In 2013, investment commitments to infrastructure projects with private participation declined by 24 percent from the previous year. It should be welcome news that the first half of 2014 (H1) data – just released from the World Bank Group’s Private Participation in Infrastructure (PPI) database, covering energy, water and sanitation and transport – shows a 23 percent increase compared to the first half of 2013, with total investments reaching US$51.2 billion.
A closer look shows, however, that this growth is largely due to commitments in Latin America and the Caribbean, and more specifically in Brazil. In fact, without Brazil, total private infrastructure investment falls to $21.9 billion – 32 percent lower than the first half of 2013. During H1, Brazil dominated the investment landscape, commanding $29.2 billion, or 57 percent of the global total.
Four out of six regions reported declining investment levels: East Asia and the Pacific, South Asia, Africa, and the Middle East. Fewer projects precipitated the decrease in many cases. Specifically, India has experienced rapidly falling investment, with only $3.6 billion in H1, compared to a peak of $23.8 billion in H1 of 2012. That amount was still enough to keep India in the top five countries for private infrastructure investment. In order of significance, those countries are: Brazil, Turkey, Mexico, India, and China.
Sector investments were paced by transport and energy, which together accounted for nearly all private infrastructure projects that were collected in this update. The energy sector captured high investment levels primarily due to renewable energy projects, which totaled 59 percent of overall energy investments, and it is poised to continue growth due to its increasing role in global energy generation.
The energy sector also had the biggest number of new projects (70), followed by transport (28), then water and sewerage (12). However, transport claimed the greatest overall investment, at $36 billion, or 71 percent of the global total.
While we need to see what the data for the second half of 2014 show, what we have to date suggests that infrastructure gaps may continue to grow as the private sector contributes less. It also suggests that, in many emerging-market economies, there is much work to be done to bring projects to the market that will attract private investment and represent a good deal for the governments concerned.
In the village of Aharkandhi in northeastern Bangladesh, life has changed since homeowners began installing solar panels on their roofs. At night, families gather at the local grocery store to watch TV, which boosts business. Children study longer than before.
This is due in part to a World Bank-financed electrification project to promote off-grid electricity in rural communities. This year, the project became the first renewable energy program in Bangladesh to be issued carbon credits for lowering greenhouse gas emissions and the world's first Programme of Activities for solar home systems under the UNFCCC’s Clean Development Mechanism (CDM) to generate carbon credits.
With access to electricity, people are finding new ways to increase their income, and the word is spreading quickly across villages.
Various scholars have indulged tremendous resources to study poverty. Amartya Sen is among such scholars. He used the ideas of Adams Smith as his building blocks and looked at poverty as lacking the basics that one needs in order to co-exist in the society. The World Bank estimates that 4 out of 10 Kenyans live in poverty. Consequently, several approaches to reduce poverty have been tried and tested in Kenya. In most cases, these approaches have been a blend of various theories, which have been opined by various scholars. However, it is my belief that just like cancer – which requires a combination of chemotherapy and proper nutrition – poverty cannot be fought using a single approach.
Sustainable energy access is vital to the eradication of poverty. I believe that by providing access to affordable energy, it triggers the domino effect of bringing light, clean water, tools of communication and learning, improving health, and allowing for the establishment and growth of small businesses. World Bank President Jim Yong Kim stated when joining the Sustainable Energy for All initiative in 2012, “Ending poverty and ensuring sustainability are the defining challenges of our time. Energy is central to both of them.”
The city has constrained human and financial resources to respond to this issue, as energy supply is struggling to keep up with ever-growing demand. Consequently, severe electricity shortages occur at the national level, resulting in frequent load shedding and energy price inflation, to the tune of 12 percent in the third quarter of 2014 alone.
Dumsor or load shedding has become part of the everyday life of local inhabitants; in fact, it is such a chronic issue that it has even made it into Wikipedia. Under the current timetable, residential customers have up to 24 hours of power outage for every 12 hours of power and are forced to use back-up power, kerosene lamps or be without power. At the same time, the Energy Commission of Ghana estimates that every year end-use electricity waste is around 30 percent of all of the electricity consumed, which in part, is due to the inefficiency of appliances and their overuse by the population. As is well known, inefficient use of energy contributes to higher levels of energy consumption than needed.
Although energy supply in the city is so often an issue, creative energies are bubbling in local information technology and innovation hubs, ready for a “spillover” into other sectors such as energy. Accra is home to a growing community of technologists and innovators, offering great and untapped potential for a new force to offer solutions, particularly, in the area of energy efficiency.
Denmark has committed to renewable energy further and faster than any country in Europe. The Scandinavian nation generates a third of its annual electricity demand from wind, and solar capacity is growing as well. For countries that want to green their energy mix, there is no better place to get a glimpse of the future than Denmark.
Its pioneering spirit has brought great benefits, and international acclaim, but like all first movers, Denmark is also learning as it goes.
To tap into this learning, ESMAP—the World Bank’s Energy Sector Management Assistance Program—organized a study tour to Energinet.dk, Denmark’s transmission system operator, as part of its work to help client countries integrate variable renewable energy into their electricity grids. Joining the study tour were 26 participants—representatives from regulators, system operators and utilities from 13 countries, including South Africa, Chile, China, Pakistan, Zambia, and Morocco.
Each year on March 22 we mark World Water Day. It is an opportunity to keep the urgent water issues – from lack of sanitation to transboundary water to climate change -- top of my mind for practitioners, decision makers and the global public. In the coming days we will post here updates and stories from the field, as well as links to some of our partners’ content. But, more importantly, this is an opportunity to hear from you, too.