A Canadian-based solar energy developer will build 3000MW (megawatts) of solar power projects within Nigeria over the next five years as the government focuses on improving the country’s haphazard electricity supply. Ask any business operating in Nigeria what their biggest operational cost is and they’ll tell you that making adequate provisions to ensure uninterrupted electricity supply frequently costs them more than or just as much as their payrolls.

This, coupled with corruption, social and political stability and poor transparency are the reasons investors and prospective global businesses approach the Nigerian market with reluctance, while many others dare not even dip their toes in the water. But the continent’s largest economy is poised to attract more foreign direct investment as the Nigerian federal government and Delta State government have signed an agreement with well-respected renewable energy leaders SkyPower Global and its partner FAS Energy to build 3000 megawatts of solar power around Nigeria.

The agreement, officially signed at the World Economic Forum on Africa held in the capital of Abuja, Nigeria last week, demonstrates the African powerhouse’s commitment to renewable energy. The massive project will cost around $5 billion (R51,7 billion) and is said to be financed through a combination of bank debt, development bank financing and equity partners. The solar power projects (unity-scale solar photovoltaic) will be rolled out over the next five years with the first phase of solar power expected to be reach commercial operation in 2015.

The development is certain to attract more foreign direct investment to the country with a “candy store of resources”. Dr Lyal White, economist and director of the Centre for Dynamic Markets at the Gordon Institute of Business Science says the massive investment is a very positive development for Nigeria that is likely to set off a chain reaction of foreign direct investment to the region.

“Investors are prone to the herd effect – as soon as one goes many will follow. A lot of businesses are waiting for a leader to do this,” he says. “You’re seeing a bit of diversification, which is positive and adds on to the Nigerian story that is growing,” says White. Nigeria has an abundant supply of oil, gas and coal yet up to 70 percent of people living in rural access don’t have access to electricity and those that do, experience regular power outages.

“The signing of these landmark agreements demonstrates the shared vision of a partnership that will further stimulate the vibrant, fast-growing Nigerian economy and substantially impact the state and country’s GDPs, resulting in increased employment and skills training,” Kerry Adler, SkyPower CEO said in a statement. White says South Africa could learn a lesson or two from Nigeria’s impressively progressive move to invest in renewable energy.

“We’re finally seeing a market like Nigeria cracking open for investors of all kinds and not just resource extraction or oil and gas.” “South Africa is also competing for scarce foreign direct investment globally and within the continent and so South Africa needs to work becoming more open and connected. If Nigeria can do it with the type of challenges they face, why can’t we?” he asks. Besides access to cheaper, alternative sources of electricity, the deal will likely create over 30 000 jobs in Nigeria.