Abuja: The Managing Director of Leke Services Ltd., Mr. Laolu Adeola, has called for the establishment of a N100 billion fund to accelerate the growth of Nigeria’s electric vehicle (EV) sector. Adeola made the call in an interview with the News Agency of Nigeria (NAN) on Wednesday in Abuja.
According to News Agency of Nigeria, Adeola highlighted that high interest rates and the absence of reliable fleet contracts are major challenges hindering the sector’s growth. He urged the government to provide concessional financing to address these issues. Adeola noted that while EVs have been introduced in Nigeria over the past 10 to 15 years as proof of concept, entrepreneurs are struggling with the high cost of capital.
Adeola suggested that the proposed N100 billion fund could serve as a capital pool for entrepreneurs who have demonstrated the viability of their businesses, enabling them to accelerate their growth. He pointed out that commercial banks currently charge interest rates of up to 35 percent due to a la
ck of understanding of the EV sector’s risk profile, treating it as high risk.
He projected a potential growth of over 80 percent year-on-year for the industry over the next five years if its funding challenges are addressed. On the topic of charging infrastructure, Adeola described the development as a ‘chicken and egg’ situation, requiring utilisation levels of between 30 and 50 percent for charging stations to be profitable.
Adeola emphasized the importance of fleet operators in public transportation, taxi, and logistics services in driving demand for charging infrastructure, as they provide a reliable customer base for Charge Point Operators (CPOs). He explained that for CPOs, fleets serve as their base load, covering costs with incidental retail charging driving profits.
He urged the government to lead efforts in reducing the cost of capital for EV businesses to between 10 and 15 percent. Adeola also advocated for greater local content in the EV value chain, suggesting that Nigeria start with assembli
ng vehicles and producing locally manufacturable components like upholstery, tricycle canopies, plastics, and glass.
Furthermore, Adeola called on the government to provide ‘catalytic capital’ or first-loss cover to de-risk investments in the sector, while Development Finance Institutions and commercial banks offer funding at higher tiers.