Photo: David Lawrence / World Bank Group
One September afternoon, my boss, Pankaj Gupta, popped his head into my office. He had some ideas about how the novel use of guarantees might help solve a type of problem we had not faced before. The Energy and Extractives Global Practice had received a request from Ukraine. The problem was the country was heading into the 2014/15 winter with a large gas shortfall.
These were not easy times for Ukraine, which was in the throes of armed conflict on its Eastern border. With an economy in turmoil, the credit rating agency, Standard & Poor's, had dropped Ukraine's credit rating two notches in the last year. The rating now languished at CCC, or very speculative and non-investment grade. This made finance, the life-blood of service delivery, difficult to access and expensive.
Night had descended and the rain that had persisted for days finally calmed when the Maputo Declaration of Community-Based Natural Resource Management (CBNRM) was finally agreed upon. But the result was worth the wait.
Photo: Jorge Láscar | Flickr Creative Commons
The potential economic benefit from the cooperative use of the Nile’s water is estimated to be worth well over $11 billion—from irrigation and hydropower generation alone. But being able to harness those benefits is a far reach; the Nile Basin—a vital source of drinking water, irrigation, hydropower and transport—has a growing need for infrastructure investments to attain the full potential of this resource. Many of these infrastructure investments need to be coordinated between the basin’s 11 countries to ensure they are creating mutual benefits and are not causing harm to neighboring countries.
The Nile Equatorial Lakes Subsidiary Action Program - Coordination Unit (NELSAP-CU), one of the Nile Basin Initiative’s two investment programs, plays a prominent role in the region’s development. NELSAP supports poverty alleviation, economic growth, and the reversal of environmental degradation in the sub-region through cooperative development and water management. Between 2005 and 2015, we mobilized $90 million of cumulative finance for pre-investment programs (e.g. the Lake Edward and Albert Fisheries Project) and $930 million for investment projects (e.g. the Regional Rusumo Falls Hydroelectric Project).
Photo: Carol Mitchell | Flickr Creative Commons
As the backbone of development, infrastructure provides vital support for the twin goals of poverty reduction and shared prosperity. Considering the different needs, roles, and responsibilities of men and women in infrastructure design makes the achievement of these goals more sustainable.
Women and men face constraints both as beneficiaries and producers of infrastructure services. For example, there can be inequitable access to roads, financing for electricity connections, or clean water. There are also inequities in the infrastructure business value chain: Do utilities have a balance of women and men on technical and leadership teams? Is there diversity on boards, with regulators or policy makers? Are women-owned firms in supply chains?
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Access to a safe, sustainable water supply is a growing concern in every region of the world. In many communities, groundwater is being pumped by diesel fueled systems, which are both expensive and can be difficult to maintain. In communities where electricity is scarce, solar can be a part of the solution.
The highest demand for solar pumps is among rural off-grid areas, currently underserved, or served by costly fuel-driven pumps. Solar pumping is most competitive in regions with high solar insolation, which include most of Africa, South America, South Asia, and Southeast Asia; but the technology can operate successfully in almost any region of the world.
Picture an island in Bangladesh that is so remote that there is no way the traditional electricity could reach it. Not now, and probably not anytime soon. That was the situation in Monpura just a few years ago – but not today.
Today, Monpura is thriving, thanks to solar power. Markets are abuzz, households can power TVs, fans and even refrigerators, and streets are lit up at night. In fact, .
Like many Sri Lankans across the country, I joined Sri Lanka’s 70th Independence Day festivities earlier this month. This was undoubtedly a joyful moment, and proof of the country’s dynamism and stability.
The country’s social indicators, a measure of the well-being of individuals and communities, rank among the highest in South Asia and compare favorably with those in middle-income countries. In the last half-century, better healthcare for mothers and their children has reduced maternal and infant mortality to very low levels.
Sri Lanka’s achievements in education have also been impressive. Close to 95 percent of children now complete primary school with an equal proportion of girls and boys enrolled in primary education and a slightly higher number of girls than boys in secondary education.
The World Bank has been supporting Sri Lanka’s development for more than six decades. In 1954, our first project, Aberdeen-Laxapana Power Project, which financed the construction of a dam, a power station, and transmissions lines, was instrumental in helping the young nation meet its growing energy demands, boost its trade and develop light industries in Colombo, and provide much-needed power to tea factories and rubber plantations. In post-colonial Sri Lanka, this extensive electrical transmission and distribution project aimed to serve new and existing markets and improve a still fragile national economy.
Fast forward a few decades and . Yet, .
Notably, the current overreliance on the public-sector as the main engine for growth and investment, from infrastructure to healthcare, is reaching its limits. and the country needs to look for additional sources of finance to boost and sustain its growth.
As outlined in its Vision 2025, the current government has kickstarted an ambitious reform agenda to help the country move from a public investment to a more private investment growth model to enhance competitiveness and lift all Sri Lankans’ standards of living.
Now is the time to steer this vision into action. This is urgent as . As it happens, private foreign investment is much lower than in comparable economies and trade as a proportion of GDP has decreased from 88% in 2000 to 50% in 2016. Reversing this downward trend is critical for Sri Lanka to meet its development aspirations and overcome the risk of falling into a permanent “middle-income trap.”
Between 2004 and 2017, some 30 African countries have adopted laws regarding Public-Private Partnerships (PPP). If we were to add to this list the countries that have implemented PPP policies, and those who are in the midst of drafting PPP laws, the tally would rise, leaving us with less than just 10 African countries that are entirely without a PPP framework.
What this tells us is that the calls by international financial institutions have been heard by decision-makers in Africa:
But how does reality measure up to the theory? How many projects, based on PPP law, have actually reached financial close? Given the time required to prepare a PPP, it is maybe too early to see PPP laws translated into concrete PPP projects, especially as more than 20 countries have in fact adopted their laws only in the last five years.
While inland transport was included in the 2015 Paris Agreement and international air transport followed suit in 2016, progress in the international shipping sector, which carries 80% of the world’s trade volume, has been more modest. Back in 2011, the International Maritime Organization (IMO) did adopt a set of operational and technical measures to increase the energy efficiency of vessels. Realistically though, it may take about 25-30 years to renew the world’s entire fleet and make all new vessels fully compliant with IMO’s technical requirements.
In any case, focusing only on technical and operational efficiency simply won’t be enough. The demand for maritime transport is growing so quickly that, even when taking all these energy efficiency regulations into account, CE Delft projects that emissions from international shipping could still increase by 20-120% by 2050, while IMO estimates range between 50-250% for different scenarios. This clearly calls for a bolder agenda that includes credible market-based solutions, too.
Photo: Raymond Ward | Flickr Creative Commons
Sector reform is a familiar concept for anyone working in the energy sector, particularly in developing countries. Typically, reforms involve measures such as building an institutional framework that allows for an independent regulator, improving the operational efficiency of utilities (for example, by unbundling vertically-integrated utilities), creating an environment for private sector participation, and last but not least, introducing tariffs that reflect costs. All these measures are designed with one goal in mind: to put the sector on a sustainable path and improve the quality of service for end-users.
While acknowledging the many benefits that sector reforms can bring, one issue we continue to face is the poor financial state of key power utilities. In other words, a lack of creditworthiness. Often, their lack of financial creditworthiness is the most critical obstacle to implementing investment programs. This makes utilities even more dependent on continuous government subsidies.