Nigerian fintech Nomba and renewable energy financing company Synafare are putting ₦2 billion ($1.4 million) into solar financing for small and medium-sized businesses across Nigeria.
The funding will be deployed over the next 24 months and is expected to help about 300 businesses purchase solar panels, inverters and batteries.
The partnership comes as many Nigerian businesses continue to struggle with two major challenges: limited access to affordable credit and unreliable electricity.
Nigeria has about 40 million micro, small and medium-sized businesses, which contribute nearly half of the country’s GDP. Yet, more than 80% of these businesses do not have access to formal credit.
At the same time, the unreliable power supply has pushed many businesses towards alternative sources of electricity, particularly petrol and diesel generators. Solar is becoming a more attractive option, but the upfront cost of installing a system remains a major barrier for many business owners.
That is the gap Nomba and Synafare are looking to address.
Under the partnership, Synafare identifies and pre-qualifies businesses interested in switching to solar. The businesses then submit their applications and know-your-customer (KYC) documents to Nomba, which carries out its own credit assessment before disbursing approved loans directly to the businesses.
The loans are expected to average around ₦50 million ($37,196), with some businesses able to access up to ₦100 million ($74,393), depending on their size and energy needs.
Synafare will handle loan repayments, while Nomba provides the financing and manages the credit assessment.
For Nomba, the programme builds on its existing lending business and its focus on providing credit directly to merchants.
“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, CEO of Nomba.
He said the ₦2 billion commitment reflects the company’s confidence in Nigerian SMEs and the potential of the partnership with Synafare to expand access to solar power.
Synafare CEO Tobi Esho said the partnership addresses one of the biggest obstacles businesses face when considering solar: the upfront cost.
“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,” Esho said.
The companies believe that access to more reliable power could help businesses reduce their spending on generators and fuel while giving them more hours to operate.
There is also an existing track record behind the new commitment. Nomba and Synafare said they have worked together for more than a year, during which they disbursed over ₦500 million to 10 SMEs without recording a default.
The next challenge will be scaling the programme to hundreds more businesses while maintaining the same credit and vetting standards.
If successful, the partnership could make it easier for more Nigerian SMEs to move away from expensive, unreliable power and towards solar without having to shoulder the full cost of installation upfront.