[Laila Nordine] Good afternoon, good evening, and good morning to our colleagues in Washington. My name is Leila Nordine. I’m a Senior Manager in the Financial Institutions Group at IFC. I have the great honor and pleasure to welcome in Jacqueline Novogratz, the CEO of Acumen, a long-standing advocate for lifting people out of poverty. Our Managing Director, Makhtar Diop, another big advocate for lifting people out of poverty, for private sector development. It’s a great, great honor to welcome with you. Makhtar, the floor is yours.
[Makhtar Diop] Good afternoon. And before we do anything, it’s to celebrate partnership. I think this is a project which really symbolizes what you can do. Internally, in the World Bank Group, we put all the resources together, IDA PSW, worked with Aki [Akihiko Nishio], worked with your other colleagues from the World Bank. And externally, we had some partners. Actually, Satu [Santala] is not really an outsider of the World Bank Group. To be totally transparent, she was one of our bosses at the World Bank. She was a board member representing the Nordic Chair at the World Bank. She always has supported us working on the least developed countries. Having herself lived in Africa, she understood the challenges. So thank you very much, Satu, for everything you have done supporting us. Kavita, thank you very much. The Green Climate Fund is obviously something I remember in New York. We were talking about it, and we talked about big numbers, but one thing that you said also is that let’s not forget also the small producers, and we should not only think about big numbers, big mobilization, and not forget that we are about people. Olga, as well, I would like to thank, and to thank obviously, Laila, who is taking the lead on it. I would like to say before starting that sometimes we talk about partnerships, sometimes we talk about speed, we talk about impact. It’s actually your leadership [that] has been really a way to symbolize all this. You were together in New York, you were very kind and showed your legendary to host us about around a meal, a group of like-minded people. The challenge was, let’s do something together. We committed to each other that we would try to make it as fast as possible. For me, this is really something quite important that we be able to demonstrate that when we want to put our heads together and we have the will to do that, there is no reason why we cannot reach the goals that we have set to ourselves. Today, for me, is a big excitement. People will say, “Why are you so excited for 45 million dollars?” I’m sorry. I’m excited because we are touching the bottom of the pyramid. And this is, at the end of the day, what we are for. So, thank you so very much for your leadership. Thank you so very much. And please, a round of applause. [Applause]
[Jacqueline Novogratz] No, no, no. Makhtar, I am so moved and so emotional, frankly, that this is coming together, and nobody does anything by themselves. We do things together. Something I’ve been thinking about so much at this COP, you’ve said beautifully, which is we hear so many people talk about the need for collaboration, the need for financial reform, and we don’t see enough of it. This is a true partnership, 22 different entities, 10 philanthropists, 12 financial institutions, the IFC and World Bank coming in, in such a powerful way, which is your leadership. You’ve said something that speaks to me as well in that systems are comprised of human beings, people. We are the system, and we can change the system. Somehow we keep capitulating to the system rather than pushing it. And so, what you’ve done, what Kavita and the Green Climate Fund has done, what Satu and the Nordic Development Fund has done, is the part of a real journey, and I hope a blueprint for how we can build these kinds of true collaborations that focus on people who for too long have been overlooked and underestimated. You recognized Holger [Rothenbusch] and BII, and we’re so excited to have them as a partner as well. Before we start, Makhtar. I’m wondering if we can just give the floor to Satu and to Kavita just to say why they’re part of this. And Kavita, why don’t we start with you since the Green Climate Fund was the first mover with first loss capital so that we could actually build something. [Kavita Sinha] Thank you, Jacqueline. Thank you, Makhtar. [Jacqueline Novogratz] Do you want to stand up?
[Kavita Sinha] Sure, why not? Stand up, take a bow. Let me just say this. The Green Climate Fund really, I think, shines well when we are able to enable other investors to do what is right in terms of the development. As you mentioned, Makhtar, development is a continuum. As long as any one person remains without electricity, we haven’t done our job correctly. If GCF’s first loss capital can enable other partners to follow us to be able to do this, the most energy-poor, it’s a human development need. And government grants, which have been the typical model so far, will never be able to bridge the gap. To create a financial model that can begin to work for the private sector. This is just a beginning. We have a small sliver of commercial capital on top of all the DFI capital, and at the bottom is the GCF. This is just a beginning. This is a journey. And we hope to walk this path along with all of you to do this. I don’t want to throw numbers. This is partnership so that we can walk together with pride. Thank you so much. [Applause] [Jacqueline Novogratz] Satu.
[Satu Santala] Yeah, thank you. I’m touched and moved to be here today and very proud. I would also want to celebrate two things, partnership, really coming together and not just talking about it, but actually on a practical deal, doing it, showing the world it can be done, even if many very different partners are together on this, it can be done. I think there’s so much value in that. Also, coming with our different capacities and really making it happen because of that. That’s beautiful. Also, celebrating the fact that we are actually taking climate finance to the people who need it most, taking it to poor communities, poor people, poor countries, because it is not happening sufficiently. This is a great example of how with some, or a lot, of thinking and working it through, it can be done, and therefore it must be done. So very, very happy about that. The Nordic Development Fund, we’re a concessional climate financier working with both public and private sectors owned by the five Nordic countries and always looking for the next difficult thing that we can get engaged with. Because we’re concessional, we can take risk. We’re very happy that we’ve been able to engage on this one. Our board has approved in September a grant contribution that is still pending finalization of some of the paperwork, but it’s in the pipeline. What I think is really beautiful about it is that we are doing a results-based model of buying down some of the interest rate for those companies that actually truly reach first-time customers, poor households in the hardest to reach countries and communities. It’s the first time we’re doing something like this, and it’s a great opportunity to learn how this will work. Great to be part of this great partnership. Thank you. [Applause]
[Makhtar Diop] We are… In January, there is a big meeting in Tanzania. The President Ajay Banga has been working with Akin Adesina, but also other foundations, like the Rockefeller Foundation, and created an alliance to connect 300 million people to the grid in Africa. It’s called M300. He will require everybody. I think this could be a kind of partnership that we need to see built during these big meetings, where we’ll be able to really move the needle totally. By doing that, we don’t want only to connect people who are in the cities, who are close to the big means of production, but we want to connect people who are at the bottom of the pyramid. Tell us a little bit about this journey. How did we get here? What do you see as a challenge moving to tomorrow? Aki is working right now in finalizing IDA21, where it’s trying to explain to a certain group of people that this has an impact that is changing the lives of people. Why do we bring some IDA money and we mix it and blend it with what the capital market can bring? We bring it also with our partners, we can reach all these millions of people that we expect to reach. But tell us a little bit your journey.
[Jacqueline Novogratz] Okay, thank you. Thank you, Makhtar. Laila, I really also want to recognize you and the team for everything you’ve done. My journey is a long one. It actually started 40 years ago in Rwanda, where I helped start the first microfinance bank and saw both, the incredible possibilities of human beings as well as the challenges in their way, and quite frankly, took the lack of electrification for granted. It was really once, 2007, we made our investment in a startup company, two guys with a solar lantern for 30 dollars. They had this big dream to eradicate kerosine when 1.5 billion people on the planet were using kerosine and had no access to electrification. We thought, “Big dream, they’re starting small. Why not?” It took almost 10 years, frankly, for that company and a couple of others to understand how people made decisions, why they depended on kerosine. They had to build the ecosystem. They had to build the financing, the distribution, understand the technology, market it, because why should people trust them? It was only when cell phone banking came online that people could pay for their solar electricity like they were paying for kerosine on a daily basis. If they had no money in their pocket that day, maybe it would be okay if they didn’t pay, but by the end of the month, they had to have paid. That was when, really, the solar revolution started, about 2012. Between 2012 and let’s say, 2020, we were able to put more capital in, and we invested in 40 off-grid solar companies. Now, across the building of an ecosystem in the more developed countries, Kenya, Rwanda, etcetera. We saw those 40 countries reach 300 million low-income people, not with full electricity necessarily, but with light and/or electricity. We also saw what is too often missed, which is what the off-grid solar energy ecosystem can build. We talk about the energy ladder. It’s real. You start with the solar, then you go to the solar home system, three lights, radio, a cell phone charger. Then people immediately want televisions, which at the beginning I thought, “Is this just commercialism?” But then we invested in an education company in Kenya, which today reaches 14 million people a day. 90% on solar television. Now you’re seeing an education component come in. Now you have a distribution network of suppliers who are not only selling solar home systems, but solar irrigation systems and productive use, hair cutting, and distribution of more efficient cookstoves. Now we have e-bikes and e-motorbikes. We can start to see the adjacent possible. Each of these rungs on the ladder opens up other opportunities. Really in 2022, probably, we started talking about the fact that we still have 700 million people without electricity, and 85% of them are on the African continent. The large majority of those people are in 20 sub-Saharan African nations. It makes no sense. When you compare that to AI, which is going to see a 10X increase in electrification, and you have a continent that is going to double in population, how can we, as a world, not solve that problem? But so many people would say, Makhtar, you know this, you’ve lived it. The economics don’t work. People are too poor. The government has to do it. Without the grid, we won’t fully industrialize. Frankly, these are excuses because, meanwhile, people have no electricity. Rather than think about the capital that we had, we looked at what people were really dealing with. What did they need? What were their challenges? One found the countries through the Green Climate Fund that really wanted to do this, starting with Malawi, in Zambia, Somalia, Burkina Faso, Benin, Sierra Leone, Togo, Uganda, which was interesting, and others, and realized that just like we did in 2007, we were about market creation, not just enhancing markets. There were no markets. And so we needed... A part of this had to be grant-funded. And so, we went to the philanthropists and raised 60 million dollars from philanthropists and from institutions like NDF, like GCF, who put part of their money into that, and now IDA, which allows you to move fast, take that first early risk. By the end of the month, we’ll have invested 10 million dollars in our first year across five countries and are starting to see real change happen. Side by side is this concessionary debt facility, whereby once you get companies into these nations, then how do you actually lend in ways that they can afford and pay back? That was where the institutions came in, starting with the Green Climate for first loss. The IFC also coming above that and other partners, financial institutions, and the impact investors. As I said, now there’s this real collaboration. Side by side, that is what Satu was talking about. 20 million dollars backed by grants, so that once you have a company in and they actually show that they are bringing off-grid electrification to the hardest to reach, they can reduce the interest that they owe to Acumen to zero. We’re not doing that just to make it more affordable to the company. We’re doing it because the public sector needs blueprints for how the private sector can help solve the public problems. We think that this rebate creates a robust private sector opportunity where government can help make this move going forward. That’s the dream. It’s built on a lot of experience. It’s not possible without a variety of institutions. What IFC is saying is it’s possible we’re in it, and you’ve already made us better as investors because you’re also moving us into recognizing what we need to actually scale this into other countries, too.
[Makhtar Diop] But it’s quite interesting because in the journey, first of all, thank you very much for your wonderful book. I advise all of you to read a book about the commitment and what it represents for people to support people and the moral commitment obligations that we have, all of us. But it was quite interesting because we learned from each other a lot. I just had a meeting with family offices. Traditionally, we don’t work family offices. It’s not our ecosystem. But I think broadening the partnership makes us think about partners that we are not our traditional partners. The big lesson is that the more you talk to people who are not in your usual lane, the more you open your mind to other possibilities of collaboration. I think this is a good example. The second one is it worked, it took you 10 years or more to work on it, but now we couldn’t afford to spend as much time to do the next one. I think we just consider that it’s been a huge investment as has been made, but now we know we have a blueprint among ourselves, not only for the government, but among ourselves, we have a blueprint of how we can work together. I think that the way I see is that it’s also creating a market within us, partners.
[Jacqueline Novogratz] I love that. [Makhtar Diop] We are creating a new market of how we work together, and we need to expand it and to [do it] very quickly. What I would like to see in Berlin is that you have spent all the money that is given to you. [Jacqueline Novogratz] You don’t have to worry about that, Makhtar.
[Makhtar Diop] I have no doubt about it. And us to come back and bring you more money to spend. I think that’s the commitment that we need to take, and we need to accelerate it. Maybe we take a year this time. Next time, it’ll be six months. Maybe it’s 45 billion. Next time, it’ll be 100 million dollars. So we need to think at scale. We cannot continue to speak. It’s good to start small, but I think as we go, we need to continue accelerating it. I count on you, Jacqueline, to help us on that.
[Jacqueline Novogratz] Well, as you know, I’m so in. I do believe that we should take on dreams so big, we won’t complete them in our lifetimes. This is a dream we can complete in our lifetimes. If we don’t, it’s a shame on all of us. We can really show the world that we can do hard things. I hope it’s okay if I share this story, but I’m moved by what you said, Makhtar, about collaborating across sectors requires that we actually learn to speak new languages. Halfway through our dinner, it dawned on me that the philanthropists didn’t really understand what the DFIs were saying because we’re so used to acronyms and shorthand. You are actually incredibly special in that you speak in a language that transcends. People can understand. We have to do a better job at that so that we widen the tent because we’re not going to solve this without the philanthropy, without the investment, and to be really honest about where we’re failing, not just where we’re succeeding. In that dinner, there was also a real commitment to learning together, sharing the lessons. With GCF, we’ve seen this now for so many years. This is not...
[Makhtar Diop] Sometimes you think that DFI, we know it all, but you underestimate what you don’t know. For me, in all humility, you opened my eyes to a world that I didn’t know. I think that this is what we need to do for each other, to really open to the space. If I didn’t have that conversation to with you that evening, I was thinking about family offices like that, but it was not a priority. I came out from that dinner and said, “Okay, there is a whole segment that I haven’t touched yet. I don’t understand how they function. I know how they function. I know. But for our purpose, which is to invest in emerging economy at the bottom of the pyramid, I haven’t yet cracked the nut.” My colleague organized a meeting. We just came out of that meeting. We start understanding a little bit more what are the challenges. They’re telling us we have now an association of family business, but we are working mainly in OECD countries. We are starting now to look at emerging countries. Do you think that we can collaborate? Yes, we can collaborate. Okay, because this is where we are. By telling them what we are doing, we have decided that we will meet in the coming weeks and have a deep dive, understand a little bit how we can collaborate in emerging economies. This is the kind of thing that this exercise of partnership will help us. I know that she’s been hearing many times, “Oh, can the Green Climate Fund disburse faster?” Yes, She’s doing it. I think that part of the story also is this effort that we’re having is that we need to ask people to help us, but not repeating what was happening 20 years ago. [Jacqueline Novogratz] No. [Makhtar Diop] 15 years ago, complaining, repeating it, but try to explain to the world that there is a new dynamics that is being built and people are doing things differently so that other people that we are not seeing every day can understand that there is a new way of things. I think the M300 that we will be having is a good example of things which are done differently, that were not done five years ago, that were not done 10 years ago, but we need to talk about it so people are not cynical and not to get in the bandwagon of repeating what was said in the past and understand that we are embracing a new dynamics and there are people who are not cynical about it, and who believe it. Even if you have spent decades working on development.
[Jacqueline Novogratz] Amen to this. Amen to this. When I was walking in this morning and I was seeing the youth protesters, I was in a hurry, but I felt that I just needed to stop and listen to them because they were all looking at all of us and saying, “We don’t trust you.” We don’t trust you as the establishment, as the status quo, and I understand it. To your point, it’s too easy to say, “Well, that’s the way it is. That’s the way the systems have been.” We really owe it. Also to show up without cynicism. I love that you said that. But to say, “We’re listening.” One thing that I hope we can bring, well, one is you want a trip to come see some of this with me. But two, the voices of those people who are being served, to hear from them. I was just thinking about... I was telling Laila, I was thinking about a woman who had a home system right beneath the grid. I said, “Why would you buy a home system when the grid’s right there?” She said, “Well, the grid goes down 10 hours a day anyway.” She said, “But it’s more than that. You see…” a literate woman, “…if there’s a wire, they own you. But me? Once I pay for my system, it’s just the sun, it’s free. And so, it’s free, and I’m free.” And I was like, “Could you be my PR agent?” That’s what we’re doing for people.
[Makhtar Diop] What is interesting is that even we can link it to the most advanced technology. You talked about AI. Today, with the low Earth orbit, you could connect people in any place in the world as long as you have a plug. Who would have thought that people could have 100 megabytes of connection, which is considered as broadband equivalent, in any place in the world just because you have an antenna that you can plug and you have a satellite that sends you internet? As you said that television was the way to a person to access education. Now, with this electricity and the new technology available now in terms of broadband and other services, you can see people started accessing internet in the rural area where they were not... The way we’re thinking about development will be changing because we’re thinking about building base stations for antennas. We were thinking about bringing the grid. We were thinking about all these ways of heavy infrastructures to connect people. Luckily, the creativity of people and the science allow us to just leapfrog. This time, when we talk about leapfrog, it’s just not to say a nice word, but just as a person who yesterday, literally, was not receiving internet electricity can receive today at the same time internet and electricity if people create the condition for it to happen. Even more, because I was jet lagged, I couldn’t sleep. I was reading about this satellite broadband. Now, they’re developing a technology where you can access it directly on your cell phone. We are working on another initiative which aims at lowering the cost of cell phone for people in the rural area. If we manage to reduce the cost, today, we can take all areas of for the least advanced countries to just get in the service level that even people in the cities would have not gotten five years ago.
[Jacqueline Novogratz] It really is so remarkable. It will continually remind us of what it means to underestimate and overlook people. Makhtar talked about my books, and the first book I wrote was called “The Blue Sweater,” and underneath it said, “Bridging the Gap Between Rich and Poor.” We have these fellows all over the world. One of our fellows was working in the Nairobi slum, and a young boy that sold eggs on the street essentially asked him what he did for a living, and he said, “Well, I’ll give you mine. Can you read?” The guy said yes. He said, “I’ll give you a copy of my boss’s book, but I know her, and she’ll want you to give her a book review.” He didn’t tell me that, but out of nowhere, I got a WhatsApp with this long book review. I had thought he would relate to all the people I had written about, women who’d gone through the genocide, people who were really poor. He said, “I really liked your book because like you, I have failed many times, I am HIV positive, I have a third-grade education, I can only find informal work, and sometimes I fail, but if you can fail as many times as you have failed and still do what you have done, so can I. And so please, can I work for you? Because I want to be part of bridging the gap between the rich and the poor.” And I was so stunned by that, Makhtar, that why couldn’t he? Why shouldn’t he be part of bridging the gap between the rich and the poor? And we see this all the time. But if you don’t have electricity and you don’t have access, you are closed off from this world. I’m so tired of seeing us look at low-income people as if we have to save them, help them. I don’t even like the word empower, even though we’re talking about power. But if we can extend possibility in a way that they can afford access and understand, they’ll be part building a world we cannot even imagine. That’s what you’re talking about, and that’s what I’m hoping for. That’s why this is just the beginning.
[Makhtar Diop] This is just the beginning, and we will be together, and let’s see this group as a group of people who will be working together for a while and eating good food when you go to New York… [Jacqueline Novogratz] Any time you come to New York, you just come. [Makhtar Diop] Make yourself invited at your table because that’s something that you will not regret at all. [Jacqueline Novogratz] I was taught very well when I lived in Africa. Good food.
[Makhtar Diop] She expanded her generosity, but I think we can really do. Just if next year we have now the family offices on board. We have more people helping us to de-risk like you guys have been doing, I think that we can really accelerate it. We have set our self-objective because the objectives are good to set to just have something to look. One of the objectives that we have in our gender strategy that was just approved by the Board recently is to offer to 80 million women access to financial services and to connect 200 million them to broadband. When we do that target, it’s tough, and you think about, “How will it will happen, how it will happen?” In my mind, I was thinking, how will we be able to make sure that telco incentivises it, building a base station in the middle of nowhere, whatever. I tell you, it’s not profitable for me to invest here because I don’t have enough customers. And looking at what technology just can bring today. Today, it will not be a matter of asking each of the telco to build something. If you have these satellites, it’s a matter of just having the right price of finding a way to reduce the cost for those people to access it. I think that there are a lot of things like that should happen that as a technology will bring to us and that we’ll be able to do that. This woman, if we, through those digital devices, they can get a digital account, they can start trading, they can start doing e-commerce on it, it will be changing totally their life. All that is possible only if you have electricity. If you don’t have electricity, none of this is possible. I think that beyond just the connecting people, I think that if we get it right and we have the right interventions, we can open all economies in a space which we didn’t benefit [before] to this connection to the rest of the world. For me, it’s just a journey. Let me show that she spent all the money. She told me, “Don’t worry about it, Makhtar. I’m spending all the money,” and I know that she will do it.
[Jacqueline Novogratz] Kavita can attest. [Kavita Sinha] And show impact. [Jacqueline Novogratz] And show impact. [Kavita Sinha] How people can spend money. [Makhtar Diop] Yeah. [Jacqueline Novogratz] Thank you. Thank you for that. [Makhtar Diop] It’s because she can show impact that we give her the money. [Jacqueline Novogratz] It’s because I take it so seriously that we do have that impact, that we don’t let people down. We talked at dinner about progress at the speed of trust, and there’s so little trust in this world. We have to learn how institutions can build trust with each other, how individuals build trust. And so, do we have to earn the trust and the respect of a whole part of the world who has been overlooked? We can’t expect it, but if we keep showing up and we deliver on our promises, that’s where I think the civil part of civil society gets strengthened. And you have my word that we will focus on that and we’ll make mistakes, but we will not stop. We will keep showing up, and we’ll do it together.
[Makhtar Diop] I will just give a last anecdote to say how you earning the trust is important. The project was approved last night at the Board, and I said to the team, I will not sit in front of you until it’s approved, because for me, it was a matter of trust. Otherwise, you will have said that our institution is just empty talk, and I couldn’t accept it. My colleagues here, and I would like to really to thank all of them, have worked very, very hard to make sure that the project is approved by our Board yesterday before I can sit in front of you and celebrate. I would like to thank all of them for the wonderful jobs they’ve done. Please. [Applause]
[Jacqueline Novogratz] Would you stand up? Would you guys all stand up? [Applause] [Jacqueline Novogratz] True thanks. [Makhtar Diop] Thank you so much.
