Universal access to affordable, reliable, sustainable and modern energy by 2030 has been a goal of the United Nations since 2015. And much progress has been made, as the UN, the World Bank and other international organizations make clear in a new report. But there’s still a long way to go. And the pandemic raging around the world now will only make meeting the goal more difficult.
In this edition of Columbia Energy Exchange, host Bill Loveless talks with Makhtar Diop, the vice president for infrastructure at the World Bank. He leads the bank’s efforts to develop sustainable solutions and help close the infrastructure gap in developing and emerging economies.
Makhtar discusses the reasons behind the progress that has been made around the world and the impediments keeping the goal of universal access still out of the reach of so many people, especially in Sub-Saharan Africa. The latest challenge, he notes, is the pandemic.
He also explains what the World Bank is doing to alleviate these needs, including new initiatives in the works.
The Tracking SDG-7 Energy Progress Report was released by the UN Statistical Division, the World Bank, the International Energy Agency, the International Renewable Energy Agency and the World Health Organization.
Prior to taking on this current role at the World Bank in 2018, Makhtar was the institution’s vice president for Africa, where he oversaw the delivery of a record-breaking $70 billion to Sub-Saharan Africa to address development challenges, like increasing access to affordable and sustainable energy.
Prior to these and other roles at the World Bank and the International Monetary Fund, Makhtar started his career in the banking sector and held government positions, including minister of economy and finance in his native Senegal.
He holds degrees in economics from the Universities of Warwick and Nottingham in England.
Bill Loveless: Hello and welcome to Columbia Energy Exchange a weekly podcast on the Center on Global Energy Policy at Columbia University. From Washington, I'm Bill Loveless. Our topic today is universal access to affordable, reliable, sustainable and modern energy, something hundreds of millions of people go without in developing countries, especially in Sub-Saharan Africa. The United Nation set a goal of 2030 for Universal access. And a new report tells us where things stand.
As it turns out, a lot of progress has been made but there’s still a long way to go and the pandemic raging around the world now will only make meeting this goal more difficult, joining us to talk about this is Makhtar Diop, the World Bank’s Vice President for Infrastructure who leads efforts of the bank to develop sustainable solutions and help close the infrastructure gap in developing and emerging economies.
He will walk us through this progress report which was released jointly by the International Energy Agency, the International Renewable Energy Agency, the UN Statistical Division, the World Bank and the World Health Organization. Prior to taking on this role in 2018, Makhtar was the World Bank’s Vice President for Africa, where he oversaw the delivery of a record breaking $70 billion to Sub-Saharan Africa to address development challenges, like increasing access to affordable and sustainable energy.
Prior to these and other roles of the World Bank and the International Monetary Fund, Makhtar an economist started his career in the banking sector and held government positions including minister of economy and finance in his native Senegal. Well, here is our conversation, I hope you enjoy it.
Makhtar Diop, welcome to Columbia Energy Exchange.
Makhtar Diop: Thank you very much for having me in your program, it’s my pleasure to be here.
Bill Loveless: Makhtar, this is an important report and we look forward to discussing it but, first tell us a little bit about yourself, your career and how you feel about the work you’re doing now?
Makhtar Diop: Yeah, Bill, thank you very much, I've been, my career has been -- I have been looking out for many decades and I've been always working in the area of development. I started by working in my own country in -- it’s a ministry of -- it’s a private sector and then well came throughout the years of which was called as Structural Adjustment Programs, where we were implementing large reforms since late 80s in Africa. And then I moved to IMF -- I was -- I work for IMF as an economist. And I went back to my country to be a Minister for Economics and Finance and I came back to Washington to work for the World Bank where I have been Country Director in East Africa covering a certain number of countries.
And then Director for Private Sector Infrastructure and Finance in Latin America and Caribbean, Director of Operation and Strategy in like Director for Brazil in the World Bank and after that Vice President for the last -- for six years in Africa, in – covering Africa and for the last two years I've been working in infrastructure.
Bill Loveless: Yeah, quite a portfolio that you have and of course your country is Senegal, where you were quite prominent there as a leader and a member of the cabinet in your country. And now of course, your passion to a large extent, I believe is still Africa and the development that takes place there in that, still needs to take place there. We have seen just now the World Bank and its partners have seen what they call striking progress and meeting this goal of providing sustainable in modern energy, universally around the world, doing so by 2030 that’s what we read in this new report from the World Bank and other international organizations. Now, what sort of progress has there been?
Makhtar Diop: I mean, progress in term of access, we had made a significant progress because the growth rate of access has been higher than the growth rate of population. So, it means that more people have been connected, it’s great in Africa. But you have a huge disparity on the continent, you have country like Burundi which are of 17% of access to Kenya which is now in is around 17% gone out, which is in that.
So, when you look at the continent which I read to look at the diversity in 2012, very targeted in dimensions which are addressing the consequence that people are facing and that’s you can talk about it, we have developed an initiative which is called LEAP Africa which is trying really to accelerate access and try to make it universal in some countries like Kenya and other country we shall be making progress in access and in some other countries like Burundi, or Fragile States to have them access at least of 50% of access of electricity in the next seven to ten years.
Bill Loveless: Yeah, the report tells us that we’ve seen the numbers in improve, there were some 1.2 billion people without access to electricity in 2010, now it’s 789 million as of 2018, of course that’s the period for which the latest data is available, what does access to electricity mean, how do you measure it?
Makhtar Diop: It means a lot, first of all we are measuring by -- by availability as you know, availability is one thing but also quantity of that availability is another thing, so it’s not only in electricity but also that’s the same for water, we have in some number of our countries where in theories there is a connectivity. But the availability because of disruption in the supply of electricity is not 24x7, so we have different level of quantity of measurement. But broadly we’ll consider as when there is connection available somewhere, there is access.
But we might want to go beyond that, in and refining our collective understanding of access by touching of the discussion that means the first step is already to have the vibes or connections or why that is a community and but that point is not to underestimate, because one of the studies that we did, when I was Vice President from Africa, we’re showing such -- for water access so a lot of community which have the connection but water doesn’t flow in the pipe so in spite it’s a development outcome that we are expecting from it is not that.
What electricity mean is what you know is more kids whoever make better learning outcomes, the women who are losing less children at birth, access to education to lot of people. And access to vaccine that is very important at this time when we talk about the Coronavirus and the possibility in -- hoping in the near term to have a vaccine and lots of challenge that we be facing is to make those vaccine available to people and save their life.
Bill Loveless: The biggest improvements have come in regard to access to electricity there’s another category that is looked out in the report and that is access to clean cooking, the numbers aren’t so good there, right, I mean, as I read it going from three billion people without access to clean cooking in 2010 to 2.8 billion in 2018, not that much of a decline, why the discrepancy? Is less attention given to cooking?
Makhtar Diop: Actually I think that it’s reflecting a lot of things, it’s reflecting the gender bias, in reality the women are most affected by the lack of good clean cooking in countries and we know that we have a lot of work to do collectively to reduce the gender gap on a lot of things. And this one is going to refresh on the gender gap in the energy sector. The second one is that something which touches a lot of things, it touches behavior, it touches or so access to new technology and this -- it requires having a model which I recreated in making the energy available.
In terms of an example in Kenya, right now, there is an interesting study that I have done with Berkeley University on seeing how people can use clean cooking in household. And part of it, the one as a main constraint was this availability of technology was the credit the microcredit mechanism. So, not having access to good microcredit mechanism, didn’t allow household to access it -- so as, we have a few factors which are impacting it lastly is, is the fact that we – the subsidies that were provided in that sector was not particularly – were targeted. And country has been able to target it well and be able to bring the subsidies to Gas, LNG, to be able -- drop house is using some small bottles that we see in some African countries are made a big change in term of – in cooking in Africa.
So, just to close to tell you that we are now on -- about to raise a clean cooking fund of $500 million that will help to accelerate that process.
Bill Loveless: We talked about the improvements in access to electricity but even these efforts are on track to fall, well short of the scale required to reach the goal of universal access by 2030. The report says that would leave some 620 million people without access to electricity that year. And that was before the pandemic, why the lag, why was the lag taking place?
Makhtar Diop: So, lag is taking for many reason, first one I think we are the – and the general approach was not emphasize enough of great connectivity in large of countries, we in the past wisdom was that, we need to have a traditional approach if connection to the on grade to be able to reach remote area. The olden that it was not sufficient to be able to accelerate access to electricity. So, I think there is a bigger recognition that of great connection is central to increasing access. And I think that you and the people I have been working very much in pushing that idea.
And I think that is becoming more and more easier now because the technology is in place and I think solar and renewable energy have played a lot of a big role in that and just getting up of batteries around so had a lot. So, now you -- we have a reasonably cheap options whereby we can upgrade which -- network which are working, which are set contain, which are much easier to deploy in remote area. So, now, we have a private sector which is looking at it as a business proposition in the past, it was only the government will have to do it.
Now, by accommodating the right legal framework, we can have more and more private sector investors who are looking it as business proposition and therefore we can have a social impact well helping some business people to make money in this sector.
Bill Loveless: Well, the report from the World Bank on Universal Access and other organizations comes as another big report has just come out from the International Energy Agency which warns that the pandemic has set in motion, the biggest drop in global energy investment in history, why is the pandemic such a big setback from meeting this goal of Universal Access and does it vary by region?
Makhtar Diop: I think, it was very for some like to think, our colleague from International Energy Agency for really putting this data forward. And _____ [00:13:07] graphing it’s important to address it very quickly. And I see a few reason, one of them is that the physical pressure that we have now in lot of countries whereby the expenditure which are increasing significantly to face the Coronavirus crisis at the same time itself address the whole in revenue makes that -- is the first decision that Minister of Finance making on capital expenditure that -- and the energy required capital expenditure, so that’s the one important element.
Secondly, utilities are starting to be under stress, they have a government to respond to that crisis of us -- has taken very quick measures in some countries by delaying the payment of yours bills by extended by allowing the poorest people not to pay anymore say due. So, we have certain number of measures which are taken and in the short term this is support, the cost is board by the balance sheet of this utility. So, utilities are becoming more and more stress financially be able to do that.
The third element is the uncertainties that it had created a lot of this investment part, the credits of PPA that we have in generation for solar and so forth, why don’t refer in direct investment and we know that in this time of, on pandemic, the uncertainty and the risk level are increased from the foreign investors, therefore they have slowed down their decision in that sector.
Bill Loveless: Makhtar, what actions is the World Bank putting in place or considering to counteract this impact, I mean, what will it take to get back on track?
Makhtar Diop: The two things I think that we started before the crisis and that will be acting a lot in moving the remedial, one of them was to create a training mark it’s -- I will just give you a little bit of what happened in the last 10 years from my perspective. When I was a Vice President from Africa from 2012 to 2018, when I came into 2012, basically we’re talking about the cost of solar around 24, 25 cents, when I left it was three cents, okay.
So, it’s fantastic, it means, it’s a sea change in such a short time and lot of the factor contributed to it. So, that’s for me was important a little bit on that momentum to try to increase interconnection between countries, so we invested a lot in connectivity among countries West African Power Pool, the Eastern African Power Pool, the Southern African Power Pool, and objective of this is to tap in the cheapest and cleanest source of energy available, electricity available in the sub region, and that what is happened.
But the question that he raised and was why people were not using as much these transmission lines, I made some head of state saying why are you building a new plant here, when your neighbor has excess electricity and the answer was simple, I'm not sure that I will get electricity when I need it, so I go to the country which are excess production, I say, why are you not exporting more, he say, yes, I tried it a few times but what happened, I don’t get paid. So, we have here collectivity made a huge investment in bringing the regional market together but it didn’t work.
So, what are we trying to do now we are preparing an operation which will go in the -- next month to our goal, July, sorry and I trying to guarantee the sanctity of contract, so if country ex – wants to export electricity to country why there will be sure that they are paid _____ [00:17:18] is guarantee fund it should be activated, if a country -- is relying on another country to get the electricity we will ensure that they get it, what it does it will create a much greener matrix, energy matrix in Africa, because you would be able to tap on hydro to tap on larger solar outline.
So, second element is strengthening the utilities. As we know the financial situation of utilities have been very fragile in a lot of countries. We need to continue aggressively in strengthening their financial situation, because at the end of the day, there’s one who will need to be able to raise money to do maintenance to invest the project for access and you know I am not totally out of the wood, so this is something that we continue with our budget support to do to help the country.
So, last thing is take this opportunity of Coronavirus to raise even most attention of country wasn’t need to accelerated, because in an economy -- in the new economy where you have much less physical contact where we need to rebuilt the value chain, then we need to integrate people more in the market at the time when they are facing oasis obstacle, you could not live without electricity. So, this is what the package that we are presenting to countries and it’s a global response that the World Bank is now providing -- more than $460 billion provided to countries, we will ask that we are focused on electricity to make sure that we are good core chain for vaccine, access to education, access to our services and better integration of the poorest in the world economy.
Bill Loveless: What makes you hopeful that these measures will work, what sorts of things do you worry about going forward?
Makhtar Diop: I’m very optimistic because there is an alignment, and every countries that I visited in Africa which is a place where we have released access service strong -- we’ll offer of making things happen and change service a sense of urgency and I think it’s translated either in the progress name country like Ghana, country like Kenya, country like Senegal are not far from Universal Access, we just are working on the last mile to be able to – those things that happen you will be so -- you -- as you know country like Ethiopia has more than 80% of its -- of the electricity production which is great if we include hydro in it.
So, lot of very good things are happening, so now what is -- by concern utilities, utilities, utilities we need to have utilities really be on some forting so that we can have sustainable program of increasing access and not to have any setback in it, and in the current situation, I want to make sure that as we are facing and addressing aftermath also current crisis we are ensuring that the utilities will not be suffering and being put to on the need and tomorrow to start again repeating the financial capacity and capability, so that they can -- they can deliver services to population.
Bill Loveless: We’re talking here of the tremendous need and urgent need in Africa especially in the Sub-Saharan Africa, as we look in other parts of the world there’s been quite a bit of progress towards Universal Access in Latin America, the Caribbean, Eastern Asia, South Eastern Asia, tell us a little bit about why we’ve seen so much progress in those regions?
Makhtar Diop: The starting point was different, the initial condition very different, first and I think that is something that we should not underestimate. A first on the fiscal side those country are a level of public expenditure which was significantly higher than the -- than the one in Africa. Secondly the market, the access to capital market, International Capital Market, was much better than a lot of African countries and soon, they have a -- they have much more integrated in a -- in the international trade in term of manufacturing goods which require electricity, therefore if you -- it’s an important part of your exports to manufacturing sector and they need electricity, you need to ensure that electricity is available everywhere, you need and as that as externalities on household we benefited from that situation.
So, this is -- these are some of the -- of the reasons and to answer to your – a point that I did not make in your question is that one of my concern also is that’s -- it’s a private sector involvement in a generation might be affected also by the Coronovirus crisis because the investors are becoming more and more risk averse in this situation. But, that’s also an opportunity, if you manage to get it right, there is not a lot of opportunity to invest in this current world and everybody is finding that investing in electricity generation or distribution is a good business proposition.
Bill Loveless: International public financer clean energy has risen from $10 billion in 2018 to 21.4 billion in -- well, I guess that number was most recently I think and maybe in 2018 that’s we read in this new report, but only about 12% of that reached the least developed countries whose energy needs are the greatest, why is that?
Makhtar Diop: This is what I mentioned in the past is that there was a curve in term of cost of production of renewable energy. And it seems that if it takes a period 17 to -- which is a pre Covid crisis period you have seen a sharp rise and I -- and it’s a market, it’s a private sector got more and more used to what you call a frontier market, as a first option that we had in Africa on solar, it didn’t attract a lot of people. Today I think the Coronovirus crisis started, now when you have an option for a solar electricity in Africa, a lot of investors are coming, are ready to invest, so this is one of -- we are recently -- even in my own country recently, one of the largest wind -- wind farm which was it and these are projects which takes time to prepare, so there is a lack because these type of project also take time to prepare particularly when the market is not as matured as a market. And as we will have more and more of this investment, the preparation time for this project would be shorter and shorter and I think, we will have a faster increase in -- investing the sectors.
Bill Loveless: What’s the role for hydrocarbons in Africa’s energy mix considering the oil price slump and the oversupply and the global market with all the slow demand these days, I look in Nigeria for example, Africa is most populist nation and has enormous gas reserves, that as I understand it are not yet providing power to millions of people in the country or the region, what’s needed to bring well, first what’s happening with hydrocarbon, so what’s necessary to bring energy to those underserved people?
Makhtar Diop: I mean, as you know it’s not an easy question, so issue of -- hydrocarbon, what we are trying to do is first of all to think about fossil fuel subsidies, a lot of fossil fuel subsidies existed and we would like to continue engaging and maybe raise the level of discussion on this issue with countries, and things that we need to have -- to as much as possible to remove fossil fuel subsidies, one that existed, that exist I think that it hasn’t had to give the price rate in term of electric price between renewable energy and fossil fuel.
That being said, these are subsidies still particularly this time when oil prices and gas prices are very low, it is also a very strong proposal, what we would like to do is to continue pushing very hard on renewable, actually close to 90% of what we have supported countries to generate are coming for renewable, so that’s what is very important to change the progress in this mix, but you have some transition, you cannot do it brutally and I think, it would not be realistic to not to do it -- in one goal and country have some resources.
Among those Africa is maybe the cleanest of all to be able to generate electricity. So, as part of the base load of our country, we are considering that gas might be a wide working towards increasing of our time, the share of renewable energy, the gas could be -- it could be -- an answer to building the base load and be able to go and accelerate access. So, this is the way we are seeing it and this is the way we are trying to deploy it in countries. And therefore when country like in West Africa and some part of East Africa, have a large sources of gas and at the same time they have a very clear strategy of increasing renewable in the energy mix, we considering -- accompanying them in that effort to balance the two objective in a way that benefits the population and allow a fast increasing access.
Bill Loveless: And of course when you discuss that balance what we’re also talking about here is addressing climate change, it’s often difficult to both meet the needs, energy needs of people and at the same time take into consideration the goal of reducing carbon emissions, how do you balance those needs?
Makhtar Diop: I think, we balance it by the -- by looking the countries specific conditions, I think that is important to have a blanket, and that approach, realities are realities, country have institution, country have different level of development and we are trying -- what we’re trying to do more specifically is to get as many incentive to country to move to renewable, and to -- for them to seize huge potential.
In reality, the potential is much bigger than they think, let’s take the Sahel in West Africa, where you have productivity land in abundance and you have sun radiation which are very good. So, you have there a case to combine with gas to power as base load to increase significantly access, in very cheap way, because you would be able to combine a base load with variable renewable energy, without battery or with battery depending on the condition and be able to touch much more larger number of people. It allows you also to do much more this reconnection.
So, I think that we are on the right side, among the mistakes I think so we’ll move fast, but I think that we need to do two things to keep the eye on the ball, never consider relaxing the -- try to shorten the process of project preparation, because I’ve been a bit obstacle, it would take a long time to prepare, to try to standardize the way people are investing in those countries, that’s what our colleagues of IFC’s Scaling of solar in Africa has been doing and it’s actually unit two moving from 24 to three cents in such a short time, and lastly to continue by having the good economy of policies to show to invest those are -- they can really make money in Africa in the energy sector.
And lastly we need to look at distribution, it’s been now increasing this weakest link, generation has been increased significantly in some country of access generation, but the problem has been distribution, low access is a network, high level of technical and commercial losses, we need to cut all this so that we can have utilities in a good financial base and have a better access to -- a larger access to electricity.
Bill Loveless: Well, before we go I’m interested in knowing now, what you do next, you’ve got this big report it’s a -- highly regarded, it’s looked at by many people who are in a position to get things done around the world, what do you -- what will you be -- do working on next now that you have this report in hand?
Makhtar Diop: What to do next is – a few things first, partner with everybody and having partnership in that, important partners, actors in the sectors and we are working very closely with them and that this report is a good indication of it. Secondly, we will – have pushing for policy reforms because sometime the problem is not, the variability of investment of physical asset, it’s--you have obstacle, is the policies that don’t allow to do that, to and include, to make sure that the subsidies are well targeted, when they’re needed in that sector.
And it goes to the poor, it have to be first reconnected and it allows to link access to productive activities, there is also a recent paper that was published from Kenya, it shows that if you have electricity and you don’t have accompanying measures in term of productive activities you don’t have _____ [00:32:18] in term of -- household improvement. So, we need to see electricity as part of holistic approach in term of a special development in some of the more rural activities --
Fourth take advantage of what is happening in other sectors, we’re talking more about greenings the word, but greening is the word we talk, requires -- so that we reduce emission in transports and I think that electricity is a key input for that. So moving towards more E-buses, collective means of transportation and therefore we would able to, not only increase the supplies, but do something on the demand side.
Lastly there are some top sectors on term efficiency that we need to look into, I’m talking about cooling -- today a big part of the energy consumption in the developing countries and at the tropical level is coming from cooling and there is a lot of inefficiency there, there is -- so I would like also to work with our team on helping country to better manage our demands so, that when we increase the accelerate, increase in the generation and access of electricity we can close much faster the gap that we are missing today.
Bill Loveless: It sounds like you have your work cut out for you.
Makhtar Diop: Thank you so very much Bill, it’s very nice to talk to you.
Bill Loveless: Makhtar Diop, thank you very much for joining us on the Columbia Energy Exchange, I’ve enjoyed of our conversation. From more on this center on global energy policy and Columbia Energy Exchange find us on the web at energypolicy.columbia.edu and on social media @ColumbiaUEnergy, for Columbia Energy Exchange I’m Bill Loveless, we’ll be back again next week with another conversation.