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Why Africa's power partnership with the World Bank should attract investors
There’s a word frequently used at global convenings like the World Bank Group’s Spring Meetings held this week in Washington, D.C.—multistakeholder. It refers to an approach to problem solving that involves input from a wide range of players—governments, civil society, private sector corporations and investors.
It will take a multistakeholder approach to bring an ambitious new project announced Wednesday to fruition, an initiative to provide electricity to 300 million people in Africa by 2030.
Of the world’s nearly 800 million people living without power, an estimated 570 million are in Sub-Saharan Africa, according to the World Bank. The organization is partnering with the African Development Bank and its own International Development Association to provide up to $30 billion in funding, but is also banking on private sector investment to help make this plan a reality.
At the meetings this week, GZERO’s Tony Maciulis spoke to Lucy Heintz, Head of Energy Infrastructure at Actis Energy Fund, a global investment company focused on sustainability. Heintz expressed optimism in the announcement and explained the reasons why it could be attractive to investors.
“This is a great ambition and it's a huge plan,” Heintz said. “If it's met on the other side by a real intent to do business by government, wherever those governments may be, in those countries where energy access is still lacking, then I think you can start to see the pieces fall into place.”
Heintz explained there are already tools in place that mitigate risk for cross-border private investors, such as the Multilateral Investment Guarantee Agency (MIGA), a World Bank organization that provides insurance for noncommercial political and economic risk.
Success stories already exist globally, Heintz explained, with India being a prime example.
“India has put in place the right legislative frameworks, the right regulation,” she said. “It's also invested in the enabling environment. So, there's a very successful transmission grid investment program, which is led by the government, but then brings in private sector once those projects are de-risked.”
As for concerns about carbon emissions and environmental risk from expanding electricity generation, Heintz says there is a greater danger in not bringing more people to power.
“Reliable electricity supply is fundamental if you want to have any ability to mitigate the risks of climate change, whether it's refrigeration, cooling, the ability to earn a livelihood, it's fundamental,” she said. “I think that's the most important thing to have in mind.”
For more of our 2024 IMF/World Bank Spring Meetings coverage, visit Global Stage.
The debilitating cost of remittances
Dilip Ratha knows how hard it is to work abroad and send money home. Why? Because he had to go through the same hoops when he was a migrant.
It's the inconvenience and the cost, the World Bank's head of KNOMAD and lead economist says during a livestream conversation on closing the global digital gap hosted by GZERO in partnership with Visa.
Still, Ratha points out, these flows are a lifeline for millions of poor families around the world. And they keep the lights on in remittance-dependent economies like El Salvador or Lebanon.
With an average 6% commission, the amount lost each year is double all the aid that the US gives to the entire world or what sub-Saharan Africa gets.
Focus on Africa: hunger, energy, climate - and the path to growth
Sub-Saharan Africa was on the brink of economic recovery last year. Now, the World Bank expects its growth to slow in 2023. With global inflation on the rise, rising food and fuel costs “actually put lives at risk in a way few other shocks can," says International Monetary Fund (IMF) senior economist Andrew Tiffin.
And sub-Saharan Africa is particularly vulnerable: 123 million people there are currently food-insecure, while the region accounts for 6% of the global energy demand. With climate change exponentially leading to those numbers rising, Tiffin says: “Any globally viable discussion has to take into account Africa’s concerns and needs. Because without that, there is simply no solution.”
The IMF’s latest analysis and growth projections for sub-Saharan Africa were released in a new report, available here: https://imf.org/AfricaREO-Oct22
Tiffin spoke in a Global Stage interview with Shari Friedman, Eurasia Group's managing director for Climate and Sustainability, at the World Bank/IMF fall meetings in Washington, DC.
Xi Jinping's WEF speech on China's global leadership falls flat; Italy PM resigns over stimulus
Ian Bremmer shares his perspective on global politics on this week's World In (More Than) 60 Seconds:
What did you think of Xi Jinping's speech at the virtual World Economic Forum?
Well, his last speech at the real World Economic Forum in Davos, I remember being there four years ago, and given that Trump had just been elected, Xi Jinping gives this big, "We want to stand up and be leaders while the Americans are doing America first." And generally speaking, was probably the most important speech of the week. People liked it. This is a pretty different environment, not so much because Trump has gone, but rather because support and belief in Xi Jinping is pretty low. I will say one thing that was generally well responded to was the call not to enter into a new Cold War. Anybody in the business community generally supports that. There's so much integration and interdependence between the US and the Chinese economies that when Xi Jinping says, "We need to find ways to continue to work together," I mean, this is the pro-globalization audience he's speaking to. They generally agree. But otherwise, the message fell pretty flat. So, the idea that China is going to be globally useful on issues of leadership, especially when it comes to anything that might threaten Beijing's sovereignty, they check global norms at the door. And a few examples of that, when Xi called for support for the rules-based international order, that's in obvious contrast with China's violation of the one country, two systems framework in Hong Kong. And they said, "Well, that's a domestic issue." Well, actually that's not what your agreement was with the British handover. And just because you're more powerful doesn't mean that norm doesn't matter anymore.
The call for abandoning ideological prejudice in the West, that sounds like, "But out of our affairs, we can do whatever we want to Uyghurs when there are a million in concentration and reeducation camps in our country." And we'll shut down journalists for even mentioning that if they try to operate inside China for that. The idea that the strong should not bully the weak sounds like, "Don't blame the United States. US, you better behave yourself." But what about the way the Chinese are treating Australia right now, or a host of other smaller countries that cross China's political, economic or national security interests? I mean, the willingness of Beijing to really make you pay when you engage in behaviors they don't like, is growing very quickly along with their international capacity to muscle flex.
And then on the pandemic, I mean, China is calling for greater global cooperation, but that also means that they need to cooperate in terms of transparency in what happened with coronavirus. And let's remember that there were, from my perspective, two big obscenities in terms of the world, in terms of coronavirus itself and the pandemic. One is the United States leaving the WHO in the middle of the pandemic, just an extraordinary antithesis of what a country should be doing, a country like the United States. But even more foundational was China lying to the World Health Organization about the lack of human-to-human spread for a month when we could have stopped this thing so much earlier, could have contained it, especially given the capacity we now see that China has to engage in contact tracing, quarantine and lockdown. And they chose not to. And that's a serious problem. For all of those reasons, this speech was not an enormously well-received speech by those watching.
Why did the Italian Prime Minister resign?
Well, I mean, largely it is over disagreement on how money should be spent in terms of massive coronavirus stimulus, sort of like the disagreement, the big disagreement, between Democrats and Republicans on the $1.9 trillion right now. I mean, how green, how sustainable should it be? How much money goes to healthcare? How much money goes to new technologies? How much to the workers? Former Prime Minister Renzi basically pulled out of the governing coalition over disagreements on that. And they weren't able to get a solid majority in a vote of confidence. That makes it much more difficult to governance done. And that's why Conte resigned. He is the 29th Prime Minister since World War II. If he doesn't get elected back in, if they can't put a new coalition together, they will have the 30th in Italy. Italy's kind of like the Doritos of G20 governments. Crunch all you want, they'll make more. That's kind of what we're looking at in Italy. The good news is it's not all that exciting.
Where is the international outrage for what's happening in Ethiopia's Tigray region?
And no question, there's a lot of violence. There are obvious human rights breaches across the board. There's danger of famine. There are tens of thousands of refugees. And this at the hands of a Prime Minister of Ethiopia that had won the Nobel Peace Prize, and some saying he should return the prize, just as they were saying that about Aung San Suu Kyi for some of her nationalist calls to help support minority repression in Myanmar after doing so much to stand up to the authoritarian government. A couple of points here. One is that Ethiopia, talking about this level of conflict at a time when everyone's focusing on coronavirus, everything small and local gets lost in the scrum. But also, Prime Minister Abiy in Ethiopia has led the charge in trying to move away from an ethnic-led federal government, where sort of different groups control political power, to one where it's much more of a traditional political party system, or I should say a modern political party system. And the Tigray in Ethiopia were the group that stood to lose the most party, a minority group that wielded effectively a majority of patronage and power. And so, the willingness to blame Abiy for the violence that we're seeing right now, even though he has the Ethiopian army, there's Eritrean military that's involved. It's an ally of his. I mean, clearly he has more power. But some of the initial violence clearly came at the hands of local Tigray as well who refused to recognize the Ethiopian election process and the suspension because of the pandemic, and instead held their own election, became a breakaway province. And so in these situations, there is so much conflicted narrative in terms of history, and it's very hard to lay responsibility and blame firmly at the hands of one side in this conflict. Those two things together get you why we're not paying as much attention as we perhaps should to a country with over 100 million people in Sub-Saharan Africa, and one of the strongest growth trajectories economically in the entire world.