By Oluremi Akande
As the world grapples with the urgent need to address climate change, financial institutions are increasingly being called upon to play a pivotal role in driving sustainability. A 2023 report by the International Finance Corporation (IFC) showed that global investments in green finance reached a staggering $2.3 trillion in 2022, highlighting the growing recognition that financial solutions remain crucial to tackling environmental challenges.
Nigeria, with its vast energy challenges and overreliance on fossil fuels faces a unique set of circumstances. LAPO Microfinance Bank (MfB) is rising to meet this challenge, steering the nation towards a greener future through its Environmental Green Clean Lending Initiative, launched in 2017.
Aligned with the United Nations’ Sustainable Development Goal 7 (SDG 7)-which aims to ensure access to affordable, reliable, sustainable, and modern energy for all-LAPO MfB is actively driving Nigeria’s transition to clean energy. By financing renewable energy solutions and clean cooking products, the bank is promoting energy inclusivity while reducing the nation’s carbon footprint.
Green finance, a concept rapidly gaining global traction, aims to channel capital towards environmentally sustainable projects. It encompasses funding for renewable energy, sustainable agriculture, and climate adaptation efforts, among others. According to the United Nations Environment Programme (UNEP), the global demand for green finance is expected to hit $6 trillion annually by 2030, underscoring the urgency of integrating sustainability into financial products. LAPO MfB is responding to this demand in Nigeria, offering innovative solutions that align with global sustainability trends.
At the core of LAPO MfB’s initiative is the drive to provide affordable financing for renewable energy solutions, such as solar-powered systems and bio-energy products like gas cylinders. These green finance products support Nigeria’s energy transition and directly address the country’s environmental and health challenges, especially in rural areas that are off the national grid. By offering loans for solar systems and clean cooking solutions, LAPO MfB is helping thousands of Nigerians reduce their carbon footprints while improving their quality of life.
In a country where unreliable energy sources have long hindered economic growth, solar energy has emerged as a vital solution. The International Renewable Energy Agency (IRENA) estimates that renewable energy could supply 50% of Nigeria’s energy needs by 2030. In line with this vision, LAPO MfB has already disbursed over N22 billion in loans, impacting more than 580,000 green products sold since the initiative’s inception. This success is a significant step towards the country’s energy transformation, echoing the global shift towards clean energy.
The bank’s target audience includes a broad spectrum of Nigeria’s population, from salary earners to rural cooperatives, artisans, and small businesses. This inclusivity mirrors the global push for accessible green finance solutions. The World Bank reports that microfinance institutions (MFIs) have increasingly been recognized as key players in bridging the financing gap for underserved populations, particularly in developing countries. LAPO MfB’s model of providing flexible loans to its clients ensures that even the most vulnerable communities are not left behind in the global shift towards sustainability.
Globally, green finance has been shown to be not only environmentally beneficial but also economically viable. A recent study by the European Investment Bank (EIB) found that every dollar invested in green projects could yield up to $4 in returns. For LAPO MfB, this financial viability is evident in the success of its loan offerings, which include favorable repayment terms and competitive interest rates. The initiative, which focuses on solar home systems and gas cylinders, has not only delivered positive environmental impact but also boosted the livelihoods of local entrepreneurs involved in the distribution of these products.
LAPO MfB’s strategic partnerships with certified solar companies and original equipment manufacturers (OEMs) are also in line with global trends where cross-sector collaboration has been key to scaling up green finance solutions. As the demand for renewable energy grows globally, more institutions are recognizing the importance of creating strong partnerships to meet climate goals. In Nigeria, LAPO MfB’s collaboration with OEMs ensures that its green products meet international standards, giving clients access to high-quality, reliable solutions.
