Economy
How to Solve Africa’s Power Distribution Problems
By Anastasia Walsh
Electrification is an on-going and foundational investment, and a necessary one to realize all modern-day development objectives. Despite bullish policies, the fact remains that over 640 million Africans lack access to electricity. The effect of this is apparent. It impedes economic growth; it inhibits the advancements of self-reliant local communities, and it threatens national security. African governments are beginning to rethink their electrification plans. Grid modernisation, specifically the deployment of microgrids in rural areas, provides a promising strategy.
The Centralized Utility Model Is Not Adequately Serving Africa’s Needs
Attempting to replicate the centralized utility models implemented in the U.S. and Europe has not succeeded in improving energy access across the continent. Despite this, it seems many governments and utilities wrongly maintain the position that the expansion of the traditional grid infrastructure is the solution. In areas where communities have access to the central grid, they still have to supplement the intermittency of the power with diesel generators. On the flip side, the utilities are financially strained because they are unable to collect revenues from their customers. The low rate of revenue collection is due to the unsustainable tariffs the providers impose on customers as a result of the political pressure exerted on them. This results in the utilities being unable to finance upgrades in infrastructure, further exacerbating the issues.
Those who favor the expansion of the central grid as the most effective means of increasing rates of electrification face the challenge of reconciling two contradicting positions. The first position is that increasing access requires lowering tariffs. The second position is that lowering tariffs will intensify the financial stress utilities are currently under. Neither of these positions is sustainable. The incorporation of microgrids into a hybrid system of electrification is the best solution.
Grid Modernisation and Microgrids
Microgrids are small-scale power grids that run on a combination of solar, wind, or biomass or fossil fuels to provide reliable power. They operate either independently from the main grid or can be synched to it at the same voltage to shift the energy and respond to peaks and troughs in supply and demand. This ensures there is no interruption in power supply, allowing communities to be more energy independent by cutting costs and providing reliable energy access.
Productive Use of Energy (PUE) is Key
The off-grid solar lighting market is thriving thanks to the falling prices of renewable energy equipment. The solar lighting market has been further bolstered by widespread deployment of pay-as-you-go (PAYGO) payment systems that utilize mobile-money technology. These solar devices provide sufficient generation for low consumption needs like household lighting, charging cell phones, and the use of small household appliances. Despite its attractiveness to householders, off-grid solar lighting is currently not scalable. The deployment of microgrids will be necessary to provide the adequate output required to power commercial businesses, hospitals, schools. Demand for electricity from small industry and business, which is classified as the productive use of energy will determine the success of microgrids; without this demand, the deployment of microgrids will not be financially viable. Ensuring the Productive Use of Energy enhances the economic and social development impacts of microgrids and rural electrification in the wider context.
Leading The Way: Kenya and Nigeria
Africa is forecast to be the world’s fastest-growing market for microgrids at a Compound Annual Growth Rate of 27%, representing 1,145MW by 2027. Within the continent, Kenya and Nigeria are at the forefront of the grid modernisation revolution.
With strong renewable energy and microgrid policies, Kenya has doubled its energy access rates since 2014. To reach its goal of 100% electrification by 2030, Kenya should implement a hybrid-decentralized system. This entails a combination of traditional utility distribution and the deployment of an extensive network of microgrids. The prevalent use of mobile money in the region, if harnessed correctly will provide the best means of collecting payment of energy bills. Nigeria similarly has ambitions to drastically increase their generating capacity by 2030 with 30% of that planned to be from renewable sources. Microgrids are expected to provide 5.3GW of this increased generation capacity.
Nation-Specific Policies
To improve energy access, African nations should consider incorporating the following into their policies: First, targeting rural populations for distributed energy via microgrids; then implementing low-cost and low-barrier permitting and licensing rules with standardized quality control and operating requirements; and finally ensuring that electrification strategies are financially viable.
Decentralized/hybrid solutions such as microgrids are the most cost-effective solution. The PAYGO business model provides an efficient means for project developed to collect revenues from their investments. Despite the tendency to paint all sub-Saharan countries with the same brush, as it relates to electrification rates, this is especially inappropriate. When it comes to implementing electrification and grid modernisation strategies, policymakers should consider their countries unique geography, natural resources, climate, population density, and power demand patterns.
Anastasia Walsh is from International Energy Consultant in Johannesburg
By Adedapo Adesanya
The United Kingdom via the British High Commission in Abuja has launched two flagship economic reform programmes – the Nigeria Economic Stability & Transformation (NEST) programme and the Nigeria Public Finance Facility (NPFF) -as part of efforts to support Nigeria’s economic reform and growth agenda.
Backed by a £12.4 million UK investment, NEST and NPFF sit at the centre of the UK-Nigeria mutual growth partnership and support Nigeria’s efforts to strengthen macroeconomic stability, improve fiscal resilience, and create a more competitive environment for investment and private-sector growth.
Speaking at the launch, Cynthia Rowe, Head of Development Cooperation at the British High Commission in Abuja, said, “These two programmes sit at the heart of our economic development cooperation with Nigeria. They reflect a shared commitment to strengthening the fundamentals that matter most for our stability, confidence, and long-term growth.”
The launch followed the inaugural meeting of the Joint UK-Nigeria Steering Committee, which endorsed the approach of both programmes and confirmed strong alignment between the UK and Nigeria on priority areas for delivery.
Representing the Government of Nigeria, Special Adviser to the President of Nigeria on Finance and the Economy, Mrs Sanyade Okoli, welcomed the collaboration, touting it as crucial to current, critical reforms.
“We welcome the United Kingdom’s support through these new programmes as a strong demonstration of our shared commitment to Nigeria’s economic stability and long-term prosperity. At a time when we are implementing critical reforms to strengthen fiscal resilience, improve macroeconomic stability, and unlock inclusive growth, this partnership will provide valuable technical support. Together, we are laying the foundation for a more resilient economy that delivers sustainable development and improved livelihoods for all Nigerians.”
On his part, Mr Jonny Baxter, British Deputy High Commissioner in Lagos, highlighted the significance of the programmes within the wider UK-Nigeria mutual growth partnership.
“NEST and NPFF are central to our shared approach to strengthening the foundations that underpin long-term economic prosperity. They sit firmly within the UK-Nigeria mutual growth partnership.”
By Aduragbemi Omiyale
A strategic partnership aimed at accelerating the growth, digital capacity, and sustainability of Nigeria’s 40 million Micro, Small and Medium Enterprises (MSMEs) has been signed by MTN Nigeria and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
The collaboration will feature joint initiatives focused on digital inclusion, financial access, capacity building, and providing verified information for MSMEs.
With millions of small businesses depending on accurate guidance and easy-to-access support, MTN and SMEDAN say their shared platform will address gaps in communication, misinformation, and access to opportunities.
At the formal signing of the Memorandum of Understanding (MoU) on Thursday, November 27, 2025, in Lagos, the stage was set for the immediate roll-out of tools, content, and resources that will support MSMEs nationwide.
The chief operating officer of MTN Nigeria, Mr Ayham Moussa, reiterated the company’s commitment to supporting Nigeria’s economic development, stating that MSMEs are the lifeline of Nigeria’s economy.
“SMEs are the backbone of the economy and the backbone of employment in Nigeria. We are delighted to power SMEDAN’s platform and provide tools that help MSMEs reach customers, obtain funding, and access wider markets. This collaboration serves both our business and social development objectives,” he stated.
Also, the Chief Enterprise Business Officer of MTN Nigeria, Ms Lynda Saint-Nwafor, described the MoU as a tool to “meet SMEs at the point of their needs,” noting that nano, micro, small, and medium businesses each require different resources to scale.
“Some SMEs need guidance, some need resources; others need opportunities or workforce support. This platform allows them to access whatever they need. We are committed to identifying opportunities across financial inclusion, digital inclusion, and capacity building that help SMEs to scale,” she noted.
Also commenting, the Director General of SMEDAN, Mr Charles Odii, emphasised the significance of the collaboration, noting that the agency cannot meet its mandate without leveraging technology and private-sector expertise.
“We have approximately 40 million MSMEs in Nigeria, and only about 400 SMEDAN staff. We cannot fulfil our mandate without technology, data, and strong partners.
“MTN already has the infrastructure and tools to support MSMEs from payments to identity, hosting, learning, and more. With this partnership, we are confident we can achieve in a short time what would have taken years,” he disclosed.
Mr Odii highlighted that the SMEDAN-MTN collaboration would support businesses across their growth needs, guided by their four-point GROW model – Guidance, Resources, Opportunities, and Workforce Development.
He added that SMEDAN has already created over 100,000 jobs within its two-year administration and expects the partnership to significantly boost job creation, business expansion, and nationwide enterprise modernisation.
By Adedapo Adesanya
The Nigerian Exchange (NGX) Limited is seeking review of the controversial Capital Gains Tax increase, fearing it will chase away foreign investors from the country’s capital market.
Nigeria’s new tax regime, which takes effect from January 1, 2026, represents one of the most significant changes to Nigeria’s tax system in recent years.
Under the new rules, the flat 10 per cent Capital Gains Tax rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The chief executive of NGX, Mr Jude Chiemeka, said in a Bloomberg interview in Kigali, Rwanda that there should be a “removal of the capital gains tax completely, or perhaps deferring it for five years.”
According to him, Nigeria, having a higher Capital Gains Tax, will make investors redirect asset allocation to frontier markets and “countries that have less tax.”
“From a capital flow perspective, we should be concerned because all these international portfolio managers that invest across frontier markets will certainly go to where the cost of investing is not so burdensome,” the CEO said, as per Bloomberg. “That is really the angle one will look at it from.”
Meanwhile, the policy has been defended by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, who noted that the new tax will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance.
He noted that the framework allows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele also said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
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