Multilateral and bilateral aid policies and trends in the allocation of electrification aid, 1970–2001

What Explains the Allocation of Aid and Private Investment for Electrification?

“…The database was audited to confirm the relevance of the projects included. A total of 13,242 aid projects were identified between 1990 and 2010, a significantly higher figure than that of Hausman et al (2014) Figure 3.1 reveals the evolution of ODA and private investment for electrification between 1990 and 2010 (with two additional years of data in the case of private investment). ODA for electrification was reduced in the 1990s in response to policy changes.…”

“…This growth was largely driven by the wave of privatisations during that decade, as previously described. During this period, the overall percentage of private investment in total infrastructure investment in developing countries rose to 53 per cent (Hausman et al 2014) from a situation of almost total state ownership of electricity infrastructure in developing countries. The boom, however, was relatively shortlived and ended with the 1997 Asian financial crisis, which brought about a sudden reduction in private lending for infrastructure projects.…”

“…Finance for electrification has since risen in its share of ODA from 2003 onwards due to a revived emphasis on the importance of energy for development (Gualberti et al 2012). This emphasis was partly in response to a reassessment of the assumption that the private sector could be relied upon to make the required investments in electricity after its own contribution fell markedly following the Asian financial crisis (Hausman et al 2014). The 2006 World Bank publication Infrastructure at the Crossroads noted the decline in private sector investment and also, as a result, a growth in demand for World Bank support from developing country governments, as well as a broader reappraisal of the importance of infrastructure in development (World Bank 2006).…”

“…Broadly speaking, three sources can contribute to satisfy the 'voracious appetite for finance' of the electricity industry (Hausman, Neufeld and Schreiber 2014): official development assistance (ODA) from multilateral and bilateral donors; national governments (or state-owned utilities); and the private sector. The International Energy Agency (IEA) estimates that reaching universal access by 2030 would require a fivefold increase in the amount of finance jointly provided by these three sources (IEA 2011).…”

“…Hausman et al (2014) follow trends in ODA for electrification between 1970 and 2001, noting a shift from almost entirely domestic electric utilities in the post-Second World War era to a worldwide movement of privatisation, liberalisation and restructuring of the sector beginning in the 1980s and accelerating in the 1990s as part of the neoliberal 'Washington Consensus'. By the 1990s, electrification aid had shifted towards countries that were relatively poorer (but not those in Africa), and also towards those with more attractive governance structures.…”