No matter how big Dangote is, the company cannot employ more people than Mile 12, Bodija, or Wuse markets. These sprawling market hubs and thousands more across Nigeria are home to the true powerhouse of our economy: micro, small, and medium enterprises (MSMEs). They are the uncounted millions powering food systems, light manufacturing, and local commerce. These MSMEs account for over 90% of Nigerian businesses and provide about 80% of employment. They are the real absorbers of labour, the real builders of GDP.
Yet, Nigeria’s MSMEs are starved of the tools they need to thrive, especially energy and finance. Despite their contribution to national development, they remain underserved by public investment and financial systems that neither understand their structure nor respect their resilience. Instead of designing solutions for the informal realities that shape Nigeria’s economy, policymakers have spent decades trying to force the sector into rigid formal molds. This has proven ineffective, and costly.
Two major obstacles hold MSMEs back: inadequate access to affordable, reliable energy and inaccessible financing. Together, these challenges lock millions of enterprises into low productivity, stifling innovation and competitiveness. Solar power offers a breakthrough offering decentralised, clean, and cost-effective energy. But solar adoption remains low among MSMEs, not because of lack of interest, but because of a lack of affordable and accessible local finance.
In Nigeria, a relatively small percentage of Micro, Small, and Medium Enterprises (MSMEs) access formal financing. While estimates vary, studies suggest that less than 20% of MSMEs in Nigeria have been able to secure credit from formal financial institutions, even though 40% had bank accounts. According to Moniepoint’s 2023 Informal Economy Report, 70% of informal businesses have accessed a loan, but only 12.2% from a bank. The rest turned to friends, family, cooperatives, and, increasingly, fintech apps.
These numbers show that financial capital exists, but it is locked away in systems that do not speak the language of MSMEs. Meanwhile, the informal and alternative financial networks cooperatives, fintechs, Islamic finance institutions are doing the heavy lifting, without policy support or integration into national solar financing strategies.
To close the solar access gap for MSMEs, Nigeria must invest in bold, scalable, and naira-based renewable energy financing models that work for informal and formal businesses alike. This will require coordinated implementation by government agencies, development partners, financial institutions, the private sector, and civil society.
1. Concessionary Naira-Based Credit – Institutions like the Central Bank of Nigeria (CBN), Development Bank of Nigeria (DBN), and the Bank of Industry (BoI) should lead the way by designing low-interest, long-tenure credit facilities targeted at MSMEs for productive-use solar systems. These should be disbursed through microfinance banks, fintechs, and cooperatives that can effectively reach informal businesses.
2. Green MSME Funds – The Federal Ministry of Finance, in collaboration with partners like GIZ, and SEforALL, should establish Green MSME Funds to co-finance solar adoption. These funds must prioritise women-led businesses and underserved areas, and should include partial risk guarantees, technical assistance, and incentive-based repayment structures.
3. Product Innovation & Aggregation Models – Solar developers, in partnership with market associations, cooperatives, and business clusters, should design modular and bundled solar solutions tailored to the unique needs of MSMEs. Programmes like the Nigerian Electrification Project (NEP) can support demand aggregation and lower the cost of solar appliances through economies of scale.
4. Leverage Informal and Alternative Finance Networks – Nigeria’s informal financial ecosystem – cooperatives, Islamic banks, microfinance institutions, and fintechs – offers reach, trust, and adaptability. With regulatory backing from the CBN and SEC, and technical support from donors, these institutions can become active channels for sustainable solar finance delivery.
5. Tap Non-Traditional Capital Pools – Beyond conventional banks, Nigeria has untapped billions in CSR budgets, insurance reserves, diaspora remittances, and faith-based endowments. Regulatory bodies like NAICOM and institutions like PENCOM should work with the private sector to design investment vehicles that redirect this capital into decentralized energy for MSMEs.
6. Incentivise Corporate Co-Financing – Corporates spend heavily on CSR and infrastructure projects. Yet, few support off-grid RE adoption for small businesses. With support from FIRS and frameworks from CAC, corporates should be incentivised through tax relief and ESG-linked benefits – to co-finance clean energy infrastructure for community-based enterprises.
In conclusion, to unlock the productivity potential of Nigeria’s MSMEs, we must change how we think about energy and finance. We must stop viewing informal businesses as “too risky to finance” and start treating them as the cornerstone of a just, green economic transition. By unlocking local finance, and working with the networks that MSMEs already trust, Nigeria can empower its small businesses to power the future.
By Clement Chisom John, Renewable Energy Association of Nigeria (REAN)