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00:00Thank you so much. This is very exciting to be here, especially with the two of you.
00:06And of course, our session is about Mission 300, which Ajay and Dr. Ta, you know very closely.
00:12And for people who may not know, this was launched just a few months ago with a commitment to power 300 million Africans.
00:21And there's quite a bit to do, but quite a lot of progress that we've seen over the past few months, which hopefully we can get into.
00:27Ajay, I was hoping you could start for us, because you were there in Dar es Salaam earlier this year.
00:32Talk about, give us a snapshot of what we've seen and what you've been able to achieve.
00:36Yes. I mean, look, the idea was that you can't have a development agenda or story with 600 million people in Africa, essentially with no power.
00:48And what I've said from day one, and, you know, Sidi has just taken over.
00:52You should all be congratulating him, because he's going to be an outstanding president of the African Development Bank and a great partner for me.
00:59But his predecessor and I had this conversation and said, electricity is a basic right.
01:06It's a fundamental right.
01:07Because without that, you can't have health, education, anything delivered.
01:11And so we tried to go at that and said, let's put a big number out there and see if we can get there.
01:16The World Bank had connected 100 million people to power over the prior decade.
01:21So the idea was, at our size, can we go to, say, 250 in five or six years?
01:26And our team stepped up at 50 and ended up at 300 million, which found, like, a really good number, half the people we would be connecting.
01:34That's how it began.
01:35It began without the ability to say, we know for sure we're going to get to 300.
01:40We might get to 250.
01:41We might get to 350.
01:43But it's way better than the current rate of progress on connecting people to electricity.
01:48The second part was, we said, we don't want to just connect them to one solar light and one fan, but to give them enough electricity in the house or in the shop to be a productive member of society.
01:59A computer, a fridge to open a chemist shop with medicines or ability to create a hairdressing salon that I saw recently, all of these I saw live in Mozambique recently.
02:10And so that is the second part.
02:11And then the third part was, make it happen at the country level.
02:14So make countries own the process with us as a group and say what rules and regulations and policies need to change so that the private sector comes in with the right kind of enthusiasm.
02:26Because there will not be enough money in either our balance sheets or the balance sheets of those countries.
02:32We're going to need to put in large sums of money.
02:35And the real numbers are very large.
02:37We're talking about somewhere between $40 and $50 billion from the two of us put together over the coming years, another $15-odd billion with the IMF coming to the fiscal headroom of countries, and maybe somewhere between $20 and $30 billion from the private sector in that space.
02:52That's what we're up to.
02:53Wow.
02:54And Dr. Ta, as Ajay was just alluding to there, you're less than a month into this position, correct?
02:59Yes.
03:00I started on the 1st of September.
03:021st of September.
03:03And yet, this seems like a seamless partnership.
03:06But I had the privilege to meet Ajay in July.
03:08He was very kind to receive me in his office in D.C.
03:11And we started talking about Mission 300 because Mission 300 is key for Africa.
03:17It's about unleashing the potential of micro, small, medium enterprise in Africa, income-generating activities.
03:25As you know, Africa has a demographic dividend to tap.
03:28Most of the population of the world would be in Africa.
03:33By 2050, we'll have one person out of four who will be African.
03:37So we need to be ready for that.
03:38And we need to provide electricity for the inservant so far.
03:43So far, we have almost 600 million people inservant in Africa.
03:46So if we succeed to do Mission 300, that will open the door for more, for the continent and for the humanity.
03:55Mission 300 is about collaboration.
03:58We are partners.
03:59We are working with the World Bank Group, but also with other partners to deliver on this machine
04:03and to bring the private sector to contribute to the development.
04:07Because development is beyond what MDBs can do.
04:10It is about partnership.
04:12And partnership is key for success.
04:14And this is why at the African Development Group, we work with all our partners in the private sector,
04:22in the MDBs space, but also government, civil society, academia, philanthropic, and others.
04:29Which is so important to actually operationalizing this, right?
04:34Can you both speak to how these different actors work together and actually bring together some private investment?
04:40How do you see this envisioning?
04:43Or how do you envision this, Dr. Todd?
04:44Actually.
04:45Okay.
04:46So we already have the compact, which has been prepared in partnership with government.
04:53Because after all, the government are the recipient and the government are those who will be implementing on the ground the compact.
05:02So partnership with government, but also partnership with civil society, partnership with the philanthropia,
05:08and partnership with all the institutions which are interested in this endeavor to make sure that we articulate our intervention,
05:19we have a very clear division of labor among ourselves, and we have a common goal and a concerted action.
05:26So, you know, I think the main thing was the energy compacts, which is called for a plan by a country at the highest level of the leadership of the country,
05:38the president, the prime minister, the finance minister, the energy minister,
05:41of what things they need to do to get to their target of how many people they want to connect,
05:46and how they will go about it, both in terms of financing,
05:49but most importantly in terms of regulatory policy, utilities paying on time, land ownership rights,
05:55the ability to acquire land for transmission lines, things that hold up projects on the ground.
06:01That's the first part.
06:03The second part is they presented those.
06:04A number of them got presented in Dar es Salaam.
06:07More are getting presented in our annual meetings in a few weeks' time in D.C.,
06:12when C.D. will also be there.
06:13And then we're working with the private sector, in fact, through an effort that was originally helped by Bloomberg,
06:21by Mike, I don't know where Mike is right now, but by him and his group of people,
06:25where we worked together on what would hold back the private sector from large-scale investing in these areas.
06:32And we came up with five things to work on, and the first one is actually regulatory policy and getting certainty.
06:38That's what the compact focuses on.
06:40The second one is even if I get that, can I get access to political risk insurance,
06:46which the World Bank does offer through something called MIGA.
06:50And, in fact, we're trying to figure out if we can use our underwriting instrument for him as well.
06:55Properly priced it has to be, but we're trying to figure that out.
06:59And then the third part was can we give them more money in local currency,
07:03because otherwise if they're investing in dollars, euros, and yen
07:06and getting paid back by utilities and local currency, they have an unexposed hedge of a very large amount.
07:12So IFC now, a part of the World Bank group, is up to 30% local currency financing.
07:17We're trying to get to 40.
07:19The real solution is in some markets, try and develop local capital markets.
07:23Can't do that everywhere, but can do it in a few.
07:25And the fourth was can we take first loss in a project.
07:30So if a project is risk-reward is up here, if I was to take first loss or I was to take a capped equity return,
07:37would I bring it down here?
07:38And so the investor would say, okay, this makes sense for me, and I can go into it.
07:43That's the fourth one.
07:44And the last one was can we bring this real large amount of private capital,
07:48which is not the individual operator of a solar company or a gas company or a utility,
07:55but can we bring pension fund money and asset management money into the place?
08:00And to do that, you have to understand that they don't underwrite individual projects.
08:04They want to see packages of securities which are bundled together
08:08and hopefully certified by a rating agency to be X quality at Y price.
08:14We just did the first one at IFC now a few days ago.
08:17We securitized $500 million of loans like this.
08:21I have plans to do this continuously.
08:23And if we can get to mutually understood underwriting standards,
08:27then we could pool our loans and do it together.
08:30That's the next step that we're trying to work on.
08:32When do you see that potentially?
08:34The pooling together?
08:34Yeah.
08:36Very soon.
08:36I mean, he's joined one month ago.
08:38That's true.
08:38I don't want to put that much on.
08:39We are working on mutual alliance.
08:41So we will have a framework of mutual alliance which will help us to rely on what they do
08:48and they can rely on what we do so to avoid duplication.
08:52And as you know, in Africa, the access to electricity is not only about generation,
08:57but also about distribution, about transmission line, and also off-the-grid system.
09:03And sometimes you can have also individual solar system for houses.
09:09And it can be also different sources of energy in Africa because the poverty in terms of energy is really critical
09:19and we need to tap all sources of energy in Africa to be able to contribute to covering the gap.
09:26I mean, the thing is you've got to break this into infrastructure, policy, and financing.
09:31So the infrastructure part of it is you use satellite technology to actually study every house
09:37and every location in every place to see, is it cheaper to connect them through to the grid
09:43or is it better to put them into decentralized power of some type?
09:47What's going to be cheaper and quicker?
09:49You've got to work that through in infrastructure.
09:51You then get to all the work to do with policy in the compacts.
09:54And then, of course, the financing part of it, which is where you talked about the private sector.
09:58This full mutual reliance that Citi just referred to, honestly, he's been here a month
10:03and already he's mentioned it three times to me.
10:06It took us a year, just so you know how hard this is,
10:09it took us a year to get this fully done with the Asian Development Bank.
10:13And the idea here is very simple.
10:15If we are both together financing a project in Gabon,
10:22if those guys have to go through two times due diligence, two types of project approvals,
10:29twice the number of work on Know Your Customer and Anti-Money Laundering,
10:34twice the amount of work on every procurement contract,
10:37they don't have the people or the time to do that.
10:40So we've got to make it a little easier.
10:41And if he can, therefore, I can underwrite and he accepts it, or he underwrites and I accept it,
10:46that's the full mutual reliance framework that he's referring to.
10:50Is the political will there among some of the governments?
10:53How are those engagements working?
10:55For the full mutual reliance framework?
10:56Yeah.
10:57Well, the Asian Development Bank has finally got it done.
10:59So now we have a model.
11:01I've begun to work on that at the Inter-American Development Bank.
11:04As soon as he joined, the first thing he said is, me too.
11:07So we're going to find a way.
11:08We're going to find a way.
11:09Do you see that happen?
11:10Definitely.
11:10That will happen very soon.
11:12So we are really committed to it.
11:13Because it's a waste of resources and waste of time to duplicate our efforts.
11:20We should rely on each other.
11:22And that will make life easier.
11:25We'll cut costs and will enable us to speed up the process of delivery of our services to the population.
11:35How does this fit into the broader ambitions you have for the bank, Dr. Ta?
11:39I'm sorry.
11:39I know you're only a month in, but I have to ask.
11:41Yes.
11:41As you know, I have the four cardinal points.
11:43And my first cardinal point is about scaling up the volume of financing for Africa.
11:48Because, you know, the needs of African economies in terms of financing infrastructure, financing, SDGs,
11:54and other, is beyond what the African development bank can provide.
11:59So we need to work with World Bank.
12:00We need to work with all the MDPs.
12:02We need to work with African DFIs, but also with the private sector, pension fund, work to attract remittances,
12:09work with sovereign fund and institutional investors.
12:12The second cardinal point is about reforming African financial architecture.
12:18Everybody is talking about reforming the international financial architecture.
12:22But we, African, we need first to reform our financial architecture.
12:26Currently, we have scattered the landscape of small institutions.
12:30We need to consolidate.
12:31We need to bring them and to have a very clear division of labor.
12:34The third cardinal point is about our demography.
12:38So I mentioned earlier about our demography.
12:41And we need to be prepared to provide the right education, the right skills, development,
12:47but also to support micro, small, and medium price, which represent more than 90 percent of the economic fabric in Africa.
12:54The fourth cardinal point is about resilient infrastructure and value addition to natural resources.
13:01Africa is underwalled with huge natural resources.
13:04We need to add value to these resources in Africa.
13:08And for that, we need also energy.
13:10We need infrastructure.
13:11We need corridors.
13:12We need really to invest at a very large scale.
13:16Well, it's very ambitious, and I'm very pleased to be sitting here with the two of you.
13:20And thank you so much for speaking about this.
13:22And thanks to all of you for listening to this session.
13:25Thank you very much.
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