00:11Welcome to this exciting edition of Business Africa.
00:14I'm your host, Afolake Winluye, the top stories this week.
00:18Nigeria's power crisis fuels a solo boom as businesses seek alternatives to unreliable and expensive generators.
00:30Togo and Russia move to deepen economic ties, opening a new chapter in trade and investment.
00:40Africa's digital revolution gathers pace, with daily mobile internet use reaching 83% among connected Africans.
00:52Nigeria's power crisis has created a new business opportunity for solar.
00:57Millions of businesses still rely on expensive diesel and petrol generators to keep the lights on.
01:03Now, PowerGen has bet on that decentralized solar and mini-grids can deliver reliable electricity at scale, where the national
01:11grid has struggled.
01:12Have a look.
01:13In Nigeria, running a business means fighting a daily, quantifiable battle against darkness.
01:20The national grid wields only 4,000 to 5,000 megawatts of electricity for a population of over 220 million
01:28people, leaving 86 million citizens completely off the grid.
01:32To cope, businesses run more than 22 million private fuel generators, with cost of generator fuel swallowing up to 50
01:40% of total operating expenses.
01:47And yet, Africa holds 60% of the world's best solar resources, but only accounts for roughly 1% of
01:55globally installed solar capacity.
01:57Instead of waiting for central transmission going to catch up, African enterprise is bypassing them entirely.
02:04Renewable utility developer PowerGen has secured a strategic investment from Shell's seeded impact fund all on to aggressively scale decentralized
02:13solar and mini-grid operators across Nigeria.
02:16Arranged by emerging markets financial advisors, Delphos, the deal signals growing institutional confidence in decentralized clean power as a bankable
02:26commercial asset class.
02:32Joining us now is Mr. Connor Shine, a financial expert and a director at Delphos.
02:38Welcome to the show.
02:39Tell us, can off-grid commercial solar realistically deliver cheaper and more reliable power to businesses in Nigeria today?
02:48Well, nothing happens overnight, but yes, solar is competitive.
02:52And what we're seeing is, in the case of PowerGen, the average solar tariffs are about half of what we
02:58have in our models for diesel.
03:00So solar wins on a cost-per-unit basis.
03:03And when you combine those economics with the development impacts that come along with clean energy, it's all the more
03:10powerful for the investment markets.
03:12At Delphos, we prioritize structuring bankable commercial transactions with solid fundamentals.
03:18And when we can combine those transaction fundamentals with development impact, then it's a win-win.
03:24And, of course, these impacts are being all the more prioritized by private investors like Alon.
03:30So it's great to see their investment in transactions like PowerGen and just the greater attention paid by the private
03:36investment community to these sorts of deals.
03:39Because now DFIs are not necessarily the first names that you think of for an emerging market transaction, which is
03:45great for market development, great for transactions akin to PowerGen.
03:50And it's also great for the DFIs because it means that their mandates to catalyze development in these markets and
03:56deepen these markets is working.
03:58How did Delphos structure the deal to manage currency risk?
04:02And can this model work for other African markets?
04:06Well, you're right to bring this point up because there is no transaction if proper attention is not paid to
04:12these key risks.
04:14So we have at Delphos our structured finance team that really works day in and day out on structuring bankable
04:22currency solutions for transactions, not just on the continent, but across the globe.
04:26But your question reveals something interesting in the case of PowerGen, which is that without getting into the terms of
04:33the deal, which are confidential, the Alon ticket of USD $5 million is a dollar-denominated investment.
04:42And with Alon, as a local Nigerian investment firm, they have their own perception of the market, of course, of
04:48the Naira devaluation.
04:50But it goes to show that FX risk in and of itself is not or should not be the determining
04:57factor in whether any party takes a transaction forward.
05:00We encouraged our capital providers across all of our mandates to take a holistic view of the project, of the
05:07transaction, and then work with Delphos in order to structure out appropriately any of these risks or perceived risks.
05:16Is decentralized power the future of Africa's energy sector?
05:22And what can African governments do to attract more investment?
05:26I mean, in the case of utilities, putting aside transmission and distribution infrastructure that's only continuing to get more dated
05:35and older, the time constraints when working with utilities can be what kills a transaction or kills a project.
05:45For these IPPs that take four to seven years to develop a project and then another two to reach financial
05:51close,
05:52the distributed energy players are able to come in and deploy these backyard energy solutions with a lot less fuss,
06:01a lot less regulatory burden.
06:03So for Delphos, we are very connected to the utilities, whether it be as clients or as counterparties to our
06:10clients.
06:10And what we encourage them to do is work to help limit the regulatory burden and also ensure that the
06:18project companies get what they need efficiently to make a transaction bankable.
06:24That doesn't mean awarding every IPP or every project developer a concession agreement or grid connection agreement or land lease.
06:31But we're identifying a portfolio of priority projects and then working with the finance parties, the advisors, and the project
06:37companies to make sure that everything is in place and the T's are crossed ahead of financial close.
06:45Well, thank you very much for those insights.
06:48Thanks so much.
06:50Appreciate it.
07:34We want to increase the amount of cocoa and coffee we process here in Togo.
07:44And Russia has extensive expertise in manufacturing the machinery that can help us do that.
07:52Beyond business interests, Moscow is also looking closely at Togo's strategic location.
08:00Its deepwater port in Lome and the Adeti Copay industrial platform offer a gateway to the Sahel.
08:10Russia uses Togo as an entry point to the wider region.
08:16A lot of petroleum products, as well as fertilizers, come into Togo before being distributed to neighbouring countries across the
08:23region.
08:25But trade between the two countries remains modest at just $10 million.
08:32The talks explored ways to expand those ties, including opportunities in industry, energy and digital technology, as well as education
08:42and culture.
08:45Faced with the rapid changes in the international environment and the challenges we share, our heads of state and government
08:52expect us to put forward concrete proposals.
08:57Togo is an important partner for us in Africa, both in trade and economic cooperation, and in cultural and humanitarian
09:04ties.
09:06With both countries set to open embassies, the next challenge will be to give trade real momentum.
09:18Africa is rapidly closing its digital access gap.
09:21The GSMA says 83% of connected Africans now go online daily, while telecom investment has driven the continent's coverage
09:30gap down from 50% in 2016 to less than 15% today.
09:36A decade ago, the challenge was physical access.
09:39In 2016, half the continent had no mobile broadband signal.
09:45Today, relentless telecom investment has driven that coverage gap below 15%.
09:50The signals are live.
09:52The foundation is set.
09:53Now, the next frontier is transforming basic access into full economic participation.
09:58The GSMA State of Mobile Internet Connectivity 2026 reveals that across sub-Saharan Africa, an entry-level smartphone now averages
10:07$40 to $50,
10:08a cost that consumes a staggering 76% of monthly income, but the poorest fifth of the population.
10:16Compounding this device hurdle are import tariffs, VAT, and sector-specific taxes, which add up to 30% to consumer
10:24costs in several markets.
10:25As a result, while urban centers thrive, diverse digital use in rural regions like Ethiopia sits at 4%,
10:32with most existing traffic concentrated in social messaging rather than digital trade or public services.
10:39The potential remains immense.
10:42The GSMA projects that closing the global usage gap will deliver $3.5 trillion in GDP by 2030,
10:49with emerging markets reaping 90% of the benefits.
10:57With that, we've come to the end of this edition of Business Africa.
11:02For more business news and updates, stay tuned to African News or visit us online at africanews.com.
11:08See you soon.
11:16Business Africa was presented by Turkish Airlines.
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