installed capacities of 26kW and 40kW were deployed, with

smart pre-paid meters installed in each home.

A Pay-As-You-Go (PAYG) model was employed for flexibility of payment enabling subscribers recharge their meters through their mobile phones.

The projects were commissioned between October 2015 and May 2016, and cost an average of US$220,000.00 (N44 million) for each micro-grid system, and US$160,000.00 for each of the

stand alone projects.

Successful implementation of the pilot scheme has served as pedestal for project replication in other communities across Nigeria having showcased both technical and commercial

viability of Solar Electrification.

THE PROJECT – SEP is an intervention project by Bank of Industry focused on promoting and supporting the expansion of off-grid renewable energy services

Onibambu, Osun State

Bisanti, Niger State

PROJECT DEVELOPER(Local partners)

BOI

Subscribers (End user)

LOCAL AGENT

�Debt (interest 7% p.a; Tenure 15 years)

�PAYG Mobile technology/Equipment

�Installation�Maintenance�Recharge cards Distribution

INVESTORS (local & foreign)

�Funding

THE BUSINESS MODEL – SEP is an intervention project by Bank of Industry focused on promoting and supporting the expansion of off-grid renewable energy services

The Business Model

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� Environmental Impact

o Offset over 2,500 metric tonnes of carbondioxide annually

� Improve living standards

o Increased disposable income

o Improved healthcare/education services

� Encouragement of rural micro & small scale entrepreneurs

o Over 100 micro-businesses thriving

IMPLICATIONS – SEP is an intervention project by Bank of Industry focused on promoting and supporting the expansion of off-grid renewable energy services

� In tandem with the Federal Government of Nigeria’sRural Electrification programme

o In line with Sustainable Development Goals(SDGs)

� Employment generation/technology transfer

o Training of locals as solar technicians

o Over 150 direct and indirect jobs created

� Reduction in rural-urban migration

o Encouraging urban-rural migration

SOCIAL IMPACT OF BANK OF INDUSTRY SOLAR ENERGY PROGRAMME

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SOCIAL IMPACT OF BANK OF INDUSTRY SOLAR ENERGY PROGRAMME (SEP) IN PICTURES

Charwa, Kaduna State

Chakun, Kaduna State

Bisanti, Niger State(Primary Healthcare Centre)

Onibambu, Osun State Onono, Anambra State

Onono, Anambra StateOnibambu, Osun State

Obayantor 1, Edo State

Replication:Ongoing in 10 additional communities in collaboration with UNDP which is providing Grant for the projects.

Fund mobilization:

Attract green funding from both local and foreign sources to replicate the project across Nigeria.

Scaling up:For productive use to other end users (BOI launched a N1 billion (US$3.3 million for MSMEs in January 2017).

Backward Integration:

Inviting partnerships for the Domestication of solar technology in Nigeria.

PROGRAMME OUTLOOK – SEP is an intervention project by Bank of Industry focused on promoting and supporting the expansion of off-grid renewable energy services

PROGRAMME OUTLOOK

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YOUTH ENTREPRENEURSHIP IN NIGERIA

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GENERAL FACTS

� Over 37million MSMEs in Nigeria. About 99.7% are Microenterprises (SMEDAN 2015)

� Based on World Bank research, on a global scale, MSMEs contribute between 40-55% ofGDP and 50-80% of employment

� MSMEs contribute over 75% of Nigeria’s total employment (NEDEP report)

� Most financial institutions, especially Commercial banks consider MSMEs highly risky.Therefore MSMEs constitute very low numbers in their loan portfolio

� MSMEs are charged 25-30% interest rate per annum on average by financial institutions

ENTREPRENEURSHIP – MSMES in Nigeria contribute 50% and 75% to national GDP and employment respectively

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YOUTH ENTREPRENEURSHIP – The youth population constitutes up to 50% of the entire population, thus, support for entrepreneurship is critical for economic development

NIGERIAN POPULATION

� Nigerian population projected at183 million in 2016

o Women constitute 49.5% and men 50.5% of the population

o The country has a growth rate of 2.28% per annum

o The UN reports the Nigerian population will rise to 391 million by 2050

o There are 87 million living in urban areas and 95 million living in rural areas

o 78.5 million citizens within the labour force population

� Youth Population

o The total youth population in labour force is estimated to be 38.2 million

o There are 15.2 million youth in labour force identified as unemployed orunderemployed

o Unemployment higher for women than menSource: National Bureau of Statistics (NBS), Nigeria

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GOVERNMENT INTERVENTION PROGRAMMES

� Youth Enterprise With Innovation in Nigeria (YouWiN!)

o Launched in 2011 with the aim of financing outstanding business plans

o Assisted 3,900 enterprises in the form of grants

o YouWiN! targets individuals between 18 and 45 years

� N-Power

o It is a paid volunteering programme of a 2 year duration that providesyouth with relevant work skills and development

o Focus areas include: Agro-industry, healthcare, tax, construction,technology, education and creative industry

o In 2016, 200,000 participants between 18 and 35 years were supportedand another 300,000 are expected to be supported by the end of 2017

� MSME Development Fund

o ₦220 billion set aside to provide funds at low interest rate (9%) to MSMEs

o 60% of the fund is targeted at women entrepreneurs

YOUTH ENTREPRENEURSHIP – The youth population constitutes up to 50% of the entire population, thus, support for entrepreneurship is critical for economic development

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BANK OF INDUSTRY INTERVENTION IN YOUTH ENTREPRENEURSHIP

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GRADUATE ENTREPRENEURSHIP FUND (GEF)

� Launched in 2015, GEF is a ₦2 billion entrepreneurship empowerment programmeaimed at members of the compulsory National Youth Service Corps (NYSC)programme with a mandate to:

o Encourage youth to venture into businesses and become labour employers

o Increase inclusion by de-risking NYSC members and making them eligible forloans up to ₦2 million

o Ensure sustainability of the businesses f the eventual loan beneficiaries

� Key highlights:

o 1623 members trained by BOI out of 4,910 applicants (1,967 shortlisted)

o Out of 669 loan applications, 436 loans approved with a value of ₦740 million

o 183 loans disbursed with a value of ₦294 million

BANK OF INDUSTRY INTERVENTION – The bank has developed programmes aimed at fostering entrepreneurship spirit among youth by changing their mindset from job seeking to self-employment and wealth creation

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YOUTH ENTREPRENEURSHIP SUPPORT (YES) PROGRAMME

� The YES programme was initiated in 2016 to cater to a broad range of youth notcovered by the GEF scheme with a program limit of ₦10 billion

o Comprises of a nine (9) week extensive Entrepreneurship and BusinessManagement training

o Includes technical skills training in partnership with various technical trainingand vocational institutes in Nigeria

o Financing of businesses by the bank under its SME Cluster Initiative

� Key highlights:

o 7,000 candidates trained (10% of total applications received!)

o Total of 1,379 loan applications received

o 474 loan loans approved worth ₦1.6 billion

o 44 loans disbursed with a value of ₦148.9million

BANK OF INDUSTRY INTERVENTION – The bank has developed programmes aimed at fostering entrepreneurship spirit among youth by changing their mindset from job seeking to self-employment and wealth creation

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YOUTH IGNITE PROGRAMME

� MSME survey conducted in 2013 showed that start-up capital requirement for 69% ofmicro enterprises was less than ₦50,000

� The initiative is targeting youth operating sustainable businesses at micro level

� Programme is being implemented in partnership with Afterschool Graduate DevelopmentCentre (AGDC) that has operated similar programmes with Lagos State government

� Support business with loans up to ₦200,000, scalable to ₦500,000 for performing accounts

o Aims to support the establishment and/or expansion of 1 million micro enterprises

o Create 1.2 million direct jobs and 4.8 million indirect jobs in a 5 year period

o Loans will be disbursed through MFBs at 9% rate

BANK OF INDUSTRY INTERVENTION – The bank has developed programmes aimed at fostering entrepreneurship spirit among youth by changing their mindset from job seeking to self-employment and wealth creation

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THANK YOU