An unconventional World Banker

Inclusive Economy28 Mar 2014Lalith Gunaratne

A tribute to Loretta Schaeffer and the ASTAE team and the local stakeholders who pioneered new ways of commercially generating and delivering electricity services to people.

A new generation of organizations, especially in the information technology industry, is redefining how people are managed and led. Companies like Google focus on building human relationships first by connecting with people based on values such as respect before they are asked to perform. The new emphasis on relationship and emotional intelligence introduces empathetic ways of managing and leading where it becomes a ‘Connect-Think-Do’ process. The ‘Connect’ is to honour each other as human beings, acknowledging our basic emotional needs – respect, recognition, trust, appreciation and meaning.

Business books, like The Empathy Factor by Marie Miyashiro, validate that institutions operating collaboratively through human connections meet both organizational and human needs and are ultimately most successful. More businesses are adapting this way of working with people with positive results.

Why should it be different in donor projects that assist the developing world? In the old paradigm of ‘Think-Do’, well-meaning yet top-down solutions are implemented without much engagement with beneficiaries.

When there is a Connect-Think-Do approach there is engagement and alignment with local partners and beneficiaries where the success of projects is measured for more than numbers alone. They are assessed by the quality of relationships developed, the quality of life improved, and the local capacity and leadership developed. Much of this cannot be easily measured, yet these factors indicate real and palpable change at a human level. This Connect-Think-Do approach requires leadership mastery, which balances between rational, emotional and relationship intelligence. Leaders with self-awareness are mindful about this balance.

Such a Connect-Think-Do leader was Loretta Schaeffer. She headed the World Bank’s Asia Sustainable and Alternative Energy Program’s Asia Alternative Energy Unit (ASTAE) in the early 1990s when small-scale energy solutions were in the shadows of behemoth thermal and hydro-generation projects.

Loretta Schaeffer was a hard-driving manager focused on results, yet creating a proactive and positive culture within ASTAE and its external stakeholders based on connection. She visited the countries for an intimate look at projects and to forge close personal relationships. Schaeffer was a good listener – she respected the knowledge and experience on the ground and helped build trusting relationships. She looked for creative ways to expand on existing models so more people in the developing world could access energy services.

I co-owned a solar energy business in Sri Lanka at the time, championing a commercial-retail model with microcredit, so off-grid homes could replace the kerosene lamp. Our example was one of a few upon which ASTAE could build their programmes.

Loretta Schaeffer and the ASTAE team were strategic in changing hardened mindsets, processes and policies within the World Bank in order to shape programmes that would align with the small-scale technologies and the recipient-country’s socioeconomic situation, culture and values. This required a paradigm shift from financing large energy projects to funding many small initiatives and engaging with decentralized stakeholders.

She did everything within her power to win over the Bank’s management to support ASTAE, including setting up a mini exhibition of small-scale renewable programmes around the world at the entrance to the annual board meeting in 1995. She used the opportunity the presence of myself and others in North America to make presentations to senior staff at the head office in Washington, DC, where many were skeptical about renewable energy. That was her way of connecting with the board and management to garner support.

The ASTAE team also agreed to a delivery model proposed by the local stakeholders that departed from the traditional path of financing large energy projects. Instead of the energy ministry and the government utility, the new model used the private banking system to disseminate funds and manage the programme.

ASTAE exemplified the Connect-Think-Do approach at another critical juncture. It was with regards to ensuring solar photovoltaic (PV) equipment quality, where the international standard for the battery exceeded locally-manufactured batteries in Sri Lanka. This would have increased the system cost substantially. But, with our many years of experience, we knew the local battery quality was sufficient to meet the service requirement. ASTAE listened, agreed and validated the appropriate battery standard.

Similarly, for off-grid micro (village) hydro ventures, ASTAE worked closely with Integrated Technology Development Group (ITDG) and the Energy Forum of Sri Lanka (a non-profit advocacy organization) to set local standards for electro-mechanical and mini-grid equipment. This enabled manufacture to occur in country, making the programme affordable to local communities.

There were other challenges as well. For example, there was more opposition from local politicians, because decentralization took away their power of the promise for grid electricity in exchange for votes. The Ceylon Electricity Board perceived an encroachment on their territory, oil and coal lobbies promoted their generation plants, and investors and banks were unwilling to risk their money on what they deemed as unproven technologies. Yet, ASTAE again worked closely with the local stakeholders and developed trusting relationships with opponents to show the benefits and the complementarity of renewable energy for Sri Lanka.

This level of connection and engagement ensured that the Energy Services Delivery (ESD – 1997-2002) and the subsequent Renewable Energy for Rural Economic Development (RERED) projects (2002-2007) in Sri Lanka were successful beyond expectations.

Over 120,000 solar home systems were installed thanks to micro-financing and over 300 off-grid micro (village) hydro projects serving 10,000 homes were commercially developed. The ESD project also provided technical assistance for standard power-purchase agreements to enable grid-connected mini-hydro, wind and biomass projects to sell renewable power to the utility and to develop well over 100 megawatts (MWs) of projects.

The success story continued as both projects included an extensive technical assistance component through a locally-established administrative unit at a private development bank. Quarterly meetings brought all of the project’s partners and stakeholders together to listen to progress and new ideas.

When the Energy Forum, in its own research, found some challenges emerging in some off-grid village hydro ventures in the governance and technical support areas, the communities and the Energy Forum proposed establishing a Federation of Electricity Consumer Societies. Technical assistance funds supported the establishment of the federation with over 300 members and financed capacity building and training in technical and project management, ethics and governance. Most of these communities have succeeded in becoming self-sufficient not only in energy services, but also economically. In 2013, one community, Athureliya, developed and connected the first mini-hydro system to the government grid.

As Sri Lanka’s ESD-RERED project provided results, decentralized energy programmes were replicated in countries like Indonesia, Vietnam, Bangladesh, Uganda and others with varying degrees of success.

Having consulted in many of these countries, I attribute the typical failures to not following the Connect-Think-Do process. Such failures have resulted from poor donor-agency-host country relationships following a lack of mutual trust, respect and understanding of local communities, their conditions and their culture. And when projects failed, this led to a waste of resources and even local conflict.

The Sri Lankan projects succeeded at the time with a ‘perfect storm’ of passionate individuals who were committed and willing to take risks, think outside the box and innovate.

Loretta Schaeffer, a connector par excellence, set the standard. She balanced the hard and the soft skills – the hard was to lead the programme with rigour, and to first be financially viable and accountable and the soft was gaining the World Bank’s management support and space for listening in order to innovate, make mistakes and learn. This ensured that local knowledge was harvested and capacity was developed. And now renewable energy plays a crucial role in the Sri Lankan energy mix as a result of this World Bank programme.