How renewable energy can kick-start post-COVID economic recovery ― MD, Lumos Nigeria
By Udeme Akpan
Despite the efforts of several administrations, inadequate and unstable power supply remains one of the major problems in Nigeria. In this interview with Udeme Akpan, Managing Director, Lumos Nigeria, Peju Adebajo, who spoke on a wide range of issues, makes a case for the massive deployment of renewable, especially solar to jump-start the nation’s post Coronavirus pandemic economy.
In your opinion, how has the coronavirus pandemic ravaged Nigeria’s economy?
There were a couple of global situations happening at the same time, one of which was the health pandemic, the Coronavirus, and on the other hand, the Oil shock, which led to a loss in revenue for Nigeria — resulting in an adjustment to the national budget.
Many of our trading partners globally are also suffering from the effects of this sudden health shock and economies worldwide are facing the prospect of recession and a decline in GDP. Nigeria is no exception.
Sectors like Aviation, Manufacturing and Hospitality have been badly affected and even places of worship like Churches and Mosques. Some, like Food and Healthcare, are thriving. The restriction on movement and social distancing has disproportionately affected many small or micro-enterprises whilst some organisations are laying off staff, not paying or not improving salaries.
What can the stakeholders; especially the Federal Government and investors, do to kick-start the economy after the pandemic?
The Federal Government has done a lot and I do commend these efforts because, despite a dip in revenues, the government has continued to deploy several interventions towards managing the current economic situation. For example, the CBN fund with reduced interest rates for businesses, the NIRSAL facility for smaller businesses, a healthcare fund, and payments to people on the social register. Importantly, the Economic Sustainability Plan (ESP) including the plan to introduce five million Solar Home Systems for twenty-five million people. This is very commendable and an excellent opportunity for the renewable energy industry.
What role do you think adequate and stable power supply will play in this direction?
We all know that energy is crucial to the effectiveness of most of our operations. Energy and transportation account for between 40 to 70% of business operating expenses. Many established organisations have alternative sources of power to the grid (usually generators) and during the lockdown, had to run generators for long hours, with attendant cost implications, making the need for reliable power more pressing. Due to social distancing, the need for technology becomes very essential and technology depends on having stable power.
Power is also crucial to small businesses such as Welders, Hairdressers, Barbers, tailors and the likes. Pre-COVID MSMEs accounted for about 90% of the workforce and 80% of the economy. So, the ability to supply these MSMEs who are off-grid, or do not have steady power, is our number one priority at Lumos. Having stable power in itself is a crucial need to be addressed.
In other words, you are saying that your company and others in the sector have been very busy even with the lockdown and you’re ready to do more moving forward, in terms of providing renewable energy supplies to Nigerians?
We are ready to do more. We appreciate the government for tackling the power sector problem head-on. We need to fix the grid, and it will take a lot of money and maybe a couple of years down the line. The government recognizes that with the cost of renewable energy coming down, it has become the most efficient and effective to deploy. Renewable energy can be deployed in areas that are too far and simply uneconomic for the grid. So, both in areas where there is an unreliable grid or where there is no grid, renewable energy, and in particular solar energy, given the amount of sun we have in Nigeria, makes the most economic sense.
Every crisis brings opportunities; the pandemic was an opportunity for the solar industry. And we are ready. Lumos is already the market leader in the industry with over 100,000 active installations across every state in the country. We have over 700 installers and over 60 strategically located mini-warehouses across the country. So, we are probably the only renewable energy company that has a nationwide footprint with a large active installed base. We are ready to support and do even more to ensure that the government achieves the goal of getting power to everyone.
Could you tell us a little more about the unique products and services you provide?
Our system is very simple, It consists of a panel, which you put on the roof or wherever you can catch the sun and an indoor unit which has a battery, which converts and stores the power from the sun. All you need to do is attach your appliances to the indoor unit and immediately you have light. Coming into the market 5 years ago, we initially had just one product called ‘Lumos Classic’. We recently rolled out two more products, ‘Lumos Eco’ and ‘Lumos Prime’. The ECO has an output of 70W DC and 60W AC, while the Prime has an output of 100W DC and 85W AC. These products can power energy-efficient appliances such as Fan, TV, Radio, Light Bulbs, laptop computer for your basic comfort.
To purchase a system, pay at any Lumos store or on Jumia.com and the system will be delivered to your home. Within 24 hours, an installer will install the system, so in just 24 hours, you can have access to reliable power. it is very simple. It is also extremely easy to use.
Another unique thing about Lumos is that we offer a very convenient and pocket-friendly payment plan. Our customers do not have to go through the stress of putting a huge amount of money down, as with Lumos you can pay over 48 months – that is four years.
For the benefits of readers, can you tell them more about the environmental benefits of using solar?
There is increasing advocacy for more climate-friendly means of generating power. Of all the different energy sources, solar energy has the least negative impact on the environment.
We see a solar revolution in the very near future just as we have had the banking revolution and the telecoms revolution. Just as we moved from an outdated banking system to the new generation banks, and fixed-line telephony to mobile phones, so we will move from the centralised grid to decentralized and distributed power systems.
Rather than going through the cycles that other countries have gone through where you had fossil fuels before transitioning to renewable energy, Nigeria can leapfrog and move more to solar energy which is cost-effective, clean and green. It is an opportunity for the government to accelerate and realise this outcome.
We are thankful for the Economic Sustainability Plan recently launched by the Presidency, to provide five million solar home systems to households and businesses.
This step is a recognition that this government understands that the easiest, quickest way to ensure the energy gets to all the nooks and crannies of Nigeria is by deploying solar.
Are there indications that with the increased use of solar, that Nigeria’s economy, especially in the rural areas would be stimulated, especially for the small-scale investors, the restaurant owners, the barbers, and artisans in the outskirts?
This is very likely. The economics of deploying solar for small scale businesses is a proven, smart, affordable way to power your business. For instance with Lumos, with just 5500 Naira a month you can very quickly get solar power into your facility, and immediately save up 70% on the cost of running your generator, eliminating buying petrol/diesel, maintenance/repairs, transportation to the petrol station and stress we go through.
So, getting solar to all the nooks and crannies in Nigeria, which can be done very quickly and affordably, provides our people with a better quality of life. Secondly, from an economic and productivity point of view, businesses become more profitable as less money is spent on running generators. It makes sense from so many points of view and investing in renewable energy should be an urgent priority for the government. Lumos as a market leader is ready to support the government to ensure that solar energy is more widely available in Nigeria.
What partnerships are you looking at to deliver affordable and steady power to more customers?
Our initial rollout was with MTN, and so you will find Lumos available in most MTN stores across the country. Recently on healthcare, we partnered with All-on, an independent agency of Shell, to deliver solar home systems to health care facilities across Nigeria to fight the outbreak of COVID-19. These are examples of very successful partnerships.
With the All-on partnership, we delivered solar home systems to healthcare facilities at the Eti-Osa Isolation Center in Lagos, to primary healthcare centres in Oyo State. We also worked with the Society for Family Health and other Non-governmental Organisations to deploy these systems across Nigeria.
We will continue to do more; we are partnering with more payment providers because we need them to ensure our customers’ payments are convenient across Nigeria, for both the banked and unbanked. We will continue to work on these partnerships and others for the benefit of our customers and Nigerians in general.
Lumos is a profitable venture for trade partners, so, we are always looking for additional distributors and installers, to penetrate the market further and push products closer to neighbourhoods, especially in areas which are underserved by the grid.
I am sure you know how tough it is to do business in Africa, especially Nigeria. Are there problems or issues that you like the government to address to make it more seamless to do solar business in Nigeria?
Right now, the key components of our products are imported, for example, the different categories of solar panels and indoor units attract different levels of duty and VAT. The government must urgently look at the tariff regime of these critical solar products, to enable importation and then stimulating local manufacturing assembly of panels in the near future.
Secondly, we need to address the issue of poverty in the country. In the very rural communities, some people find 5500 Naira monthly, unaffordable. We would like the government to put in place incentives leveraging the conditional cash transfer scheme to enable these households afford solar.
The third is education. It is a relatively new industry in Nigeria. The government can do some awareness programs to educate citizens that you do not have to disturb neighbours with the noise of a generator and that there are alternatives. I think the government has been doing well, especially with the five million solar homes initiatives, but of course, we are always asking for more to ensure that solar ultimately remains affordable and available.
Lastly, the industry needs access to intervention funds at single-digit interest rates to make continued investment a reality.
Any advice you may wish to put across to the various stakeholders, your customers, the government, and other people in the economy?
The government is already doing well, and we want them to sustain the momentum. For our existing customers, we want to assure them that we know and understand what Nigerians are going through, and we will continue to make our products affordable and ensure excellent customer service. We also assure them that Lumos will be with them on their journey to a better lifestyle and helping them manage their costs. Solar is here to stay and Lumos will be an integral part of working with the government, the industry and all our trade partners, to ensure Power for everyone.