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Sabon Gari: Despite FG’s multi-billion investment on solar project, SMEs spend over N36m yearly on generators (Part one)

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The Federal Government, through the Rural Electrification Agency (REA) resolved to provide a cheap, stable, and efficient off-grid power to support Small and Medium Scale Enterprises (SMEs) at the Sabon Gari Market, Kano. The market is among the top prominent commercial hubs in the state with over 13, 000 shops. Traders in similar markets such as Ariaria in Abia, Iponri in Lagos, were also listed as beneficiaries. The intent was to provide electricity to over 340 economic clusters in the country. Olugbenga ADANIKIN, who visited the markets in three states, reports about gaps in the project implementation and how it is frustrating most small businesses four years after flag-off. 


IT was about 2:47 pm on Tuesday, November 30. Safiya Bello, a middle-aged woman, stands on the balcony of a salon complex within the Sabon Gari Market, Kano, scouting for potential customers.

Her shop is strategically located in the market, ranked Nigeria’s largest with  solar-based decentralised power grid.

Oga! You wan make your hair?” Safiya queried in a seemingly customary phrase.

“No, I just came to find out if the Federal Government’s solar energy project is servings its purpose.”

Safiya spared no time expressing her disappointment. “No! It is a failure!!”

“It is not serving any purpose. It cannot power a simple hairdryer. In fact, most traders have shifted to Maja.”

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‘Maja’, this reporter would later find out, is the high-capacity power generating brand serving shop owners in  Abubakar Rimi Market. It has at least 13, 000 shops.

This is despite the ban on the use of generators and privately installed solar panels in the market since the FG launched the Energizing Economies Initiative (EEI) of the Rural Electrification Agency (REA).

“How can you plug two customers’ phones and your power will just trip off…” Safiya, who was obviously furious, asked.


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“See my shop. I am no longer connected to it (solar) because the amount demanded from us before we can use our hairdryer is N10, 000 weekly. Where will I get the money?”

She belongs to the Igbo Road Hairdressers Association comprising over 250 members. This implies that if each salon operator contributes N10, 000 weekly for energy consumption, as demanded, each salon owner would require at least N40, 000 monthly to use their appliances.

This would amount to N480, 000 in a year per hairstylist and N120m annually for 250 hairdressers.

Amount spent by over 13000 shop owners on Solar Energy in Sabon Gari Market, Kano

Victoria George runs a salon at Shop PBA N/45 within the same market. Her story is similar to Safiya’s. All her tools such as dryer, hair stretchers, and the like have become useless, except she uses her power generating set.

Victoria, who subscribed to the N4, 000 monthly tier removed a device from its case, saying “Look at this small hand dryer, the solar energy cannot power this equipment as little as it is.

One of the customers was quick to ask, “what about your big hairdryer?”

She walked up to it, pulled the equipment hanging on the wall with adjustable hinges and tried switching the knob. It is now dusty due to irregular use.

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“Even when we pay for the solar, we still have to switch on our generators and the governor of Kano has banned the use of generators in the market.”

Mrs. Victoria George, a hairstylist at the Sabon Gari market displays her hand dryer which has been rendered useless except she uses a power generating set. Photo Credit: Olugbenga Adanikin, The ICIR.

Another shop owner, Aishat Musa, subscribed to N2, 000 solar power weekly. That is N8, 000 in a month, yet she spends N12, 000 monthly on her private generator to meet the energy demand of her business.

She has also resolved to forgo the solar power source as it hurts her business.

How EEI came to play

During the first term of President Muhammadu Buhari, the FG through the REA energizing economies initiative rolled out the energy transition programme.

It is decarbonisation of the energy sector – the use of solar technology or clean energy to power businesses, majorly Micro, Small, and Medium Scale Enterprises (MSME). The project doubles as part of Nigeria’s Intended Nationally Determined Contributions (INDC), also known as the National Climate Action Plan, designed to reduce climate change impacts, including severe weather conditions such as flooding, desertification and rising sea level, among others.

Nigeria is a signatory to the historic 2015 Paris Agreement and it pledged to reduce Green House Gas (GHG) emissions in the country unconditionally by 20 per cent and conditionally by 45 per cent. Emission of the GHG causes climate change.

The FG further submitted an updated INDC to the United Nations (UN) on 27 May 2021 to renew its commitment to clean energy.

Nigeria’s Intended Nationally Determined Contributions (INDC) at a glance. Infograph Credit: CSDevNet.

Hence, launched in September 2017, the EEI was to increase energy access, provide clean, affordable energy and off-grid power solutions for traders. The solar power intervention, however, phases out the controversies around epileptic supply and estimated billings.

Specifically, over 340 economic clusters were identified, with an initial 16 clusters and these clusters were to enjoy constant, affordable, and reliable supply from clean energy.

Though it is in phases, part of the first phase was executed at Ariaria Market in Abia State; Sabon Gari Market in Kano; Sura Market and Iponri Market, both in Lagos State.

“We are now also implementing, a policy that no government before us committed to, developing energy through mini-grids. Iponri market is now being powered by solar,” Babatunde Fashola, the former Minister of Power, Works and Housing stated during the project inspection.

“This solution is also in Sabon Gari market, Kano State and it is coming up in many other markets.”

A firm recognised as Special Purpose Vehicle (SPV) was created to manage the solar facilities in each of the markets.

The SPV at the Sabon Gari market – Sabon Gari Market Energy Solutions Limited (SGESL), for instance, signed a 20-year renewable energy contract with the Kano State government. The company was registered in August 2017 but listed as inactive because it has defaulted in its obligation to the CAC.

The Iponri Market SPV is referred to as Iponri Market Energy Solution Limited (IMESL). The firms are managed by the parent company Resource Energy Limited with the company representatives across the markets as well as growing foreign investments.

Nevertheless, on-ground findings reveal most traders in the benefitting markets are dissatisfied with the high tariff.

One too many; Traders pay double on energy for businesses to thrive

To remain in business, most traders, mainly hairstylists, spend at least N5, 000 monthly on energy – that is N4, 000 monthly solar subscription and at least N1, 000 to power privately-owned generators when the need arises.

Sabon Gari Market Energy Solutions Limited Solar Power Subscription Plan

At Shop PBH/11/47, Madam Bridget was visibly furious at the sight of this reporter and his fixer. She had assumed the duo were officials of the energy provider. Seated at the aisle to the stall, she could not hold back her angst.

“We pay a monthly bill for solar power connections but still rely on generators for our businesses.”

For her, the energizing market initiative is flawed and could have been better implemented. She was quick to highlight its unstable nature as it could stop working for days without being fixed.

Traders are faced with another level of challenge. They are expected to promptly renew their tariffs, otherwise, once the subscription elapses before recharge, it takes a long while before power is restored.

“Over 95 percent of hairdressers have discarded the solar energy intervention because it is useless.”

Zuliahat Abubakar, an apprentice, had brought a customer from her shop to another stall for hair drying because her master could not afford a generator and the solar energy was unhelpful. Hence, visiting her fellow hairdresser was the only option.

Just in front of the shop was a power generating set. But the middle-aged woman would carefully watch out for market supervisors who often visit stalls to ensure full compliance with the solar intervention, before powering her generating set.

“The solar energy is too expensive so we don’t use it in our shop.”

Despite the solar, the least sum spent on power generator is N1, 000 monthly while the highest is N12,000 based on The ICIR on-ground findings.

Still, if 250 members of the Igbo Road Hairdressers Association in the Sabon Gari Market pay on average of N5, 000 monthly on generators, it means  the group of hairstylists would have spent N60m in a year and N240m in just four years.

Infograph shows amount spent on generator by over 250 hair stylists at the Sabon Gari Market, Kano State.
Infograph shows amount spent on generator by over 250 hair stylists at the Sabon Gari Market, Kano State.

On the other hand, for the entire 13, 000 shop owners paying on average N4, 000 monthly for solar energy in a year would amount to N624m, and N52m monthly, according to The ICIR estimates.

“When they asked us to pay N10, 000 weekly before we can use our dryer, we went to meet them (SGESL) with our Chairlady but they said except we subscribe to that band, there was nothing they could do, so I had to stop,” says another hairstylist who pleaded anonymity.

Apparently, other store owners in the market shared similar worries. Iliyasu Ibrahim (28) occupies Shop D2 in the market and sells kitchen utensils. He relies on the energy source to test-run electric utensils, before final sale to prospective customers but that is no longer a reality.

Ilyasu Ibrahim shares his worry during an interview at the Sabon Gari market. Photo Credit: Olugbenga Adanikin, The ICIR.

He now mostly test runs in the next shop. “It is too costly, inefficient, and unstable,” says Ibrahim, who compared his N4, 000 monthly solar subscriptions as to when he runs on ‘Maja’.

While on ‘Maja’, he could test the utensils, use appliances, and charge customers phones but not anymore. He has, since the last Ramadan, suspended use of the solar energy till the 2022 fasting season. He says but for the usual heat that comes with the period, he would have totally neglected the supposed intervention.

Next to his stall are Shops E3 and E4. Yeshau Abdulakadir, who manages the stalls, told The ICIR that his boss had since opted for private solar energy, thus discarding the federal government-led project.

Florence Pelayo, who occupies shop M69, sells fabrics but wants a drop in the monthly charge to N3, 200 since she pays N4, 000 monthly when running on ‘maja.’

“The light does not give us joy,” a septuagenarian woman from the Igbo extraction states while expressing her frustration. She occupies one of the shops adjacent to Mrs. Florence but prefers anonymity.

The elderly woman had paid N4, 000 two days earlier to renew her solar energy subscription but as of the visit, the shop was in darkness.

“Let them come and pack their thing, I will get another MTN solar package,” she states furiously, narrating how the officials, at the EEI project onset, seized her MTN solar package. By the time it was returned, it was no longer in a good shape.

These stories and many more clearly unveil how the FG’s led initiative has rather frustrated some small businesses it was meant to boost, four years after the project launch.

Traders’ preference for ‘MAJA’ amidst adverse effects

Prior to the solar power intervention, when traders used ‘Maja’, shop owners could powered their appliances with the sum of N100 or N150 daily charge. Under this arrangement, ‘Maja’ operators would daily visit each subscribed shop to get the fee. By some estimates, these amounts would be between N500- N750 weekly or N2, 000-N3, 000 monthly as the case may be.

It also implies that, with less than N4, 000, an average trader in Sabon Gari market could conveniently access needed energy, hence their apathy towards the FG’s intervention.

Although ‘Maja, provides a cheaper means of power supply, it comes with its adverse effects; noise pollution, air pollution, and susceptibility to fire disasters. As of 2019, Nigeria leads Africa in air pollution-related deaths.

But these problems the FG solar intervention sought to address. Four years down the lane, traders seek better efficiency – more energy at a lower cost.

Most traders interviewed by The ICIR attribute their request to poor patronage and low purchasing power at the markets. For instance, Bolanle Momoh, Chairlady of the hair stylists association, had expressed relief with the solar intervention.

To her, the intervention would not only check pollution that comes with the power generators but promote efficiency, boost productivity, through affordable cost since the sunlight is abundant. But, that is not the case.

Except for shop owners like Alamin Adamu, who sells jewelleries, most traders maintain that the initiative has badly affected their businesses due to non-affordability.

Alamin Adamu who deals in sales of Jewelleries pays N10, 000 monthly tariff to access solar energy at the Sabon Gari Energy Service Limited. Photo Credit: Olugbenga Adanikin, The ICIR.

Apparently, Bolanle and her colleagues recognised the role of stable power in their line of business but subscribing to a higher band, they maintained would make no economic sense considering the low level of patronage.

The ICIR further learned that failure to comply with the restrictions placed on the use of power generators attracts a levy or complete forfeiture.

“You see the problem we are facing? Momoh queried.

Still, aside from hairstylists, The ICIR counted at least 20 other shops that have jettisoned the solar power service at the Sabon Gari Market.

They include Shop D6, D7, D8, E1, PC E1, E 162, E115, D15, and E297. Others are E298, L355, L361, L362, L363, L371, and lots more.

Lists of some of the traders, business type, their monthly subscriptions, and watts 

S/n Name of Trader Business Type Monthly Solar Subscription Watts
1 Falalu Useni Sales of ladies bags N4,000 60
2 Nura Mustapha Sales of ladies bags N4, 000 60
3 Abdulmalik Yakubu Bags N4, 000 60
4 Alamin Jamil Adamu Gold Jewries N10, 000 300
5 Ilyasu Rabiu Ibrahim Kitchen utensils N4, 000 60
6 Septuagenarian Bags and ladies shoes N4, 000 60
7 Florence Pelayo Fabrics N4,000 60
8 Abubakar Mohammed Remote controls of home appliances N4, 000 60
9 Anonymous Igbo woman Hairdresser Independent Solar
10 Yesahu Abdulkadir Kitchen Cutleries Independent Solar
11 John Paul School bags N4, 000 60
12 Zuliat Abubakar Hair Stylist N4,000 60
13 Anonymous Edo Woman Hair Stylist N4, 000 60
14 Madam Bridget Hair Stylist N4, 000 60
15 Anonymous woman Hair Stylist Generator
16 Mrs. Victoria George Hair Stylist N4, 000 60
17 Mrs. Omok Gloria Hair Stylist N4, 000 60
18 Mrs. Bolanle Momoh Hair Stylist N4, 000 60
19 Mrs. Favour Obi Hair Stylist N4, 000 60
20 Hajiya Aishat Musa Hair Stylist N8, 000 130

 

“…so this thing is useless,” Victoria George adds. “It only works with the fan and one bulb in this salon. That’s all.”

In summary, most SMEs in the popular market do not consider the project as efficient and affordable. Most traders who spoke with this reporter at different sections of the market described the initiative as problematic because they are limited to a small ceiling fan, a bulb and are permitted to charge a maximum of two mobile phones due to the tariff.

Omo Gloria was among those who particularly decides to approach the solar power provider. The response that followed their complaint made her completely lose hope in the system. The service providers, she said, advised the affected traders to upgrade to N10, 000 weekly payments.

“The solar energy was initially powering our tools when they just started but because they have set 60 watts for N1, 000 worth of power, any appliances connected to the socket trips off the power.

“And that’s why we are having these issues. Unlike when they newly started, we were happy the energy could power our dryers. Customers’ hair gets dried quickly but at a time, it went off. That was when we realised it was programmed.”

Economic cost of power amidst inflation, poor purchasing power, looming fuel price increase

Nigeria’s economy has witnessed severe hits mainly since the COVID-19 outbreak. The federal government recognised this impact, hence, introduced the economic recovery growth plan.

Despite the intervention, the prevailing economic situation has led to inflation, poor purchasing power, and job loss.

In 2021, the National Bureau of Statistics (NBS) puts the unemployment rate (Q4 2020) at 33.3 percent. It rose from 27.1 percent in the second quarter of 2020, and, it is expected to rise to 53 percent, according to experts. Some of the traders clearly attributed the worsening economic situation to customers’ low patronage and inability to subscribe to a higher band.

Regardless, the traders plead for more inclusive and considerate watts across the power bands for the sake of their small businesses.

The Managing Director, Muhammadu Abubakar Rimi Company Limited, Uba Zubairu Yakasi pilots affairs of the market on behalf of the state government. But he is also disturbed by the several challenges confronted by the traders as well as the lukewarm attitude of the SPV.

The ICIR watched as Yakasi called the firm’s representative more than thrice during a visit to relay the traders’ complaints. He picked his phone to extend the complaint to the SGES but the officials failed to respond.

“You see? This has always been my experience. You see how many times I have called and they didn’t answer? Yakasi says angrily. He recalls how he was almost lynched in a protest due to the solar project.

“The traders thought I forced it on them, and that I was making money from it but that was not the case.”

“I am tired of the problem.”

As he continued, his lawyer came in, accused the reporter, and his fixer, not realising they were not officials of the SGES. At the Audu Bako Secretariat, The ICIR, subsequently visited the Commissioner for Information Muhammad Garba to react to the development but shuts his office. He gave his secretary standing order not to allow anyone in, not even after the reporter’s formal introduction.

But what this implies is that the concerned traders are at a fix. The market is off-grid. The use of generators is banned. For those who secretly use gen set, there is the likelihood of PMS increase in 2022, and the monopoly enjoyed by the SGESL may not end until over the next decade.

SGESL insists traders must subscribe to higher band to meet energy need

Sabon Gari Energy Solutions Limited (SGESL), Kano State. Photo Credit: Olugbenga Adanikin. The ICIR.

The ICIR reached out to officials of the SGESL. They insisted traders could subscribe to any of the bands provided. Hairstylists, for instance, were particularly asked to pick a higher tier, subscribe, and get the required energy.

Rensource Regional Head Akpan Nsika during an interview explained that the power usage was strictly metered based on the tiers.

Once a trader uses beyond the allotted watts, the power trips off. Citing hair drying machines as an instance, he said the energy consumed by the device is much higher than the normal subscribers, hence, if traders are to use such appliances; they are required to subscribe to a higher band.

“When it concerns power in the market, it is offered in Tiers. If you are on 60 watts, you cannot use above that. So customers can approach us to request for an upgrade based on their power load,” he insists.

Nsikan Akpan Rensource Regional Head. Photo Credit: Social Media

“Appliances come with watts, so if you do not align with it, definitely, there will be an issue along the line.”

Even though, multiple traders stated that the SPV demanded N10, 000 weekly to access the required power, the highest band according to a source at the SGESL is fixed at N20, 000 monthly.

The source also confirmed repeated complaints from the traders but suggested that they either switch to a higher band or jointly access the power pool at a spot within the market, and this would only be available at weekends especially for hairstylists.

But the traders kicked against the idea. The fear of losing their customers mainly if converged at a spot for hair drying, at the power pool remains another concern.

 

You cannot make solution that will worsen SMEs – LCCI DG

Dr. Muda Yusuf, Ex-DG of Lagos Chamber of Commerce and Industry (LCCI).

Former Director-General of Lagos Chamber of Commerce and Industry (LCCI) Dr. Muda Yusuf calls for a review of the solar power intervention to ensure interest of the SMEs is genuinely protected.

He identifies the need to validate if solar could serve high-power users such as printers, hairdressers, and the likes. Yet, he was particularly interested in the implication of restricting traders solely to solar energy and driving energy monopoly through the SPV.

The governments, he says, should design mechanisms that would check against traders’ exploitation, and ensure their freedoms are not trampled upon in the name of promoting clean energy.

“Energy is very fundamental to SMEs. Naturally, a high energy cost will adversely affect businesses. You cannot create a solution that will worsen SMEs, than what they were, because the whole idea is to make them better.”

According to him, “the monopoly has been created which is physically very exploitative. Somebody needs to ensure SMEs are not exploited because it is also not fair, not to give them an option of alternative. That freedom should not be taken away. They should have an alternative to avoid the monopoly that has been created.”

Yusuf adds that “since the service providers know they (traders) don’t have any choice, they can charge any price but once they know the traders have an alternative, it will force them to reduce the prices.”

Mike Terungwa, Executive Director, GIFSEP. Photo Source: Twitter

An environmentalist, Mike Terungwa, says the private sector should not have been in a hurry to make profits due to the innovation, rather win the heart of the traders and help satisfy their energy, hence, improving their businesses.

“The private sector is usually too quick to make profits in Nigeria. And this is an issue. For any project, there must be a gestation period before you begin to reap profit. You cannot install solar today and expect you break even in one year due to the cost.”

The planned removal of fuel subsidy, he says is an opportunity in the sense that once the subsidy is removed from fossil fuel, it should go on items required to generate clean energy. This move, according to him, would cause a drop in the cost of accessing clean energy, especially on the part of the traders.

“Industries should take advantage of the opportunity. Big companies in Nigeria such as Dangote, Tony Elumelu should prioritise and begin to invest in renewable energy, mainly in local production of batteries, local accessories,” Terungwa adds.

He advised traders to also invest in energy-efficient equipment for a win-win situation.

Olugbenga is an Investigative Reporter with The ICIR. Do you have a scoop? Shoot him an email at [email protected] Twitter Handle: @OluAdanikin

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