← This Week in Global Development
This Week in Global Development
Special edition: Live from Hamburg: Can governments still invest in the future?
01:08:00
This special two-part edition of This Week in Global Development comes to you from the Hamburg Sustainability Conference, where leaders from across development, government, business and civil society gather to debate the big questions facing the...
Loading summary
Transcript30 lines
- [00:04]
A
Hello and welcome to a special edition of this Week in Global Development. I'm Ayinat Mersey. This week we're coming to you from the third edition of the Hamburg Sustainability Conference. And here thousands of leaders from governments, international organizations, businesses and civil society have gathered to tackle some of the biggest questions in global development. I'm delighted today to be joined by two guests. First, we have Achim Steiner, the chair of the Hamburg Sustainability Conference and former administrator of the United Nations Development Program. And we also have Mohamed Joulde Vajalo, the Vice President of Sierra Leone. Thank you both very much for joining me. I'm going to turn to you first, Akim. So we've just come off London Climate Action Week. The Bond climate talks were earlier this month and now we're here in Hamburg. So there isn't a shortage of international gatherings. But I'd like to know what role this conference is trying to play that those other meetings don't.
- [01:02]
B
Well, first of all, let me say I think London Climate Action Week was in some ways a remarkable moment in time. First of all, I think to see the world converge in London around the topic of climate change was in many ways, I think, living proof that people are actually very concerned about it, remain very committed to acting on it. And we saw many, many different players there in that sense. I think it was first of all, coincidentally, also with the heat wave in Europe, a somewhat brutal reminder that this topic hasn't gone away. And I think those who would wish that climate change is not a priority for people, it is, but there are also many other priorities. But I think what also when you juxtaposition, or perhaps look at London Climate Action Week and then Hamburg Sustainability Conference, I mean, their framings are different. The climate movement and the climate agenda has for the better part of two and a half, three decades. And I'm in a sense a very proud part of that community honed in on a problem that we are essentially capable of resolving, but are losing time and have lost a great deal of time and also have been dealing with a reality that is also very true, that countries are looking at this issue from very different perspectives. If you go back 20 years, it was who has actually caused this problem. And that was the main reason why some said, you have to act, we don't have to act. The next stage was, well, in fact, we all have to act. But some are more able to act than others, to use an old adage from George Orwell and all those Huxley worlds that some are familiar with. And I think today we are in a world where basically everybody is compelled to act, but we are sometimes having to rethink the way we actually do that. The Hamburg Sustainability Conference is, if you want a larger aperture around the climate change agenda, we can today rationalize the billions we have to invest in transition, transformation, clean energy, clean mobility, with the benefits that they're generating. Because for the past 20, 30 years, there has been an extraordinary public policy debate about cost, cost, cost, affordability. In many ways, the cost of inaction is something we have debated for many years. But today the opportunity to act, in fact, could mean greater energy, let's say, resilience, security. We have just lived again through a moment that my geography teacher taught me 40 years ago, that the Straits of Hormuz is the great Achilles heel, you know, to the global economy. And then here we are in the year 2026, and we are surprised. But we've also seen suddenly that in fact, renewable energy infrastructure is exploding around the world. Last year, according to the International Energy agency, close to 90% of all new electricity generating infrastructure was renewable. So we have had an energy revolution that has taken off and it is making energy cheaper, more reliable, and ultimately us all less vulnerable. But, and here comes the hook, we are still fighting this battle, sometimes only in terms of net zero in terms of parts per million of CO2 emissions, when in fact we should be conducting these discussions now in terms of how do we make the cost to a household of their monthly electricity bill cheaper? We are able to decouple, for example, in a country like the uk, most households now from being dependent on gas, they just need solar power panels, they need a heat pump and they need a battery. But most households in the UK can't afford the capital expenditure. And yet we talk about energy security. We'll spend tens of billions of pounds or dollars in securing supply chains when with that same amount of money, we could decouple 29 million households in the UK from being dependent on gas. So this is, I think, where the debate is evolving. And the Hamburg Sustainability Conference is a response in two respects. One, sustainability becomes sometimes a politically controversial issue, but that is partly cultural, partly political polarization, and partly also a framing of transformation as some kind of sacrifice rather than an opportunity and a benefit. And secondly, the. The Hamburg Sustainability Conference is designed around the explicit recognition that the future of technology, of energy system, international cooperation, is fundamental to our ability to succeed. And that means having a different table, a different discussion, different actors around the table. We are not a UN conference, we are not an intergovernmental negotiating platform in these corridors here. And all the participants have been noticing this over the last one and a half days. We have a diversity of participants and voices that are truly co creating alliances, solutions and also new initiatives here. And that I hope will take us out of a corner of rationalizing climate action only from a kind of negative delinking agenda to a much more positive one of opportunity to co invest, to co create, to co benefit and ultimately with the most vulnerable in our society is very much at the center of our attention.
- [06:28]
A
And I wanted to ask you, I know a lot of, I mean, probably all DEVEX listeners will be familiar with your name from your many years at undp. And I'm sure many of them are curious, you know, now that you're chairing a conference that exists really separate to the UN universe, not very separate, but it is its own separate entity, are there things that you can say or do in this role that you couldn't before? How is this role different in how you're shaping the conversation?
- [06:56]
B
You know, I never perceived my years of working in the United nations as essentially being years where I could not say what I wanted to say. But I have always had a deep respect for multilateralism not being my personal soapbox. Right? I mean, I'm elected to lead an institution. The mandate of my institution is the product of negotiated agreements amongst member states. And therefore my voice was not being, in a sense, constrained by something. You are not allowed to say this. Some would try, but frankly, I never felt that I could not answer back and say, I'm sorry, I will not be told what not to say because of an ideological issue. But I did in a sense, feel constrained by what was agreed amongst member states. And so, yes, the life after my work at UNDP and in the UN has become much more easily, let's say, articulable in terms of things that I would like to say in my own right. Now maybe far fewer people will listen to it because I am not speaking with the authority of being the administrator or an Under Secretary of the United Nations. But, you know, in different phases of your life, you use different means of communication. I'm also now a Senior Fellow at the University of Oxford at the Oxford Martin School. I have taken on an extremely hot topic there, which is how do we rethink security in this day and age? And being in a university by definition is a constant discourse. It's a constant challenging of ideas. So in a very practical and subjective way, yes, I feel much more empowered to think beyond normal boundaries. But I do want to emphasize that I did not feel that when you accept the public office, you also accept that with it you are not there in your own interpretation of life in the universe. You are there as an enabler of countries to come together. And where I find myself with the HSC now to share this, what I'm doing in Oxford, I continue, my passion that has really been part of my working life is how do I foster international cooperation, how do I contribute to people recognizing and seeing that they always have much more in common than that which divides them. And yet extraordinarily, we humans are so capable of fixating on the things that divide us and we completely lose sight of our shared interests, shared aspirations.
- [09:26]
A
And I wanted to follow up. I know that you've been at Oxford and there, I believe you wrote something quite recently about the international community defining national security too narrowly and something that you also touched on in your earlier response. So we're seeing governments across the world, especially in wealthy nations, increase defense spending and cutting investments in things like international development. I'm wondering, have kind of a two part question for this. I'm wondering how and why do you think those conversations became so disconnected? And I guess in a practical way, if you're sitting across from a government minister or a decision maker, one of the people who believes in this, who's telling you this, saying, I'd love to do this, but I don't have the money, what do you say to them?
- [10:14]
B
Well, first of all, I understand what you're saying because you know, whether you are looking at a number of countries, for example, in Africa or in the so called Global south, that are so heavily indebted that they're already spending more on servicing their loans with the interest payments than they're investing their education sector. This is a very material, brutal reality. You are defunding your investment in the future of your kids, your generation, in order to service a debt. And so we are in a fiscally distressed situation. You know, far be it from me to be in denial. But then we also live in a world that this year, latest, next year will pass the point at which we are spending 3,000 billion US dollars on defense budgets worldwide. That's 3 trillion. But you know, 3 trillion is upstairs. Some of us have to remind me that's 3,000 billion US dollars on essentially weaponizing ourselves in order to deal with tensions and disagreements and differing interests. And you know, particularly in the context of NATO countries, as many listeners will know, this decision to move to 5% of GMP spent on defense raises fundamental Questions that equally go to the dilemma, how on earth are you going to afford this? In the United Kingdom, that will mean 60 billion extra pounds being spent on defence. On top of the existing defence budget. The UK is already struggling with a deficit public revenue platform. What will we defund? Will we defund the National Health Service? Will we defund the digital public infrastructure? We need education. In Germany, it's 90 billion euros extra every year. Now, on top of the defence budget that is already part of government expenditure, we are taking decisions to invest in security or in defense and deterrence. And what I would like us to debate is not that this is a fiscally difficult situation, we have real dilemmas, but to at least ask the question, why would you only spend on a defense and deterrence strategy such extraordinary amounts of money when many of the risks to national security are no longer simply territorial threats or the army of your neighboring state. They are cyber terrorism, cyber security, runaway climate change, algorithmic security, AI, health security pandemics. These are the systemic cascading risks that are transacted through financial markets, through the Internet, through a kind of boundaryless ability to undermine national security. And we are not investing in those because we are going back to almost a 20th century view of the battlefield. And that, I think, is a debate that deserves to be taken into the town squares, into the town halls, where citizens need to be part of this discussion, because we are taking decisions right now that are indebting our children and their children's generation on the back of a very narrow view of how you deal with security risks. And I think that is one way of perhaps framing a debate also about sustainability, about where we are able to invest. As I said, the irony is we are divesting from the very things that we actually need to invest in, which is a global energy transition, dealing with the vulnerabilities that are arising from extreme weather events, that are causing droughts, displacement, migration, those we are cutting. And we are shifting that money into a very singular dimension of increasing national security. And I think that is where the debate now needs to be going much more public. And I think those political leaders, parties that are advocating either a singular or alternative pathways, they need to be challenged. Show us the evidence, make us part of this debate. Because right now, I think most people feel almost paralyzed. Paralyzed because we are scared. We are scared about all the insecurity, about all the political tensions. Europe has just lived through a heat wave where, if you think about your parents or grandparents, you actually have to wonder whether they will survive the next summer and what an extraordinary moment of bringing all this abstract debate down to very real things. My mother is 90 years old now. She is worried to go out of her house during those hot summer months after 9 o' clock in the morning. Who would have thought that that is what life looks like in one part of the world? And this is not even the hottest one.
- [14:54]
A
I wanted to follow up on something that you had mentioned. You know, this idea of can we bring the public in to these conversations? You know, governments is indebted potentially their citizenry to things that they didn't necessarily agree to. I wanted to hear more on your reflections. Do you think the citizenry in many of these countries disagrees with this defense spending? Do you think that if given the choice, they would potentially want to act in defining security in a broader way, as you've, as you've described?
- [15:22]
B
You know, I'm cautious because I would like to think that we might arrive at wiser spreads of investments or let's say, being able to deal with multiple priorities in a more strategic and longer term way. But I don't want to be presumptuous. I mean, we know that, you know, for example, nationalism and the fear of your neighbors and that narrative that your neighbor is your enemy is very powerful. You know, people who are afraid. Fear is extraordinary political currency. And that is what has happened to so many of our democracies today. I mean, in the absence of people having confidence in the direction in which our societies, our economies are moving, they are more open to listen to those who are on the more radical end of, let's say, the political solution spectrum. The disturbing part is that the way that debate is now evolving, it is not making us, in a sense, more informed decision makers, it is making us angrier decision makers. And that is why, for example, in my work in Oxford, also when I'm looking at security, I'm looking at this whole question of algorithmic security. We have this perverse reality that the success of a platform, a social media network, is in part premised on a business model where agitation is revenue. And so inevitably, whether by design or by default or just by business model, we are investing extraordinary amounts of time, energy and money in making people angrier with each other and more fearful of each other. Now, sometimes those fears have a very real, maybe reason or a rationale. But we also know that many of them are actually, in a sense, a weaponization of our social media networks for political ends. I do believe that collective intelligence in the age of artificial intelligence is at least one control factor that I think will allow at least common sense to have a voice again. Because what is happening in our political process right now is that the so called center, either side of a center, or left and right wing or conservative progressive forces, but that center ground is essentially gone silent. It is disenchanted, it is disempowered. It has a sense of having lost its agency, which creates the vacuum where just 10% on either side of the extreme end of the spectrum become suddenly the dominant voices. And this is undermining democracy, this undermining, I think our civic courage also to step into a room and say, no, I feel there is a need to discuss this. And what is also in part, I think a phenomenon of the age we live in is with all this technology and when you hear about AI and behind it, quantum computing and all of that, we all feel like, oh my God, I don't understand this anymore. I don't understand this whole climate thing. No, the minute a society essentially abdicates and delegates fundamental decisions about our future, it loses control. And complexity does not mean that democracies and citizens have not got a role to play. And I think this is perhaps the transition also in a media, journalism, communications world where we need to reestablish some form of equilibrium so that we are not simply, you know, consumers of algorithmic business models.
- [19:01]
A
I wanted to kind of shift the conversation a bit and get an understanding of kind of. I mean, I know, I guess kind of the conversation's happening more across the Global South. I mean, one thing that I've noticed walking around this week, and one thing that you've indeed mentioned earlier in one of your answers, is that many conversations are coming back to this idea of countries, especially in the Global south, having to do much more with much less, while fiscal space is shrinking very, very quickly. I'm wondering, do you think we've reached a point now where the biggest constraint in development isn't necessarily ideas or technology, but just government's ability to finance long term investment? Do you think that's the main challenge now?
- [19:52]
B
It's always risky to singularize something, but I think certainly the most preoccupying variable right now, both in a public finance perspective, a fiscal perspective, is if I'm heavily indebted, and you know, we are literally in most economies around the world now spending inordinate amount of money just to pay interest on money borrowed. Certainly finance has become in many ways an increasingly important constraint. And let's be honest, money is the lifeblood of our economies. It's how we transact. It's how we invest in the future. It's how we create new opportunities. I think we do have to figure out a way in which particularly the wealthier parts of society, but also the wealthier parts of the global economy take a more systemic view on how to invest in the long term futures. And you know, this is again, not without precedent. I mean, we have seen in so many respects in the development histories of countries and economies moments when the government, the state, through its tax revenue was able to leverage funding that was for intergenerational investments. The roads, railways, bridges, the power lines, the communication infrastructure of the 19th, 20th century. We didn't ask the farmer living somewhere in the remote Midwest who didn't have a power line to now pay for the development of that grid because it would never have reached that farm. And this is why I think we do need to focus on this question. How do we finance, first of all, in a fiscally distressed moment, those parts of the development trajectory that are critical for a world, the economy, to continue to hold promise? How do we also help those who don't have the capital expenditure today to for example, invest in digital public infrastructure? Because if you do not make sure that all countries and all economies are part of this extraordinary revolution that is unfolding of possibility, which is really the age of possibility we live in, then we're going to have the most extraordinary unequalizing decades or two decades ahead of us in human history simply because of the way that, you know, the ability to build on digital platforms, to be able to leverage AI and all that it offers, it cannot simply become the property of a few. The monopoly or the oligarchy of AI would be a recipe for disaster, I think in so many respects. So we now need to find ways in which we can mobilize capital investment to allow a yes family of 8 billion people to advance together. Where some have the ability to do more in the short term, but others will be able to do that in the future. And we today have already a world in which China that had 800 million people living in extreme poverty 30 years ago, is today a country that has almost eliminated extreme poverty, has become the second largest economy in the world. But not to belabor the Chinese example, we can go to many other countries, the so called Asian tiger economies. Korea had the same per capita income in the 1950s as Kenya did. Korea is today one of the OECD and great international economic success stories of the last 40, 50 years. And I think we need to remind ourselves how these things happened and why they very often were Also the product of not only wise national policies, but international cooperation, co investment, co financing. So my short answer to your question is yes, finance is absolutely central. And we have to quickly appreciate that this is a collective opportunity, but also a collective risk to miss this opportunity. And I spent in my years in the UN, eight years as the UN's representative in the G20 Finance and Central bank governors track, and just in the last few years, I found it astounding how unable the leading economies of the world were in tackling an issue that was suffocating many of the most vulnerable economies unsustainable levels of debt. And you know why? Because they themselves had a lot of stress. But also because frankly, the fate of maybe 30, 40 least developed countries or poorer debt distressed economies were in a simplistic way, not material to the stability of our global financial system. So simply parked. And I think we sometimes fail to learn lessons in history and they will come back to haunt us. And I think this issue of debt on the one hand, but also finding the kind of strategic investment pathways in the way that we design, for example, the development of digital public infrastructure. We need to mobilize private capital, but sometimes you need to incentivize it. You need to sometimes put a subsidy in place so that the poorer households are able to make, for example, an investment in clean energy infrastructure in their home which they cannot afford right now. But why should the electricity bill of a working class household in a European economy essentially foot the bill of a generational transition in terms of grid technology? It's not rational. And that's why finance needs to be rethought both in terms of mobilizing, incentivizing private capital and investors, and also looking at how public finance solutions need to be thought of as strategic investments.
- [25:42]
A
Hi, I'm Kate Warren, Executive Vice President and Executive Editor at devex. At devex, we don't just cover the biggest moments in global development. We create space to understand who and what are driving the headlines. Alongside gatherings like the World bank and IMF Spring and annual meetings, the World Health assembly, the UN General assembly and beyond, we host Devex Impact House, where our journalism comes off the page and onto the stage. We bring together a curated group of leaders for live interview, intimate roundtables, hands on workshops and candid conversations you won't hear in the official meetings. It's where tough questions get asked, the spin gets stripped away and meaningful connections happen. If you'd like to join us or stay in the loop on all of our events online and in person, please visit devex.com events Vice President, thank you so much for joining.
- [26:36]
C
Thank you.
- [26:37]
A
Yesterday I heard you use the phrase the politics of painful choices when you were talking about governing today in this current fiscally constrained environment. And that phrase really struck with me, stuck with me. And I was wondering, what does that actually look like in practice when you're sitting around the cabinet table making budget decisions? What are those conversations like?
- [27:02]
C
The politics of painful choices is essentially the kind of policies you make within the context of very constrained fiscal situation and also an unpredictable development environment. Over the last couple of years, we have seen a lot of uncertainty. Today we have the debt crisis, where we take 42% of our revenue to service debt. And then you have international development window closing down. Last year we were in Sevilla where the message was clear that most developing countries should now mobilize domestic resources to finance their development. And they also have climate risk. And then within that context, you have unpredictable events like the Ukrainian crisis and then the Middle east crisis. We are in domestic commodities like electricity, fear, rice, and essential commodities that price go up. So what you do as a government, as a government, when you get limited revenue now and you spend 42% of that revenue to service debt, the remaining money that is there is what you are going to redistribute across government priorities. So then what do you do? You are left with very painful choices to make. The principal choices is more or less the politics of trade off. What do you delay now? Are you delayed building a school? Can you delay building a hospital? In a country like Sierra Leone, every day 720 kids are born. And these 720 kids, they translate into 14 classrooms. So it means every day you have to think about building 14 classrooms, you have to think about recruiting additional teachers for these kids. You have to think about paying healthcare workers to go. So which means at the end of the day, that is what I call the politics of painful choices. You are left as a government to trade off. What are priorities that we can do now, what we can delay. So in essence, the politics of painful choices means you focus on key priorities to keep you above water, and then you delay development priorities more long term development priorities like you cannot have limited resources. You begin to think, but I want to spend it on protecting mangroves or paying school teachers, or you want to build new roads. So long term development projects are stalled to attend to the realities of the day. These are the priorities around essentially education, health, and more importantly, climate change in certain key areas wherein vulnerabilities are expanding. So the politics of painful Choices is how a government, small economies like Sierra Leone survive and govern in a context of tight fiscal space, reduce development aid and an unpredictable multilateral system and international system and shocks that are very, very difficult to absorb as the one we are facing today as a result of the UMOS crisis.
- [30:17]
A
Indeed sounds impossible in many, in many situations. I'm wondering, you know, what are the sort of misconceptions that development partners or donors might have about actually what it means to govern in this sort of situation with such limited fiscal space? Is there something that you find that people sometimes misunderstand about how it works?
- [30:40]
C
Yeah, well, yes, sometime couple of weeks ago, I participated in the Fragility World Bank Fragility conference. And I told them, what is it that we have to learn? We have to learn that today unpredictability itself is a vehicle of fragility. Because if you take a country like Sierra Leone, over the years we have made immense macroeconomic gains. We took over power in 2018 and within 2018 we said we are going to attack, attack major social issues. We focus on maternal and infant health. We increased the national budget from 6% to 11.2% in health. And then we were able to reduce maternal mortality between 2018 and 2023 by 79%. We were able to reduce infant mortality. And then we took education. We took 22% of our budget to spend it on education because we wanted to give access to kids across the country to go to school. So we, we pronounce a free quality education. And then to encourage girls to go to school, we are able to increase girls enrollment in school. Today you have more girls in secondary school than any other time since independence. Today you have more girls in universities studying sciences, engineering, because any girl who goes to study STEM courses is free education. We made all of this investment. We have made gains also in reducing inflation. Inflation was at 48%. We reduced it to a single digit. We stabilize the currency. We are able to make sure at the end of the commodity prices are stable. But all of these gains do not only depend on domestic governance choices. They depend on a stable global commodity prices. Because if there is a shock in the Middle east, if there is a shock, if there is a crisis in Ukraine, if this crisis impact transport, global cost, freight cost, the cost of essential commodities and the cost of fuel that translate automatically into people's life, then at the end of the day, unpredictability of this nature, it itself a vehicle of fragility, it drives fragility. That is what international community needs to learn and sometimes Also what they need to learn is that the instruments that are available, that are available to support countries going through these kinds of fragility, to support country going through this kind of shocks are usually instruments that are not adaptable to the reality. Because international community, they finance us based on what they call a review circle. If every year they say we are planning to do we have provided a country, a country assistance program and then they walk around the contra system program and they say, okay, we give $600 million, for example, in the World bank for the year. This kind of shocks that has tendency to reverse all the gains we have made over the years. This needs flexible instrument to support countries to consolidate the gains they have made, you know, instead of just focusing on the review circle. Secondly, sometimes the instruments are also very rigid and slow. That is the same thing. I wanted to share with our partners yesterday to compare what is happening in the almost what is happening in the Sahel. I worked for a couple of years in the United nations in the Sahel as the Sahel advisor to the special representative of the Secretary General. You know, is that every time capital is not lacking, people institutions are ready to deploy. But because institutions operate with different mandate and from different windows, mediating and negotiating how they could, how they could support becomes a challenge. So usually what the international community needs to learn is that sometimes these countries that have made immense gains in the social sector, immense gain in creating minimum, minimum macroeconomic stability, are not strong enough to be able to absorb certain shocks. So what instruments are available to do that? And today what we learned from the Middle east crisis is that already most African countries today are operating within a very fragile environment. And unpredictability becomes a very vehicle. So these are the challenges of governing fragile state. Fragile state with very limited economy and very limited capacity, you know, to be able to absorb shocks of this nature.
- [35:31]
A
Just to follow up on that, I mean, I know you have described it a bit, but I know also in. I think it was your, in your conversation yesterday that you called for a shock absorption facility. Right. Could you tell me a little bit more about how that would differ from the types of facilities that are already in place? What would you like it to look like?
- [35:52]
C
Well, this shock absorption capacity, the. It will differ in this in the sense that one, it is not a facility that is subjected to annual review. This is not a facility. This is a facility that comes and then it is a facility that has its own triggers. Like you said, I'm going to give you a facility so that you are not able to reduce the gains you have made in education, in health. So this is a facility. This is a facility I give you so that you can continue to keep the gains you have made because you are going through shocks. And secondly, this is a facility that is flexible. It is a facility to allow you to be able to absorb the shock. I give you, I give you a critical example now when I talk about the politics of painful choices. If now the almost crisis, like I just said yesterday, and that when you have an increase in fuel from $70 to $120, automatically our fuel importation invoice rises between 140 to $160 million. That is 2% of our GDP. And that is definitely going to be translated. If you take all of that increase and then translate it directly into the pump price, it is going to increase fuel cost by extension, transportation cost, by extension, food, local domestic food prices will go up. So what does government do? Government engages in a kind of a politics of redistribution. What we earn, you know, what we earn, we redistribute it as in a form of subsidy for those, for those things. So that's that subsidy envelope, that subsidy envelope. Like if for example, I decide to take $10 million or $20 million, I say okay, instead of the pump price goes to $1.50, I will just increase the pump price by $1.20. The 30 cent is. If the 30 cent is the tax that government is supposed to get, I sacrifice that tax.
- [37:52]
A
So.
- [37:53]
C
But when you have an absorption facility, then the absorption facility, $30 that you are going to trade off. You can then use that $30 for other essential social interventions like paying healthcare workers, paying teachers so that at the same time you don't transfer the stress of fuel, fuel pump price increase to people. And then you don't lose the money that you also need to be, to be, to. And then it can be, it can be triggers. You can design the triggers. You can be able to say this money we are giving you can only be spent on education, on health, or to reduce the pump price. That is one key, one key definition of how that facility is going to be going to be deferred. It could also be a pre capitalized facility, a facility that already is there. It is there. They are already. They are only used for this kind of shock. So that at least the gains we have invested in over the years, the gains we have made over the years in a country like small economies like Sierra Leo is not swiped up over the. So it allows us to absorb this shock, that small time, short term Facility allows us to stabilize the shock and at the same time we continue to spend on social sectors that are very, very important, you know, for the development of the country. These are not facilities that are going to be spent on building roads. These are not facilities that are going to be spelled on building bridges or building schools or building hospitals. These are facilities that are going to allow government to be able to continue to spend on social sectors, keep social, keep hospitals working, keep schools working, while at the same time reduce the stress of the shock in transferring it 100% to the population. This is the kind of it is like what you have for the environment. It is called the global shield. You know, it's a facility that is given to countries that suffer extreme, extreme climate problems where in the short term that comes in to support them.
- [40:01]
A
Essentially we're here at a conference about sustainability and you know, just in the. As a follow up to what you were mentioning about the politics of painful choices, I'm curious about how issues like sustainability, environment, climate shake out for you in government. Because I could imagine pressure from citizenry and indeed yourself, right, to address the most immediate life saving questions and problems. So how do you balance sustainability? How do you think about sustainability when you're in such a constrained fiscal space?
- [40:42]
C
Well, essentially that is at the heart of what I call the politics of painful choices and that you operate within very difficult environment. You know, like in my opening yesterday, I said, you know, in the last three past three decades, African countries like Sierra Leone have been operating within a very stable international development space. Meaning over the years we have seen increased development assistance and then we have seen expanding globalization. We are seeing a predictable, relatively stable multilateral environment. And then African countries are moving, working very hard to be integrated into global market. But that assumptions does not seem too old now or is on the trend today. More and more we are seeing geopolitical interest and competition determine investment flows, also determine how global development policies are shaped. There is a reduction in development assistance we are servicing that I just told you, about 42% of our national domestic revenue. So in this kind of space where you are totally constrained and you have to make trade, trade offs, then the whole question of how, how are you going to spend the limited money you have becomes very, very paramount. So in that kind of context, you have to ask yourself, is sustainability, is climate action a priority? Now for me, do I want to pay? Do I want to not pay teachers? Do I not want to pay nurses? Do I want students and citizens to go to the street and demonstrate that things are difficult Or I want to focus on climate, long term climate actions, on sustainability issues. So these are the painful choices you have to make as a government. And then you are. Not that you don't care about the security of the environment, not that you don't care about the urgency of sustainable issues, but that the priority at. And how does that poverty at hand relates to the limited resources you have? You know, in as much as we have been making certain gains, we are making investment in the area of food and access to electricity. We are moving towards renewable electricity. Like somebody said in the opening yesterday, in the last couple of years, 60% of the electricity expansion that we see in most of the world is towards renewable energy. In Sierra Leone we are doing the same. Like today in Sierra Leone, we have decided that the over 1,000 health facilities that we have across the country, we are going to solarize them. Already we have started solarizing them. We have solarized 36 major health facilities in the country. So now we are working on the others. We have introduced smart agriculture. We have made sure that we are moving towards renewable today. A couple of Years ago, in 2018, our energy access was at 16%. In the last couple of years we have increased that to 34%. We have made massive investment in generation and transmission. We've got investment from the Americans 480 million dollar grant, MCC grant that we are investing in building new transmission and distribution lines. We are building also power plant that are going to use LNG. We are building solar plant. So by 2030, with 2030, energy access in Sierra Leone will be increased to 78%. As we are going right now, the kind of investment that I'm making. So we have been making a lot of effort in renewable, in transitioning and making sure that health facilities and smart agriculture invest in renewable. We are also supporting communities and local communities to be able to reduce deforestation. We are doing all of that. But all of this kind of intervention should not be subjected to external shock. Because what you spend on this kind of intervention are relatively. When all things are equal on priority sectors like health, like education, I know like when all this, when things are stable in those priority sections, they allows you to make investment into resilience. For us, resilience. For us, resilience is both taking care of short term priorities while investing also in the long term. In the long term it is not the two way approach, but when you are confronted with making very painful choices, the long term development, like building road to create access to market, supporting rural women to be able to manage, to manage Climate change and also managing, managing the erosion of mangroves becomes a long term priority because you focus on the daily subsistence of people, making sure that essential commodities are not increased. Essential commodities stay stable so that people with very limited, very limited resources can be able to buy food. And then you are able to reduce what we call out of pocket expenditure on health because you have to also subsidize medicines. You have to also make sure you pay for hospitals to go so that people continue to spend less on those things. So for us, for us, managing and focusing on sustainability as a priority means that we have to operate in a stable global commodity price that will not reverse the gain. It will reduce the chances of making very painful choices. But when you have global shock. We moved out of COVID when Covid came. By the time we are trying to develop a post Covid recovery plan. Ukrainian crisis came with a new. And now that you've made some gains over the last couple of years, the Hormuz crisis came. How simple trade route disruptions of trade route can cause lasting effect on the other part of the Atlantic. What becomes a security problem in the Middle east is now a human development problem in countries like Sierra Leone. So in that kind of context we are faced with the challenging task of absorbing the. And in absorbing the shock, what are the immediate priorities? You have to spend the limited resources that you have. One, you have to redistribute part of it to subsidize, to subsidize major commodity price. And second, you have to make a choice which particular development project you have to engage in. So in that kind of context, it's like the relationship between security and development. I tell people in the Sahel, Sahelian countries, development today is not a priority because they spend most of their budget on security. When you are confronted with a security situation, and security is not just about arms. Security is about supporting communities to be able to cope with the vulnerabilities they are experiencing on a daily basis. Security is about keeping the prices of essential commodities very stable. Security is about making sure that young people go to school and they have jobs to sustain themselves and their family. Security is about supporting communities to be able to cope with climate vulnerabilities. So these are the dimensions, you know that, that these are the trade offs that we make, you know. So while we acknowledge sustainability as a key priority, we also at the same time are faced with realities that reduces our capacity to make very fine trade offs, wherein sustainability is placed at the center of our, at the center of our politics in a very Unpredictable environment is about survival. It's about maintaining the gains. It's about building on the gains you have already made in the social sector, in education, in health and in commodity prices.
- [49:16]
A
And I wanted to ask you about, I mean, you've been mentioning the amount, the staggering amount that Sierra Leone has to pay to service its debt, right? Which is contributing, of course, to this constrained fiscal space. I was wondering, it seems like many countries, especially in Africa, are really grappling with this question of servicing debt. Does this just need to be the main conversation at every conference? It seems like everything else is unlocked. If we can solve this one problem, debt servicing, are we paying enough attention to try and resolve this? Should this be front and center, center at every conference? What are the kinds of conversations on debt and debt servicing that you wish were happening more?
- [49:59]
C
Well, you see, the debt servicing is not only external debt, it's also domestic debt. So even if you bring the conversations to international institutions, lending institutions, maybe if they decide to focus on their own debt, you still have domestic debt. So in combination, a country like Sierra Leone, we spend 42%, like I said, of our domestic revenue to service both domestic and international debt. And that in itself, 42% is a lot. The UNDP Director General was talking yesterday about more than 10%. I reminded him it's not 10%. I don't know which countries indicators you are using, but it's far above that in sub Saharan Africa and most of the countries in sub Saharan Africa. So if you take 42%, you can imagine what that 42% will do. If you are spending it on other essential sectors, it shows the tight fiscal constraint. And most of these debts, they come from essentially high energy invoices, you know, for a country. And then at the same time time the kind of transition countries are making. For example, in a country like Sierra Leone, we realize that government footprint in delivering services has to reduce dramatically. So we are moving for the privatization of state owned enterprises that allows those state enterprises to function effectively and to be able to break even and even make profit, including in the energy space. We passed a law to allow private sector to intervene in, in, in production, in generation, in transmission, distribution and commercialization of electricity. So we allow government money that we spend to subsidize electricity that we can spend it somewhere else. But today the big question is, how do you support those countries? We normally get envelopes of support. You know, a particular envelope of support will come from the IMF, from the World Bank. So we give you 20 million, 15 million so that you can Pay your electricity invoices just to reduce. Just to reduce. Just to reduce the debt. I believe one critical thing I usually tell international community people is if you identify where government investment comes in because debt services deprive government of involving in development projects, you are not able to build road to create market access. You are not able to build additional infrastructure that will become enabling. Enabling vehicles to steer up macroeconomic development. So the. So the money you spend on debt can then be able to allow you to do a development. You're able to build road because it's only when you're able to build road, you're going to help the economy grow. To help the economy grow, you have to invest in productive sectors. But for now, in a context where you are servicing debt at that scale, your investment are just limited to the social sectors. And when you invest in the social sector, you don't grow the economy, you only grow the economy where you invest in the productive sector and you're able to build the infrastructure that will create jobs and then that will create additional revenue for the state. So this debt servicing is an issue. Last year was largely debated in severe, you know, today most in Hamburg. Here is a buzzword. The opening, the opening statement. Yesterday, yesterday not all of these speakers made reference to debt, made reference to huge debt and how these huge debts and all these unpredictability like what is happening in the almost are driving our attention from sustainability issues to realities on a daily basis that small countries in the global south have really living. I believe the conversation question is how do you address that? Like I said yesterday, and then we have to invest. The international community will have to also invest in building what I call resilience infrastructure. What does that mean? It means you invest resources on food security, how to increase food access and then at the same time energy access. Because food and energy access is the structural backbone for countries to be able to absorb shock. If food prices are cheap, energy prices are cheap, believe you me, the rest people can manage. Because these are the two ingredients that you need are structural key indicators. So one is to invest in what I call a resilience infrastructure. Second is to support private sector investment in some of these countries. Go to these countries, identify what are the potentials that you can spend. Because the more private sector investment, more private sector capital that is attracted from outside that is going to further create jobs. That is what are going to help grow the economy. Because long term debt servicing and long term debt sustainability will depend on the scale of the growth of the economy. So how do you help Us to grow the economy, how do you help us to attract private capital? How do you help us to invest in infrastructure that are game changing? Infrastructure? If you take a small country like Sierra Leone, maybe doing a 1km road would cost about $1 million. So if I have 78km road to do, if there are bridges, more or less, you say it cost you about $100 million. If I have, if I have resources to build that, that is going to create access to mag head, that is going to create access to ecologies where food, food production will take place. Because when farmers know that if they grow mummies, if they grow more fruits and more vegetables, they have access to the market and people will buy them, then the incentive to grow more will go. And when they grow more, they grow their revenue. Then at the end of the day, these farmers will be more sensitive to climate actions. They will be more sensitive to making sure that children go to school. They will be more sensitive to make sure that at least they have enough resources to do what we call out of pocket expenditure for health services, healthcare services. So at the end of the day, the whole idea about debt servicing should be conceived within the broader objective of growing the economy. In the short term, you can, international community can come in, assess what the constraints are, you know, what are the windows we can help for countries with huge debt servicing percentage, like Sierra Leone, that we are spending 42% of that to service debt. But the long term is how do you come in to spend to support these countries to grow their economy so that at least major development infrastructure are supported? That I now know that. Okay, for example, before this time, the European Union used to spend a lot of money, a lot of money on infrastructure. They put a lot of resources in building roads. But now that envelope is closed. I'm not seeing that envelope again. It's closed. Now they are spending in other priority areas, you understand? So now those areas where they used to spend on road, roads, I have to come in. The World bank also spends on road. But some of those envelopes are not forthcoming. So you look at big infrastructure expenditure, you take them on, when you take them on, that will help us to grow the economy. The objective is to grow the economy. The objective is to ensure that the gains we have made in social, the social sectors is maintained. And then you support us to expand the productive sector. Because the productive sector is the future of development, is the future of jobs, is the future of increased revenue. So how do you support us to invest in those productive sectors in the area of energy, in the Area of road networks, in the area of water resources will help us grow the economy. When we grow the economy, then we are not obliged to be taking debts because or we have sufficient revenue to be able to invest in capital project. Because most of what constitute the debt are capital projects and electricity invoices, fuel invoice and subsidies. Because you, the small money you get the remaining 58% of the revenue you spend on subsidies. You subsidize everything and take a little bit of money to pay teachers, to pay health care workers. So the debt question is a big burden, but we don't have to just look at it short term, meaning that, okay, you have 1 billion, 2 billion, 2 billion debt. Okay, we help you, we waive 1 billion out of your debt. No. While that is good in the short term, the long term is how do you help this country to grow their economy so they also have sufficient resources to be able to pay part of this debt.
- [59:12]
A
And tools like swaps, debt swaps, is this something that excites you, that Sierra Leone does, that is important to you or like debt swaps?
- [59:21]
C
Well, debt swaps, it is something that is on the table. But I believe debt swaps, debt cancellation, also repackaging debts, you know, these are all interesting, interesting, interesting instruments, you know, that are, that are on the table. It depends how, how the methodology, how they are going to be played out. But these are things that are on the table. These are things that is at play out there, particularly in the Global South. But it depends, you know, debt cancellation, debt swaps, you know, repackaging the debt, you know, debt, debt buy offs. Now you have institutions that are specializing, they come, they buy your debt and then they develop a program for you and you pay them. And that is also, is just, I tell people that is a way of just postponing the debt in a very civilized way.
- [60:17]
A
Yeah, as you were mentioning about the need for the long term investment to actually get at the root of the problem through investments in things like food and energy, you need to resolve the root of the problem. Just as a final note, I'd be curious to hear about any of your reflections from this conference and how the conversations have been going for you. What are your big takeaways from being here so far at Hamburg?
- [60:46]
C
The big takeaway is that at a time when you have a lot of unpredictability and uncertainty in the international development space, you have spaces like Hamburg, where policymakers, global leaders come, including governments representative from the global South. And then for the fact that there's a space place where people come to talk about this kind of challenges in itself, it's a big gain, you know, because if I was not on the floor yesterday talking about the politics of painful choices, you would not have invited me to come. So the fact that we have this kind of spaces where people come very interesting panel to talk about ideas, to talk first about the problems and then talk about the ideas and see how we can show shape solutions moving forward, it's indeed a big one. And secondly, when you have a space that constantly remind policymakers about the importance, the importance of paying attention to globalization, the importance of paying attention to climate issues, the importance of paying attention to debt servicing, the importance of paying attention to sustainability issues in itself is an interesting one. Itself is an interesting one. It's a young conference. I think we are in the third year now and to see that more and more it is attracting very interesting conversation. I believe there is a future for the Hamburg conference because the issues that are on the table are the issues that are very close to our heart. These are issues about malnutrition for kids. There are issues about climate, climate things. These are issues about north south relationships, These are issue about debt services. These are issues about climate actions. So at the end of the day, at the end of the day, when you come to a place like Hamburg to discuss all of this, you have that space, you have time to meet with NGOs, you have time to meet with people working a very interesting project across Ethiopia, other countries, other part of the world. They come, they explain what the experience is and what are the methodologies that have been using, you know, the tools to be able to address some of those things. I find it very interesting and I believe the Hamburg conference is touching at issues that are close to all our heart and more importantly is the timing of it. I don't know what they discussed last year, but this year everybody's talking about the almost crisis. How do you navigate that? What are international financial institutions doing? And then also to bring global policymakers. Imagine yesterday in our panel you have the Minister of Development Corporation of great United Kingdom, you have Minister of Development Cooperation. And in Germany you have the President of the African Development bank. And then you have the, the boss, the, the, the Director General of UNDP and then the Deputy Secretary General General. You know, these are global policy makers. And then I am there as somebody that is a product of the crisis that is being caused, you know, and somebody that is sitting from a distance that is managing all of these unpredictable shocks that are driving fragility. And I Share our experience and are able to get firsthand that this is really what is happening. These are the things we do, these are the kind of way we manage, we manage shocks and these are the gains we have made over the period and these are the risk of reversing those gains. And this is how we think you can support us creating even that kind of space in itself. You know, I find it very, very interesting. And then when you go through the panels, it's a pity I cannot attend all the panels because they are overlapping. But I would have loved to attend most of those panels to hear what is happening, happening in particular context, you know, and to see how you can learn from them. Like I always tell people the most beautiful thing about this, my job, I worked before as a researcher at the University of Bordeaux in France and then I worked for the United nations for a couple of years. But the role as Vice President is every day I learn, I learn, you know, I learn about how I make policy choices. I learn about how I manage one crisis to another. I learn about how international community are behav. I learn about what are the trade offs you have to make is I interact with people. I learn from other people's experiences. So that is the beauty about this job. It's a learning job. So coming to Hamburg also is part of that learning process and part of that exposures that create a platform for small economies like ours to tell the world this is what is happening from our own side. This is what we have been able to do. These are issues that are close to our heart, but these are the priorities that we make. You know, to see like the Vice President of the World bank for Climate told me, he said, Mr. Vice President, he said my role is to help you not to make painful choices when it comes to climate action. See, if you don't have platforms of this nature, you not be able to have vice president of a big multilateral bank to say that, to talk about that. You know, I was very pleased yesterday to see the United Nations Development Program Program Director, you know, going in detail about what they do and the shocks that comes to their table on a daily basis. I was also very pleased to see on the table that the Minister of Development Cooperation of Germany, Madame Radovan makes a pronouncement that look, we are going to increase our development cooperation in this area because we see this as critical. We are going to focus on this area because all of these areas will help to address some of those painful choices that global south countries are experiencing. So I, I think it's a very good space, you know, it gives me also the opportunity to talk to you and to be able to put one or two ideas, you know, on your microphone, which I'm sure other people will hear, you know. So that's the beauty of Ambogo. I'm very excited to be here. And I told the organizers yesterday I am always available to come and share my experience here as a as a policy maker in my country also, and my experience in the region because I worked for the United Nation in the region in the Sahel. So what is unfolding in West Africa today? I'm always open to come and discuss that so that at least other policy will make us will see the reality that is unfolding that how global issues are playing out at a very small spaces, you know, like Sierra Leone and in West Africa.
- [67:41]
A
Thank you very much for your time.
- [67:43]
C
Thank you.