Nigeria’s high borrowing costs are discouraging investment in solar energy, with Chinese infrastructure company PowerChina warning that expensive bank loans are making it difficult for businesses to establish and expand renewable energy projects.
Timmy Shi, PowerChina’s Regional Director for Africa, said access to cheaper financing was giving Chinese companies an advantage over other investors in Nigeria’s growing solar market.
“Money from China is cheaper, but high bank interest rates are keeping many companies from investing in solar in Nigeria,” Shi said at the recent Association of Energy Correspondents of Nigeria (NAEC) Energy Conference and Awards.
According to a report published by The PUNCH on October 15, 2026, Shi said the cost of funds remained a major consideration for foreign investors assessing opportunities in Nigeria.
Her comments highlight a financing challenge facing a market where demand for alternative electricity continues to grow amid unreliable grid supply and rising costs of powering homes and businesses.
BloombergNEF data reported by The Guardian on July 23, 2026, showed that Nigeria attracted $2.4bn in small-scale solar investment in 2025, making it Africa’s largest market in that category.
However, high financing costs remain a constraint on the expansion of renewable energy projects, particularly those requiring substantial upfront investment in solar panels, batteries, installation equipment and supporting infrastructure.
The Central Bank of Nigeria reduced its Monetary Policy Rate by 350 basis points, from 26.5% to 23%, at its September 21–22, 2026, Monetary Policy Committee meeting. The decision followed a decline in headline inflation to 15.39% in August, according to the National Bureau of Statistics.
Despite the reduction, the benchmark rate remains high, while commercial lending rates and other financing costs can vary considerably depending on a borrower’s creditworthiness, loan structure and repayment period.
For solar businesses, expensive credit can increase project costs, extend the time required to recover investments and make it harder to offer affordable payment plans to households and small businesses.
Shi said Chinese companies benefited from access to cheaper capital in their home market, helping them compete more aggressively in Nigeria.
“Chinese companies and their products have flooded the Nigerian market and are leading,” she said, attributing part of their advantage to lower financing costs.
The disparity raises concerns about the ability of Nigerian companies and investors from other countries to compete in a sector that requires sustained capital investment.
Shi also identified foreign-exchange risks and the difficulty of repatriating investment returns as concerns for international businesses considering projects in Nigeria.
She said investors needed confidence that their funds would be protected and that profits could be transferred out of the country without undue difficulty. Commercial guarantees capable of reducing investment risks would also help attract capital, she added.
Beyond financing, Shi said Nigeria needed solar solutions designed around local operating conditions, electricity consumption patterns and the needs of different communities.
She argued that the market did not simply need more solar products but systems that could deliver reliable performance under Nigeria’s specific conditions. She also called for better consumer education, improved after-sales service and training for installers and other industry workers.
PowerChina has been expanding its Nigerian renewable energy activities through partnerships with local businesses and the Rural Electrification Agency (REA). In November 2025, The PUNCH reported the company’s partnership with Novel Solar to expand access to solar solutions, while BusinessDay reported its agreement with Paulken Engineering to accelerate clean power projects.
The REA’s Distributed Access through Renewable Energy Scale-up (DARES) programme is another initiative supporting the deployment of renewable energy systems, including standalone solar solutions for households and businesses in underserved communities.
In addition, promoters of the proposed Green and Climate Finance Bank of Nigeria have presented the institution as a way to mobilise long-term funding for renewable energy and other climate-related investments. The proposal received support from the House of Representatives Committee on Renewable Energy in March 2026, but the proposed bank should not be treated as an already operational financing facility.
For Nigeria’s solar sector, the challenge is to convert growing demand into sustainable investment by improving access to affordable, long-term finance while addressing currency risks and investor confidence.
Shi’s warning suggests that without these improvements, local businesses may struggle to compete with foreign companies that can obtain cheaper capital, even as the need for reliable and affordable electricity continues to expand.
