At the 2024 Spring Meetings, World Bank Group President Ajay Banga announced an ambitious commitment to bring energy access to 300 million people in Africa by 2030, in partnership with the African Development Bank. But what will it take to achieve this, and how will the International Finance Corporation and the private sector contribute to this goal? In this episode of IFC Audio Stories Sarvesh Suri, IFC's Director for Infrastructure and Natural Resources in Africa, shares some of the financial tools and innovative solutions that could help transform the continent's energy landscape.
Transcript
Lindy Mtongana: This is IFC Audio Stories where we explore private sector solutions to global development challenges. I'm your host, Lindy Mtongana.
The Spring Meetings are wrapping up here in Washington DC – the annual event where the International Monetary Fund and the World Bank Group host leaders of business, government, and civil society to address issues such as the global economic outlook, poverty alleviation, and of course development.
Now, one of the big themes on the agenda this year was Powering Africa: that is the urgent need for reliable, affordable, and sustainable energy to drive Africa's development and lift millions out of poverty.
We sent our roving reporter Camryn Billett, to find out just how much this resonates with delegates at the Spring Meetings:
Camryn Billett: “My question for you is what does this phrase mean to you? Power is a human right.”
Kamilla Atta: “Power means to me, giving human beings the ability to have control over their own lives, to have autonomy, to have independence and to be able to do the things that they want to do without limitations.”
David Barotto: “Power is light, power is livelihood, power is jobs, economic growth. And in 2024 You can't live in this world and have a justified livelihood without power. And so of course, it is evident power is a human right today.
Lindy: Well, let’s bring you the perspective from the International Finance Corporation. I'm joined now by Sarvesh Suri, IFC’s Director for Infrastructure and Natural Resources in Africa. Sarvesh, welcome to IFC Audio Stories.
Sarvesh Suri: Thank you.
Lindy: To begin with, can you explain the extent of the power deficit in Africa and its implications for development?
Sarvesh: At present there are more than 600 million people in Sub Saharan Africa, who are not connected to the grid or do not have power in their homes. At the current pace of electrification, unfortunately, which has been pushed back by COVID and the aftermath of the Ukraine war over half a billion people by 2030, would still not be connected to electricity in Sub Saharan Africa. Of this about 400 million people by 2030 would be living in fragile and conflict affected environments. So, what is very much clear to us in the World Bank Group, is that the pace of electrification in Africa needs to change, we need to really take this as a battle of powering Africa going forward. You asked the question as to what the implications for development are. So, if you look at the UN Sustainable Development Goal Number Seven, which is universal access to clean and reliable electricity, Africa is the area where the energy access battle will be either won or lost. Without access to reliable, affordable, and sustainable power, the region will not be able to meet its development aspirations or achieve the economic transformation that's needed to lift the millions out of poverty. At a human level, lack of power means that the kids cannot really study in the evening, schools are not digitally connected, hospitals remain out of medicines that need to be stored in cold temperatures. Small manufacturers, SMEs - they cannot really power their machines and improve their productivities thereby being able to create the jobs that are needed for millions to get out of poverty. So, I firmly believe that power is really a human right that touches upon two of the most fundamental issues for us as IFC. The first one being it impacts the quality of life. And the number two is it hampers economic development, thereby keeping us away, not being able to fulfill our mission fully to create opportunities for people to improve their lives.
Lindy: While at the Spring Meetings WBG President Ajay Banga made an important announcement about the Bank’s commitment to accelerating electrification in Africa. Let’s take a listen:
Ajay Banga, World Bank Group President:
“You know, back in COP 28, the World Bank made a commitment to connect 100 million Africans to affordable energy by 2030. What we're doing today is multiplying that commitment by bringing in all parts of the bank across all parts of Africa and really thinking how we can make this work. We're going to multiply that commitment to 250 million people, out of that 600. Akin is already ready to go to 50. 250, 50, 300 million. If we can reach 300 out of 600 by 2030. That's great stuff.”
Lindy: Sarvesh of course that was the President of the World Bank Group Ajay Banga, alongside the President of the African Development Bank Akinwumi Adesina announcing an ambitious commitment to bring affordable access to power to 300 million people across Africa by 2030. What is the role of the IFC and the private sector in meeting this target.
Sarvesh: Private sector is at the heart of the agenda of powering Africa. But this mega-scale of mobilizing private sector will not be easy. It's pretty ambitious. It will be like literally fighting a battle and from IFC, we are seeing that we will have to fight this battle at every front. We have developed a five-prong strategy to tackle this issue which spans across the transmission, distribution as well as generation in both the on-grid as well as off-grid sectors.
So, the five-prong strategy is as follows; number one - for the first time, we are working now in Africa to create opportunities for private sector solutions to reform the transmission and distribution sector. Number two, we'll be focusing on off-grid solutions. So essentially, the areas which are remote which are not connected today to the grid, which are not close to large cities, they are best served by independent small mini-grids as we call them, with a small power sector generator as well as small connections within that area that connects 1000 households. So, we in the World Bank Group have started to focus a lot on off-grid renewable energy solutions. Number three is: we will continue to play a significant role in on-grid power generation – big power plants that are important to bring in the electricity that's really needed on the continent. Number four, we are focusing a lot on spearheading innovation as well as bringing in new technologies into this sector. And number five, we are focused a lot also on modernization corporatization of state-owned power and entities, as well as taking some power assets from the hands of the government and bringing it into the hands of the private sector to run them more efficiently.
Lindy: I like this analogy about this being a battle: so, you have a partner, the private sector, and you have your arsenal, this five-prong approach, but what about in areas where it is particularly difficult - countries that are characterized by fragility, conflict, and violence. What are some of the challenges of implementing these electrification projects and how does IFC navigate these complexities?
Sarvesh: So, the complexities of fragile environments are much more severe than other countries in Africa. The political risks that a private investor faces in fragile environments is extremely high. So the first thing that we work with government when we engage in a fragile environment is to get an unwavering kind of commitment from the government for reforms, which are really needed for driving national action, as well as to inviting private sector participants to come into the country. The other issue that fragile environments also face is that policy environments in these countries are generally unstable. So, bringing in the entire might of the World Bank Group is also extremely important for us to develop and deliver projects in this area. Let me just give you an example of, of the kinds of projects we are supporting in fragile environments. So last year, we provided close to 100 million dollars of debt to a company called SCATEC Release. Now, this is a company which has really innovated at the product level, how power projects are delivered. So, they've essentially taken containerized solar solutions in the sense that they've taken a solar plant and put it in a shipping container, that they can very easily transport to very remote areas in fragile countries on the back of a trailer. And by doing so, and by also innovating on the contracting arrangements, they are able to bring the time from start to finish of delivering a power small power project from between the traditional IPP norms of somewhere between three to seven years, to up to nine months. So, innovations such as this, where you can put the whole power project into a shipping container, and very quickly deploy it on site are critical for us to make a difference in fragile environments.
Lindy: That's a really incredible innovation and just hearing you talk about it, I can already imagine the impact that it's going to have. Well, let’s bring in the perspective of private sector players. Now at the Spring Meetings our roving reporter Camryn Billett caught up with Folake Soetan the CEO of Ikeja Electric. Headquartered in Lagos, Nigeria it is the largest privately run electricity distribution company in Sub-Saharan Africa.
Folake Soetan, CEO of Ikeja Electric Plc
The energy access in Nigeria is about 54%. So, one of the things that is critical is to ensure that there is legal and regulatory framework and policies that support and encourage institutions like the World Bank and IFC to be able to support the local mini grid suppliers, the utility companies to ensure that they are able to execute projects that will improve energy access in Nigeria.
Lindy: So Folake there touching on how the private sector is looking to governments and institutions like the World Bank and IFC to scale up their projects. Sarvesh, a final word on Ajay Banga’s announcement. Access to affordable power for 300 million people in Sub-Saharan Africa in just 6 years. How will this be done?
Sarvesh: This is really a battle that has to be fought at every level. But we also need an ‘all hands on deck’ approach. So, we are working very closely with all stakeholders, be it the governments themselves, be it the private sector participants, our clients, but also other MDBs as well as donors to bring everybody to join us in this agenda to deliver the 250 million people that we want to connect to power by 2030.
As the World Bank will support the governments for reforms and financing, IFC and MIGA, we stand ready to mobilize private sector companies. We are ramping up our equity, our debt investment substantially. We are ramping up our PPP advisory with the governments significantly, as well as technical advice and upstream advisory to the to the private sector players. And with MIGA which is now also setting up the Unified Guarantee Platform to provide political risk insurance, we are going to be working in a coordinated fashion to deliver this ambitious agenda of achieving SDG Seven that is really making sure that by 2030, we get back on the path of electrifying Africa.
Lindy: It’s quite exciting isn’t it. You can just imagine in 2030, that you – might be looking back on this as the turning point?
Sarvesh: It's a very gratifying moment. It's a challenging moment for all of us in our team. But we are extremely motivated with this ambition. And it has been done in other continents - in Asia and Latin America - that countries have achieved 100% electrification. And now it's the turn of Africa.
Lindy: Indeed. Thank you so much Sarvesh.
Sarvesh: Thank you so much.
That’s where we leave it for today. A big thank you to my guest Sarvesh Suri – IFC’s Africa Director for Infrastructure and Natural Resources. Visit ifc.org to learn more about how the institution is scaling up solutions and investments to help connect millions more Africans to electricity. Thanks for listening to IFC Audio Stories. This episode was hosted and produced by me Lindy Mtongana, with additional reporting by Camryn Billett. Till next time, goodbye!