Meet the CCG Team #2 – Dr Alex Money

Alex Money is the leader of CCG’s Investment Pipeline team, using his professional experience in investment management and enterprise sustainability to address one of the biggest issues in climate change – how to mobilize much-needed climate finance.

Tell us about the role of your team at CCG

I lead a small team focussing on investment pipelines within CCG and our role is to support and facilitate the mobilization of investment into projects and activities that are consistent with the CCG’s objectives. Often we get involved when the work of other CCG teams reaches the point where investment readiness becomes relevant and our expertise in how to engage with sources of capital or government finance ministries can be helpful.

As well as that enabling role, we have an origination role where we work specifically on projects where we can empirically demonstrate how finance can be mobilised, through novel field-based research.

And do you have a specific territory that you’re focusing on currently?

In terms of the origination work, we have taken an approach that is narrow and deep because we are a small team. In the last couple of years, a lot of our focus has been in one of CCG’s partner countries, Zambia. There we’ve been interested in the wider public and private funding landscape and in particular, the potential for devolved investment decision-making through the mechanisms being applied by the Zambian government. A good example of this is our work on evaluating the Constituency Development Fund, and proposing ways in which its efficacy could be advanced.  Now that CCG has been given the five-year extension, our ambitions are to do more origination work in other CCG partner countries as well as continuing to support other CCG teams when their work reaches the investment readiness stage that I mentioned. 

It may seem obvious, but why do you think it’s important to focus on finance?
Well, if you’ll allow me one philosophical statement, finance exists to serve society. And yet, in many people’s perceptions, it seems to be the other way around.  I think there is an unnecessary and often unhelpful mystique associated with finance, often exacerbated by jargon. We think it’s important to de-mystify finance for the many non-financial audiences and stakeholders within CCG and our partners.

Finance is actually pretty straightforward for the most part. But the key thing is that unless the right sort of finance is mobilized in the right circumstances to the appropriate projects, nothing else can really go on; it’s where the rubber hits the road. Within CCG we’re interested in ensuring that our research on finance and investment is fit for the purpose of supporting the outcomes that we’re all working towards.

And what kind of progress do you feel that your team have made so far in trying to address these issues?

With the enabling work, a lot of what we’ve done has been making capacity available to our colleagues such as Sam Fankhauser’s team and Julia Tomei and the Policy team. We are also increasingly supporting the International Partnerships team as the Data-to-Deal framework gains traction as an effective way to secure finance. 

I’m fairly happy with our progress; last year we published a comprehensive paper on mobilizing investment in Zambia and presented the work to government stakeholders and others at the COP in Dubai.  So far this year, we have just published another paper looking at impact measurement. What we  found here is that current frameworks that are being used to measure performance of investment actually run the risk of entrenching existing inequalities in terms of who can obtain funding and finance.

I think being able to raise awareness of that risk and demonstrating how it could be mitigated is a key contribution that we can make to support the release of investment for impact, particularly for the people who need it most. 

Following on from that, we quite often hear that potential investors have quite an aversion to risk when it comes to climate projects. Do you think that’s justified still or do you think they need to change their approach, particularly in areas like climate entrepreneurship?

Risk is generally associated with imperfect information and in many of the countries we are particularly interested in, information is indeed particularly imperfect with lots of data and knowledge gaps. So I think the risk aversion is natural, but it is one of the aims of CCG is to address those knowledge gaps with the best available information, from empirical, rigorous research that helps to reduce that perception of risk.

One of the things I find most frustrating about climate finance is that around the opportunity that is not being taken.  Let’s just take Africa as a continent, for example, with a population today of about a billion people.  It’s virtually guaranteed, due to demographics, that this will be around two billion people by 2050.  That’s a 100% increase in population and the latent potential of growth, of economic productivity, of improved outcomes is extraordinary. No other region in the world holds a candle to this. 

But while there are very few places on Earth where that sort of investment opportunity exists, there is, of course, the vulnerability and lack of resilience that many of countries currently face when it comes to climate change.

But there are lots of things to be positive about. For example, the capacity for modern generation of electricity in a continent like Africa is self-evident and the productivity opportunity which that could unlock is what drives the return side of the equation.  Couple that with the fact that in terms of technology and data we’re laying submarine data cables to the continent and there are satellites providing Internet connectivity to the most remote locations.

So, you have these different things going on. You have the demographic dividend. You’ve got these transformative breakthrough technologies and energy and data provision, and you’ve got this vulnerability and lack of resilience to climate change, which can be mitigated and adapted to.  If we can do that effectively, then those growth opportunities have a real chance of being realized.  And that’s what will drive the investment story.

And so would you say that you’re quite optimistic about the way that this will go?

Extremely optimistic. I’m from Zambia, so I come from a developing country background. I grew up in a very different environment to the one we live in today and the opportunities for equitable, socially inclusive growth have changed immeasurably in a generation. I think one can only be optimistic about what the prospects are, but nothing is to be taken for granted.  It’s extremely encouraging to see the FCDO willing to support the work that’s already happened in CCG by extending the capacity for us to do this.

Absolutely.  Let’s talk a little bit about your background now.  What is the journey that brought you to to doing what you do now?

I’ve got about 30 years of professional experience, which makes me start to feel old! I grew up Zambia, where my parents still live, when it was one-party state. I suppose this has given me a kind of visceral, first-hand awareness of development related challenges and opportunities from quite an early stage.

My first degree was in development economics here in the UK. I started working in what’s called emerging markets as a fund manager for Citibank and then Bessemer Trust, investing in companies in Latin America, Africa and Asia. So I spent many years getting very familiar with some of the opportunities and challenges about growth and developing countries.

In the mid-2000s I left to set up a capital markets sustainability advisory firm with two partners. Our timing was lucky.  That firm grew very quickly and was financially successful, which meant that after a couple of years I had the opportunity to come out of it and go back to school as I wanted to learn more stuff.

I originally came to Oxford to do a one-year master’s programme with a view to going back to the firm, but the plan evolved and I stayed on to do a PhD and then joined the University faculty. I remember one morning, a few months after we decided that the relocation from London would be permanent, walking through muddy fields in Oxfordshire with my wife and she suddenly turned to me and said: “how did this happen?”. But overall, with two young sons, it has always felt like the right move.

I’m so glad that it’s been positive for you. Going back to Zambia, how much interaction have you had with, say, policymakers or government in the work you’re doing and what kind of indications does that give you about how they might react to the work you’re doing?

I’ve engaged closely with public agencies in Zambia for a long time. My father was a career civil servant in Zambia and former director of the geological survey department. As I mentioned, Zambia was a one-party state until 1991 so in my working lifetime, I’ve seen Zambia evolve into a fully-fledged democracy and now one of the leading democracies in the developing world in terms of its ability to transition power and so forth.

Unfortunately, Zambia is very sensitive to factors beyond its control.  It’s heavily reliant on copper and the copper price has fluctuated quite widely and the local economic dynamics have often been quite challenging for Zambia’s people.

But, it currently benefits from a strong functional, technocratically competent government.  Its agencies have a very responsive approach to thinking about climate adaptation and mitigation. It has good relationships with research institutes and governments outside the country and particularly here in the UK.  All of these things create a pretty good environment for engagement.

Of course, there are quite high expectations on the part of public authorities in countries like Zambia; what they want to see is a better outcome as a consequence of engaging with organisations like CCG. I feel acutely responsible for this as I have a strong professional background in the implementation side of things.

What we have to do is be credible to deliver on the implementation side here. We’ve been given the mandate to do that and we’re talking to receptive people.

Great. What is Zambia’s situation in terms of natural resources from which it could develop its economy?   
Well Zambia has an incredible natural capital resource endowment.  But historically as a primary resource exporter so it hasn’t captured much of the value added from copper, which is obviously a key metal in the decarbonisation story. So now is an opportunity to look at the resource endowment of Zambia to try to think about models in which more of that value could be kept within the country for the benefit of Zambians.

What other opportunities are there in Zambia in terms of say critical minerals? What are the things it could focus on adding value to?

In addition to copper, Zambia has very large lithium, cobalt, manganese and rare earth deposits.  All of these things are components of batteries and other infrastructure that are fundamental to moving towards net zero emissions. One amazing fact is that less than 60% of Zambia’s territory has been geologically surveyed so there’s an element of not even knowing what we’ve got.

But what we do know is that the current global situation positions Zambia, with the appropriate investment and the right governance, to build value from its endowment.  There is a model for that. For example, look at Indonesia, which is not a CCG partner country, but it has adopted a muscular approach to this.

In Indonesia, as I understand, you are no longer allowed to just extract raw minerals. Instead, investors have to put processing facilities in place in the country and so that may be a model that countries like Zambia could adapt.

There’s certainly a playbook that doesn’t have the same relationship of dependence that we might have associated with the 1970s to the 1990s, for example.

That’s really good to know, and one of CCG’s approaches is that, although we treat every country individually, you can learn from other countries when they’ve got a model that works and fast track to a solution rather than have to do all the work on your own.

Absolutely.

Let’s talk a little more about the level to which CCG gets involved in practical support for a country. You talked about implementation earlier; how do you strike the balance between creating empowerment in a country and doing the work needed?

A good example is the development of skills and knowledge in a country’s own energy planning team through activities like the energy modelling training programmes run by CCG using courses from the OpTIMUS Community. As members of those teams are trained, they cascade their knowledge to the rest of their team, creating a legacy for the future.

But there are sometimes gaps in the country’s implementation capability in other specialist areas as well. For the work I do in finance there are fewer people in some of these countries who have that knowledge so I will naturally be more involved in working alongside them.  Generally speaking, though, there is a clear distinction between our research programme and what is traditionally called technical assistance.

Yes, I see.

One of CCG’s strengths – and something we promote when we discuss the Data-to-Deal framework – is that we have capabilities through our specific teams, to help with every step of this approach: from acquiring the data through research, to supporting a country to create a financially credible proposal for its clean energy projects that gets taken up by the World Bank or other financial body (the ‘deal’).

Any final thoughts?

I would like to highlight how important we think the extension of CCG to 2030 is, in terms of the delivery side of things.  I think it’s given our partners in-country more confidence that we are going to be around to help them get things done.  All credit to the CCG leadership for making the case to the FCDO for that.