Tinubu has said he will unify Nigeria’s exchange rate, which until now has discouraged foreign investment due to the wide gap between official and parallel-market naira-dollar rates.
In his inauguration address, Tinubu also called Nigeria’s current interest-rate levels “anti-people and anti-business”, and said they need to come down.
The West African country has been slow to adopt renewable energy despite soaring diesel prices amid strong solar potential.
Eweje, who is Nigerian, went to university in Canada, where he started WATT Renewable. Operations in Canada have been scaled back as the focus switches to Africa. The company in May announced a $10m contract with an unnamed African bank to deliver 5.6MW of power to sites in Nigeria.
The company is “building a decent pipeline” of projects in Nigeria, with a focus on telecoms and financial-services clients. But “barriers to entry” have slowed the adoption of solar power in the country, Eweje says. These include insufficient education, with many not understanding the full potential of solar due to a lack of exposure, he says.
There’s also the high upfront cost to businesses of switching to solar power, with the government in the past not having done anything to make it cheaper, he says. Regulation is a further barrier. “In the past, government policy has scared away some investors,” and created uncertainty, Eweje says.
He is optimistic that some of those hurdles will be reduced under Tinubu. The new president has the right ideas, but everything depends on implementation, he says.
A unified exchange rate and lower interest rates, “if applied properly will absolutely help to ease the capital constraint” on the solar-power industry.
WATT currently distributes its power directly to Nigerian customers. The company could make excess energy available to the grid if regulation and infrastructure are improved.
Currently the infrastructure is “unreliable” and it’s “extremely difficult” to get paid for supplying solar power to the grid, Eweje says. The government agency responsible for payment, Nigerian Bulk Electricity Trading (NBET), “has challenges in performing the role”.
Expansion plans
WATT is seeking up to $100m of equity in tranches to fund expansion in Nigeria and across Africa. A first tranche of $30m to $40m is currently being sought for Nigerian growth. Eweje aims to conclude that by the end of 2023, but says it could slip to the first quarter of 2024.
The company wants to raise a second tranche of $30m for expansion in West Africa in late 2024 or early 2025, and a third $30m tranche, intended to fund expansion in southern Africa and the Caribbean, by the end of 2025.
WATT, which gets debt funding from the Swedish environmental impact investor Trine, is targeting development finance institutions and private-equity firms.
Eweje is considering expansion in West African markets including Côte d’Ivoire, Liberia, Togo, Cameroon, Niger and Chad. WATT has been getting “solid enquiries” from those countries, and its existing major clients, including Pan African Towers, want solar power in new markets. This can provide a “softer landing” in terms of market entry for the company, Eweje says.
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