Nomba, a Nigerian fintech company and Synafare, an asset financing company focused on renewable energy, have committed ₦2 billion ($1.4 million) to help small and medium-sized businesses in Nigeria access solar energy systems. The financing is expected to help about 300 SMEs reduce their reliance on generators, lower energy costs and operate more reliably.
The funding will be deployed over 24 months and will support businesses in purchasing solar panels, inverters and batteries. The initiative comes at a time when access to affordable credit and reliable electricity remains a major challenge for Nigerian businesses.
Nigeria has about 40 million micro, small and medium enterprises, which contribute nearly half of the country’s GDP. However, more than 80% of MSMEs do not have access to formal credit. At the same time, unreliable electricity continues to push businesses towards expensive alternatives. About four in 10 Nigerians depend on generators as the national grid struggles to meet demand, while solar currently accounts for 1.5% of Nigeria’s overall energy mix.
For businesses, the combination of limited financing and high energy costs can restrict growth. By providing funding specifically for solar equipment, Nomba and Synafare aim to address both challenges at the same time.
“At Nomba, we’ve built our credit business on a simple principle: lend responsibly, and lend directly, so the value reaches the merchant without unnecessary friction,” said Yinka Adewale, chief executive officer of Nomba. He said the ₦2 billion commitment reflects confidence in Nigerian SMEs and the model the two companies have developed together to expand access to solar energy.
Financing Solar Access for More Businesses
The partnership brings together Synafare’s renewable energy network and Nomba’s lending infrastructure. Synafare identifies, vets and pre-qualifies SMEs interested in adopting solar power. The businesses then submit their applications and know-your-customer documentation to Nomba, which independently assesses their ability to repay before approving and disbursing the loan directly to the merchant.
Loans under the programme are expected to average about ₦50 million ($37,196), with individual businesses able to access up to ₦100 million ($74,393), depending on their size and energy requirements. Nomba will provide the capital and conduct the credit assessment, while Synafare will manage the collection of repayments.
The companies expect the financing to give SMEs more productive operating time while reducing their spending on generators and fuel. More reliable electricity could also allow businesses to extend their operating hours and invest more resources into their core activities.
“Every business we work with wants more reliable power to run and grow their operations, but the upfront cost of going solar is often out of reach,” said Tobi Esho, chief executive officer of Synafare. He said Nomba’s direct financing has helped close that gap and that the new commitment will allow the companies to reach a larger number of SMEs.
Building on an Existing Partnership
The expansion will require both companies to increase their capacity to identify and assess suitable businesses while maintaining their existing lending, underwriting and vetting standards.
Nomba and Synafare said their partnership has already provided an early indication of how the model can work. Since beginning their collaboration more than a year ago, the companies have disbursed more than ₦500 million to 10 SMEs without recording a default.
The new ₦2 billion commitment therefore represents a significant expansion of an existing financing model. If successfully deployed, it could help more Nigerian SMEs move away from costly and unreliable power sources while giving them greater access to the equipment needed to support business growth.
Source: TechCabal
