RENEWABLE ENERGY FINANCING. Challenges, Opportunities & prospects The Ecobank experience. Sunkanmi Olowo

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1 RENEWABLE ENERGY FINANCING Challenges, Opportunities & prospects The Ecobank experience Sunkanmi Olowo

Slide 1 The Pan African Bank Incorporated 1985, Nigerian operation since 1989 Leading pan-african banking group, presence in 37 African countries, trading in over 20 currencies and international

2 Slide 1 The Pan African Bank Incorporated 1985, Nigerian operation since 1989 Leading pan-african banking group, presence in 37 African countries, trading in over 20 currencies and international offices in Paris, London, Dubai and Beijing. At year-end 2014, the Group had US$24.5 billion in assets and revenue of over US$2.5 billion. Listed on the Lagos, Accra and Abidjan (BRVM) stock exchanges Operates Covers 37 Countries in Africa Our Pan-African Heritage Introduction Dem Central Congo Cote Sierra Cameroon Sao Senegal Malawi Guinea Liberia Nigeria Kenya Gambia Mali Togo Ghana Cape Burkina Uganda Rep Tome D Ivore Burundi Benin Rwanda Chad Leone Gabon Brazzaville Africa Bissau Verde of Faso Congo 30 Country Operations across Africa Key alliance with NEDBANK (South Africa) to deliver world-class service to customers across Africa Services to more than 11.5 million individuals, small businesses, local corporates and public sector organizations, through our extensive network of 1,600 branches and offices, 2,700 ATMs and over 10,000 POS terminals. Over 20,000 employees

in assets and revenue of over US$2.5 billion. Listed on the Lagos, Accra and Abidjan (BRVM) stock exchanges Operates Covers 37 Countries in Africa Our Pan-African Heritage Introduction 10. 14. 25. 23.

3 Ecobank Sustainability Framework Microfinance and micro banking Women in business Ecobank Foundation Community engagement Social Responsible Financing Human Capital: Attracting and retaining employees Diversity and culture Training and development Pan-African spirit Creating economic value Fostering integration Partnership for development Driving Economic Transformation Protecting our natural resources: Environmental sustainability Risk management Green business Global initiatives Internal carbon footprint management

spirit Creating economic value Fostering integration Partnership for development Driving Economic Transformation Protecting our

4 Commitments to RE-Finance Set up of sustainability desks in every affiliates. All credit requests must pass the sustainability test to qualify for funding. Signatures to key protocols. Alliances with key partners in the renewable energy field. Focus on renewable energy as a key segment of our business. Trained Relationship managers on RE finance. Have a consumer finance product for Renewable energy 3

Signatures to key protocols. Alliances with key partners in the renewable energy field.

5 RE Potentials in Nigeria Nigeria is endowed with abundant renewable and non-renewable energy resources Current energy supply depends mostly on fossil fuels (petroleum)and firewood. Only about 40% of households in Nigeria are connected to the national electricity grid. Provision of electricity is largely supplemented by private generators powered with fossil fuels. Though enriched with abundant hydrocarbons, the current capacity is not able to meet the power consumption in the country. The present dependence on fossil fuel is not enough to meet energy needs of the country. Nigeria requires power generating / handling capacity of about 140,000 MW as against the current capacity of 6,000 MW. Power Government policy is targeted at ensuring that 7% of Nigeria energy supply will be provided through RE by 2025)

Though enriched with abundant hydrocarbons, the current capacity is not able to meet the power consumption in the country.

6 Challenges of financing RE in Nigeria Challenges Absence of serious players with capacity and industry knowledge to work with Inadequate knowledge from bank personnel's. Lack of capacity (Financial, Technical, experience) of most companies & Bankers Many are new / recent entrants. Desired growth not seen. Absence of standards and regulatory frameworks Challenges Most project brought up were not well thought with untested and unreliable cash flow Too many substandard and failed solar installations Failed projects due to non standardization Absence of the required long term low priced funds to unlock the sector

Absence of standards and regulatory frameworks Challenges Most project brought up were not well thought with untested and unreliable cash flow Too many

7 Key considerations in RE finance Clean energy Carbon credit Grant, rebate & fiscal incentives Government policy (7% target by 2025) Tariff structure Off taker agreement Cash flow Captive power Power purchase agreement Sustainable finance / green bank

by 2025) Tariff structure Off taker agreement Cash flow

8 Key considerations in RE finance Clean energy Carbon credit Grant, rebate & fiscal incentives Captive power Government policy (7% target by 2025) Tariff structure Off taker agreement Cash flow Power purchase agreement

Government policy (7% target by 2025) Tariff structure

9 The Journey so far Ecobank set up RE desk and sustainable energy finance at the group. Appoint Sustainable Finance Champion in all affiliates. Training of at lease 60 staff on RE and the financing models. Working with Key partners, the bank Set aside funding for RE sector and energy efficient products. Flexible financing models in a bid to provide favorable solutions for RE financing. Synergy with Consultant of international repute to support financing of RE businesses. Seeking & exploring other collaboratio ns with multilateral agencies. Reasonably priced loans with less stringent collateral s. Good working relationship with the CBN for RE financing. Using the CBN MSME funds to offer single digit interest rate loans to RE companies. Introduce Consumer Finance product to boost RE uptake

Flexible financing models in a bid to provide favorable solutions for RE financing. Synergy with Consultant of international repute to support financing of RE businesses.

10 Financing Renewables In Ecobank Financing is available for RE Business owners for the procurement of components: solar panels, inverters, batteries, charge controllers etc. Funding has also been provided in the past to major distributors/suppliers of RE products. All developers must pass through due diligence tests to qualify for funding. Financing of businesses who wish to off-take renewable energy solutions is also available however projects must be assigned to approved project developers.

Funding has also been provided in the past to major distributors/suppliers of RE products.

11 Financing Renewables In Ecobank Total financing disbursed till date is in excess of $1.5mm with a healthy pipeline of over $3b undergoing review. Due to challenges with capacity, the renewable energy Consumer finance scheme was launched to scale-up the business uptake of project developers. Financing will be available to staff and individuals with staff salary accounts domiciled in Ecobank. Project Developers are encouraged to offer this product as a sweetener whilst doing independent marketing.

Due to challenges with capacity, the renewable energy Consumer finance scheme was launched to scale-up the business uptake

12 Requirements for accessing Credit Must have be in business for minimum of 3 years. Accounts must have been satisfactorily operated for minimum of 6 months Verifiable office or factory address. Must have full Understanding of the business No existing bad credit anywhere Business must be profitable Sound and realistic business proposal, not speculative

13 Requirements for Accessing Credit Ownership of the company shareholding structure Profile of key stake holders & Mgt, (background/qualification/experience) Existing loans? Technical support / Affiliation Off-taker agreement Competitors / industry knowledge Assets conversion cycle

(background/qualification/experience) Existing loans?

14 The Consumer Finance Scheme for Renewable Energy/Energy Efficiency products Target Market This loan program will be focused on Individuals working in reputable multinationals and blue chips, local corporates and Public sector institutions Qualifying products (will include but will not be limited to); Household installations and Energy efficiency Products certified by Winrock Int l Tenor will be maximum of 24 months Amount to be financed will be N20Million maximum. Product will be available as asset finance and salary-backed loans. Qualifying products are to be determined by industry experts - Winrock International. Approved vendors for the scheme must successfully go through a due diligence examination conducted by Winrock int l. Other financing arrangements to be developed are currently in the pipeline. 13

be maximum of 24 months Amount to be financed will be N20Million maximum. Product will be available as asset finance and salary-backed loans.

15 The Journey started with me, my 5kw solar solution

16 Thank you

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