Three Big Questions for the World Bank’s new electrification plan for Africa

How? What's new? And Whaaaat?

My quick reaction to yesterday’s news. 

The World Bank announced a step-change pledge yesterday to provide electricity for at least 250 million people in Africa by 2030, alongside the African Development Bank connecting another 50 million people. This would be fantastic… if it can happen. 

An announcement and a press release is not a plan of course, so I’ve got questions. The big three so far:

1. Connecting 300 million people in six years? How will that possibly happen without fudging what counts as a connection?

The presser says it will be a mix of on-grid and off-grid solutions. That’s smart. Yet a massive expansion of the grid to the unconnected will take a lot of time and a lot of public money. Strengthening the existing grid would be a huge benefit to boost reliability, which is greatly needed for businesses to thrive and could be an obvious area for World Bank investment. But grid modernization doesn’t immediately add to the tally of new connections. Is that going to happen?

Off-grid is far faster for reach the rural poor, but whether it’s a real connection depends on what the system can deliver. As I wrote earlier this week, dropping a solar lantern or a tiny home system might count as a connection, but it shouldn’t. I hope the Bank’s drive to hit 300 million people won’t encourage them to define access down to a mere lightbulb. 

2. What will the World Bank actually do differently?

I’d hope that a big new pledge would have started with some clear-eyed soul-searching of why the status quo isn’t working. The announcement says the Bank will double spending to $6bn per year and allocate more of its concessional sovereign loans to the effort. (I’m reminded of a Bill Easterly quip: “When aid agencies don’t know what to do, they just double aid.”)

More funding for the power sector is good, especially if more public money can be used to build enabling infrastructure and reform the utilities. But isn’t that what the Bank has already been doing? Is it just more of the same with a 2x budget? 

My question is even sharper for what the Bank will do differently to attract private investment. The disappointing results of the 8-year old Scaling Solar initiative and the Bank’s stubborn refusal to reflect on its mistakes make me wary. I hope I’m wrong and the World Bank has a thoughtful new idea.

3. Did the World Bank just ban financing for gas and diesel power?

According to Devex, a senior official told the press, “All new power generation will come from renewable energy sources, such as solar PV, hydro, and wind.” If accurate, this would be a major policy change. 

The Bank won't finance coal or upstream gas production but has stayed open to financing downstream gas for power plants (or cooking or fertilizer) if they’re part of a country’s development plan. Many African countries expect to use gas-fired power to balance higher penetration of intermittent wind and solar. And many solar minigrids use diesel as backup. 

Just a year ago, the Bank verified it was open to funding gas power and updated its energy investment guidelines. Last year, it approved funding for a large gas power plant in Uzbekistan. Is that no longer the policy? Or does this new Africa initiative have extra restrictions on technologies allowed? 

Borrowing shareholders, like Mozambique and Senegal, should insist on clarification. The World Bank is supposed to serve their development needs. Yet Bank president Ajay Banga is right now in the middle of seeking a record replenishment for its soft loan window known as IDA. So Banga is asking rich world governments – to whom he’s promised to do more to fight climate change – to donate billions extra just as he’s made this big new African electrification pledge. Has a bargain been cut?

I hope we’ll find out soon.