Annual investment of $8 billion will be required until 2030 to achieve universal access to clean cooking, according to the International Energy Agency.
The Paris-based agency’s estimate is less than 1 per cent of what governments spent last year on measures to keep energy cheap for their citizens, it said in a report produced in partnership with the African Development Bank on Wednesday.
One in three people around the world still cook their meals over open fires or on basic stoves, resulting in “significant damage” to health, quality of life and gender parity, the IEA said.
“Clean cooking is a topic that rarely hits the headlines or makes it on to the political agenda,” said IEA executive director Fatih Birol.
“And yet, it’s a cornerstone of global efforts to improve energy access, gender equity, economic development and human dignity.”
The report said that basic cooking methods contribute to greenhouse gas emissions, while the collection of wood and charcoal for cooking results in the loss of forest areas “the size of Ireland each year.”
Currently, 2.3 billion people rely on harmful cooking fuels such as charcoal, firewood, coal, agricultural waste and animal dung, exposing them to dangerous smoke, which leads to 3.7 million premature deaths, the report said.
Early deaths from poor indoor air quality would drop by 2.5 million annually if access to clean cooking is achieved globally, the IEA said, adding that the average household would also save at least 1.5 hours of time a day.
“The burden of fuel collection and making meals typically falls on women and takes on average five hours a day,” the agency said.
“This prevents many women from pursuing education and employment or from starting a business that could deliver financial independence.”
China, India and Indonesia have halved the number of their citizens who lack clean cooking access since 2010, mainly through free stove distribution and subsidised liquefied petroleum gas canisters.
However, in Africa, the population without clean cooking access has increased during the same period, the IEA said.
“The lack of access to clean cooking negatively impacts public health, perpetuates deforestation and increases greenhouse gas emissions,” said Akinwumi Adesina, president of the African Development Bank.
“Universal access to modern energy by 2030 is imperative and requires game-changing approaches.”
Public and private finance have a “key” role in advancing clean cooking, particularly in regions without the fiscal space to drive the required investment through public funds, the IEA said.
The agency also said that concessional and climate financing would be needed to support projects in the poorest regions, notably in sub-Saharan Africa.
“Solving access to clean cooking does not require a technological breakthrough,” Mr Birol said.
“It comes down to political will from governments, development banks and other entities seeking to eradicate poverty and gender inequality. But today, we are failing women in some of the most vulnerable areas of the world.”
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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