Assemblies - Business Assembly: Delivering Against Odds: Private Sector Leadership Across the Housing Value Chain (WUF13)

Everyone, and welcome to the down, was he showed to children and tuo dog.
Gentleman Patrick Kaag Gasham from UN Habitat.
He is the director of the Regional Program Division, and please join me in welcoming him to the stage.
Thank you.
Okay.
Distinguished guests, Your excellencies, partners, a very good afternoon to you.
You didn't mess up my name.
You were definitely in the ballpark, so you did well.
Welcome.
It is official Woof 13.
This is the Business Assembly and it truly, truly is a genuine pleasure to have you here.
I sure hope you share my enthusiasm and the enthusiasm that I share on behalf of you and habitat.
Is it fair to say that you do share the enthusiasm that I just expressed? I take it as a yes, even if you don't respond.
It's good to see all of you in this room.
I know you represent multiple sectors and one of the reasons why we are quite excited about this particular event is that at the World Urban Forum, our role as UN habitat is to really not just convene, but also to catalyze and to enable.
The reality is when you look at the multitude of challenges and problems that we have, one sector alone or one entity alone is not capable of solving it.
We truly can't pretend that we can do it on our own.
I'm sure you agree with me.
We are big believers in partnerships, catalyzing and enabling partnerships that are very much solution focused.
If you think about our strategy 2026-2029, we are placing a huge amount of emphasis on housing, on land, basic services, and at the center of everything that we do, what is really foundational as far as we are concerned, is that it definitely identifies the private sector in its diversity as an indispensable partner.
In delivering the agenda.
It just comes back to what I said a moment ago.
A sector on its own cannot do it, we can't do it on our own.
But when we catalyze, when we convene, and when we enable, we can co create some of the most complex solutions for the most complex problems that we have.
You will shortly hear from Carlota, and I hope I got your name right, who will really set the scene, but also set the tone, quite frankly, to take us through the journey ahead.
What I want to say before she does is simply this partners, friends, colleagues.
What is said in this room today really matters and I sincerely hope you see the significance of what we're going to do today.
Woof 13 will produce what we call the Baku call to action and the concrete experiences, the honest assessments, and the solutions that emerge from this assembly will absolutely shape it.
I hope you see this also as a pivotal moment, but also as an opportunity for all of us.
We are definitely our posture here is to listen and to make sure that your voice really finds its way in terms of when it comes to just not wolf, but this particular forum as well.
Can I just take this moment to say on behalf of you and habitat a huge sense of gratitude for all what you do, what you plan to do, what we plan to do collectively, and welcome to Baku and welcome to the World Urban Forum.
Thank you.
Thank you.
Thank you very much.
Yes.
To try to set the scene of what we're going to discuss over the next few hours, I mean, it is no secret that housing has become the defining economical, social, and urban challenge of our times.
By 2030, nearly 3 billion people, and that's roughly one in every three people on Earth will need access to adequate, affordable, and climate resilient housing.
Today, more than 1.1 billion people already live in informal settlements, and if the current trends continue, that number could approach 3 billion by 2050.
Now, we know that to close that gap is near impossible.
We're talking about 96,000 adequate housing units that wouldn't have to be built every single day.
This notion that we just heard of no one can do it alone is very much true and this is affecting cities the world over from Vienna to Nairobi, San Paolo, to Lisbon, to Baku and across regions, housing systems are under pressure from rapid urbanization, rising land costs, climate vulnerability, demographic change, and of course, growing inequality.
Alongside this crisis lies as well a very enormous opportunity.
Housing is the largest store of wealth on Earth, representing nearly 288 trillion in global real estate value.
The construction sector employs almost 287 million people around the entire globe and contributes to roughly 13% of global GDP.
In emerging markets alone, the international finance corporation estimates a 16 trillion housing finance gap, not simply as a measure of unmet need, but as a measure of unrealized economic potential.
This is why the private sector is not a spectator in this conversation.
It's very much part of it.
In many contexts, it is the primary delivery actor, shapes land, finance, construction, deploying technology, building infrastructure, and ultimately determining whether housing can scale fast enough to meet this rapid demand.
This afternoon, we're going to approach housing not as a single product, but as a system.
Our discussions are structured as a journey through the housing value chain.
Beginning upstream with land, planning, and regulation, all the conditions that determine whether housing delivery can happen at all.
Then we'll move on to materials, construction, innovation, digital systems, services, and of course, infrastructure.
Across the three panels, we will return to this one central argument.
Housing systems are only as strong as their weakest link.
A failure in planning affects finance, a failure in infrastructure affects affordability, a failure in delivery affects social stability and economic growth.
The central question here before us today is not simply how to build more housing, it is where public and private actors can create these decisive value together, and what are the enabling conditions that allow that value to scale? And whether or not maybe no better place, of course, than here to have this conversation, a region that is actively navigating the transition towards more market based housing systems, while also confronting the realities of rapid urban growth and infrastructure modernization.
So thanks everyone for joining us, and I hope you leave this afternoon inspired and setting the tone for an exciting week for this edition of the World Urban Forum.
But for now, we were going to hear a video message from António Campagnoli, the president of Yabsi the International Real Estate Federation.
Thank you.
Excellencies, Distinguished Minister and dear partners, colleagues and friends.
It is a great honor for Fbsi the International Us Federation, to be part of this important business assembly and allow me first to express our sincere gratitude to misses Anna Claudia Rosenbk, Executive Director of UN Habitat, our long standing global partners for their kind invitation and for the opportunity to share FF perspective in this important conversation.
Allow me to begin with a simple reflection which strongly echoes the discussion we recently held during our spring symposium at the delegates dining room at the United Nations in New York, drawing from the experience of our members and partners from different regions.
When we speak about housing today, we are no longer speaking only about buildings.
We are speaking about dignity, about stability, about accessed opportunity, and ultimately about the future shape of our cities and societies.
That is why today conversation matters so much because the challenges before us are indeed considerable.
The responsibility before us is not only build more housing, is to build housing that is adequate, affordable, climate resilient, well located, connected to services, and capable of supporting real communities.
We must do this at a scale the world has never seen before.
By 2020, nearly 3 billion people will need access to adequate housing that should concern all of us, governments, institution, communities, and sanity, the private sector.
At Topsy, we have been reflecting deeply on this question through the springs and polls and I've already mentioned, as well as the multiple irregular exchange across regions.
One conclusion has become unmistakable clear.
The housing crisis is not a single crisis.
It takes different form in different places, but its roots are often very similar.
Fragmented planning, land constraint, regulatory delays, insufficient infrastructure, uneven access to finance and weak coordination across the value chain.
This is why I would like to make one central point today.
Housing delivery must be understood as a system, not a single construction item, not a simple matter of supply and demand, but as a chain of interconnected condition, land, planning, permitting, infrastructure, finance, operation and long term livability.
If one linking that chain is weak, the world's system underperforms.
Too often, we ask why housing is not being delivered at scale and yet the answer is often found long before construction even begins.
It found in land that is not ready in permitting system that are too slow and unpredictable, in planning frameworks that do not align with infrastructure, in a regulatory model that unintentionally increase cost and delay without improving outcomes, and in market condition where even couple private actors can move because the enabling environment is simply not there.
If we want real progress, we must shift the conversation.
We must stop treating housing as a secondary market issue and start treating it as essential social and economic infrastructure.
That means housing the same seriously, the same strategic coordination, and the same policy discipline that we give to transport, energy, and water system.
All these bring to me to the private sector.
The private sector is not an optional participant in this agenda is an essential one.
But we should also be clear the private sector is not one actor and not one model.
It includes large developer, SMEs, corporations, start up, manufacturer, service provider, financial institution, and many markets, informal and incremental builders.
Together, they shape housing outcomes every day often in a way that public policies do not fully recognize.
The role of government therefore is not to replace this ecosystem, but to enable it wisely, responsibly, and in the public interest.
That means creating frameworks that are predictable, current, and fit for delivery.
It means accelerating without lowering standards, it means reforming without losing inclusion.
It means enabling innovation without compromise affordability, and means ensuring that resilience and sustability are not treated as luxuries, but as an integral part of the housing model from the beginning.
Our own FFPs discussion have shown how this plays out in a practice across different regions.
We have seen that in some countries skills become possible when public programs, structured housing finance and private delivery work together.
We have seen that in other contexts, the real change, the real challenge is not simply housing shortage, but lack of coordination between planning, infrastructure, and finance.
We also seen that without a secure title, viable mortgage system, and coherent lend reform, entire markets remain inaccessible to the majority of others.
Different context, yes, but the same lesson delivery depends on the quality of enabling framework.
What we need now is not only more dinosis, we need more alignment with more practical cooperation, more deliberate partnership, and more recognition that adequate housing will not be achieved through fragmented action.
The future belongs to those who can connect planning with execution, policy with investment related with infrastructure, and ambition with implementation.
This is in many ways the real leadership challenge before us.
Know whether the public sector should act, it must, know whether the private sector should contribute, it already does, but whether both can work together in ways that are structured, accountable, and scaled to realities we face.
At TAPS we formally believe that the real estate profession has a duty not only to participate in this conversation.
But we shape solution.
Our members work every day across the housing value chain in the development in brokerage, in valuation, planning, investment, property management, and urban transformation.
They see the friction points, but they also see the opportunities and that practical experience must be part of the answer.
So let us use this section not only to identify the obstacle, but to advance a more positive and action oriented message that against the odds deliverable is possible, that with the right frameworks, the private sector can do more and with the right partnership, public purpose and market capacity can reinforce one another and that with courage, coordination, and long term thinking, housing can once again become not a privilege for few, but a foundation for dyntity, resilience, and opportunity for all.
Thank you very much.
Thank you.
Now we're going to move on into our first panel.
So please join me in welcoming one by one as I introduce them and they'll take here the main table.
First up, we have Sitola Mbanga who leads the South African Local Government Association, which represents all 257 municipalities in the country.
As we know, this is a nation that has a housing backlog of more than 2.6 million units, so the challenge really is felt.
So please join me in welcoming him to the stage.
Also joining us, we have Elon Nokov who serves as the First Deputy Minister of Economy and Finance of Uzbekistan and is one of the senior architects of the country's housing reform agenda.
Next, we have Gubel Sadeva.
She leads PWC Azerbijan and advises both government and private sector clients across Central Asia and Eastern Europe.
The next speaker is Karina Garnaga.
She leads the landscape department at IND Studio, a multidisciplinary architectural Bureau founded in 2008 with over 300 professionals and operations across Europe, Central Asia, and the Gulf.
And then finally, but not least, we have Rafat Atakshiv, the Deputy Chairman of Azerbijan's National Agency for small and medium enterprise Development, Koba.
Thank you.
Thank you.
Well, thank you all for joining us.
The way we'll do this, I'll give the floor to each of our speakers in turn and then we'll have a chance to comment between each other and to have a better overall view of what each of them thinks of some of these pressing challenges.
Perhaps, first, Deputy Minister, if I could begin with you.
We know that Uzbekistan is undertaking one of the most ambitious housing reforms programs in the region.
It's moving from a heavily state led system towards a model that mobilizes private investment, mortgage finance, and market based delivery at scale.
From your experience leading that transition, what have been the most important conditions for bringing the private sector in as a genuine partner and what lessons do you think Uzbekistan's journey might be relevant for other nations in Central Asia and the South Caucasus that are navigating similar paths and journeys? Thank you.
First of all, thank you for inviting to this interesting and important panel session.
I want to thank the hosts and you inhabited for organizing this event.
The question you have given, I think it's not only important for Uzbekistan, but for many developing countries, especially for developing the mortgage market in a sustainable and stable way and giving more and more access to ordinary people to get or to be able to buy or to get a loan for their house.
In Uzbekistan, during the new era of reform, which started from early 2017, we almost increased the number of house built, especially flats by more than five times a year.
Annually, it was around 15, 20,000 flats.
Last year it was more than 100,000 flats.
So this year, we are planning more than 140,000 flats.
But compared to what is the population growth? Every year we have 1 million babies born, so the real growth rate is 1.8% and the new households, the marriage, the number of the marriage is around 270,000.
So if you take and compare, still the number of house which we are building and even so it has increased by five fold may not be enough.
But how we have reached this a and, you know, everyone is saying yes, and everyone agrees we need the finance, we have to have a resources, we have to have a private sector.
But for developing countries, it's always not easy.
It's difficult, especially when you have an emerging financial system, the banking system, you need loan money.
So mortgages are usually given to more than five years.
In case of Uzbekistan, we were able to increase from ten years to 15 to 20 years.
Ten years ago, it was almost a distorted market.
The state would give the money to banks and this money would be used for building just for a targeted households.
But when you have a limitation and the cheap resource, it will bring too many distortions and maybe adverse selection, et cetera.
I don't want to go to this side.
So we faced a quite big challenge.
How we can create an efficient market where we can have, you know, the efficient selection of the household, but also make it affordable and also interesting for the private sector.
Then we move we approached the international financial institutions like ADB and others and also, you know, the partners consultants, and they designed such a model that the government will come to banks with, you know, long term resource.
The interest rate will be at the level of the central bank key rate and the banks, they will have their own interest rate margin, and then the interest rate will be close to the market rate.
Then the question came across, will the people be able still to afford this? Then we came, in order to push this reform, we said we will give subsidies for the first installment.
So the people, the households who have the sustainable source of income but cannot afford the initial payment, so it can be covered by government.
Then the issue arise at the beginning, there would be some families, they would have difficulty to pay some little bit higher interest rate.
We went to give some additional money for subsidizing the part of the households who want to take this.
And thanks to God, this market became operational and it is increasing.
If this year the government is channeling around $1 billion to banks.
The banks by themselves also using almost 50% of this overall mortgage market not from the private sector.
So it became very good and it's also a good competitive environment among the construction companies who are building the house and selling because people they have You know, it's not like a direct program.
You get the loan and you get, you know, the house where the bank says or the local council says.
You can have an access, you can live in one region and you can go to other region and use this, you know, the subsidies if you are a young family or, you know, you have a sustainable income, but it's not enough.
But you can choose any house that was built.
So it's also a kind of a market and, you know, it creates a competitive environment.
So I can elaborate a lot about this program.
But the idea was so I think we have achieved somehow a good, you know, the results.
The idea was to create the market where we will be able to efficiently select households, create a fair rule or rule of game where the competition is available and present and private sector will come and also the banks will mobilize more and more resources by themselves to finance the longer term mortgage.
Thank you.
Thank you.
Thank you very much.
So, if I can come to you next and the case here of South Africa back in March of this year, you spoke quite candidly about the complexity that municipalities are facing.
We know regulatory bottlenecks, limited, well located land, infrastructure backlogs.
The list goes on.
You made this case that government cannot address these challenges alone.
Now, from the organization's work across all the 257 municipalities, what are some of the concrete steps that you are seeing cities and municipalities taking to accelerate issuing permits, streamline the land use management, reposition themselves as this proactive enablers of housing delivery and also, where do you see that shift happening now? Thank you very much and of course, all protocols observed and Deputy Minister, again, So perhaps what is important is for me just to very briefly sketch some of the context.
Today or this year, South Africa is about 30 years since democracy began.
So we are very young democracy.
That's number one.
Number two, we are facing a huge phenomena of population movement in migration, out migration.
So it's a classic case of anthropology at its best.
You can't stop it.
You just have to manage it.
So that principle is quite important.
Thirdly, we are sitting in a space where opportunity for growth exists alongside poverty.
And that's where the complexity is.
On the one hand, you have people that can afford to buy material, build their own houses, but by far the vast majority do not even have a single dollar to purchase a bag of cement.
I think this is where local government and perhaps generally government has to find itself working in conjunction with the private sector because the private sector does have the money, the resources.
I'm not sure where do they take it from.
But they control banks predominantly and we sit predominantly with people that are looking for accessing those.
It's that point of convergence because that point of convergence has created an opportunity for infrastructure to be delivered, whether it is about water, whether it is roads, whether it is human segments, whether it's food production.
So that's what we ought to be able to do.
Obviously, it will differ from one country to the other because our conditions and circumstances are different.
Clearly, we have to be identifying what we call in South Africa, the spatial transformation agenda, the spatial transfiguration agenda.
Because without doing that, then the current circumstances are going to remain where poverty and wealth sit alongside and get their not conversion.
Ideally, what we need is a government that is proactive.
The attitude where local government is just an administrator It can't be.
It has no life longitudinally.
Local government and in fact, government must be proactive and actually thrive or perhaps let's use the word orchestrate what should happen in the space.
The private sector must embrace that orchestration to its own advantage of profiting.
Ultimately, the public sector will see society profiting as a consequence of that.
Sound theoretical, but I think it requires us to be willing partners on the agenda.
That's the essence of what we're finding in South Africa at the moment.
I want to stay with you because one of the things we know as well about South Africa is the amount of informal settlements and how they're integrated in the city.
They generate value to the economy, their job opportunities.
I wonder here in this context about informality as an opportunity when it comes to housing.
What would it take for the private sector to embrace it? So again, this is quite attitudinal.
It's the mental shift at the beginning.
If the private sector looks at poor people as poor only and not being an opportunity If that doesn't change, then you're going to remain stuck with poverty.
Poor people are themselves an opportunity.
They are the beginnings of creating a demand for a particular product.
That they do not have the financial resources to access that is itself an opportunity for others from the private sector to create that because the demand is there and it is at that stage where the two umbrellas of the private sector and the public sector have to basically come together in mind and change that.
There's nothing wrong with informality, if I dare say, informality serves a particular purpose because not everything is servable only through formality.
Certain things need informality for them to exist because ultimately, you start from informality to formality.
You never always start from the formal part.
Yeah.
Thank you very much.
Let's bring in Gunnell into the discussion because we're hearing here about the roles that both governments and private sector can have and that's precisely what PWC does is advises both sector clients across the region.
And from that advisory vantage What do private sector actors, that would be developers, investors, service providers? What do they actually need beyond policy announcements to commit capital and capacity in transitional markets? Where do you see the gap most often? Is it in the regulatory framework? Is it in the institutional capacity to implement it consistently? Thank you.
Thank you very much for the question.
Maybe before answering the question a little bit, give the scene for what's happening in Azerbijan and what does the public sector implement, how the private sector participating in providing the housing.
Generally, when we set the stage, we are post Soviet country when in the beginning of 90s, everyone become in one day or one year owner of the house.
Yeah, and it is actually a good background.
But since that time, 30 years has been passed and this Soviet time houses, they becoming dangerous, not proper housing for the people and we encountered the problem of the maintenance, these houses or dismantling them and building a new houses.
The advantage that we had before became right now, let's say, problem or the part that we need to solve.
A part of that at the beginning of 90s there was because of the Karabak war and there was millions of people which were displaced.
Yeah.
So as a country, we have recognized the problem of the affordable housing like very early, I would say so.
And there are a couple of the instruments that government or the public sector has placed or provided.
One, it was similar to Uzbekistan to some extent, as a mortgage loans with a low interest rate.
The further it was like new program as a rent the house like it's generally without the first installment, the um the people can rent the house for affordable prices and there is a transparency in the electronic system for that.
Then a part of that, there was a media, it's a state housing agency who build social affordable houses for the people again with quite fixed rates for the per square method.
But as you see, it's all the governmental and public money and governmental measures.
Here's the question, where's the private sector in this scene and what the private sector can do? Um, like as you mentioned, the Pita Azerbjan is part of the bigger region in Central Eastern Europe.
So generally, we are quite very well connected and exchanging the experience or what type of the measures or what type of the projects we have in other countries.
And one of the project that was shared with me, it was about measure, if I'm not mistaken, was in Kazakhstan, where the private companies was asked to participate in the project for dismantling the old Soviet houses, and then to build on their side the new skyscraper or whatever the new modern houses.
It was the social costs for the displaced people, for the people who was displaced from their old houses, war on the private sector.
So on the construction company.
On developing company.
Instead of that, for the private sector is important.
I get my margin, I have my profitability, but how I should accommodate this cost for the displaced people.
There was like the alternative that the construction companies were allowed to build higher.
It was, for example, old five floor houses and the developers were allowed to build instead of that higher, high scrapper modern houses and accommodate this cost by selling it on the market rate.
The government and then when I was listening to this project that was implemented in Kazakhstan, I saw this was the same in Azerbijan.
This was called pilot projects where all this old houses was generally dismantled and that's how the private sector was involved.
Generally from the public money or from the public funds, it was only the uh, the land that was under these old buildings, they was passed to the private developers for the construction.
That's one of the mechanism that was used.
And for this project, there was no huge, let's say, regulatory change.
Yeah, there was no new law implemented.
Yeah, it was just quite a few subordinated acts, which we call like it's very fast to implement.
But it was very good alignment with the municipalities and the cities.
But, um a part of that, for example, about the regulatory gap and what the private investor need.
For quite a long time, we have PPP, public private partnership law, which was not very much used, I would say so.
There was a private sector player a As everyone, the private sector players seeking, as I said, for the margin and the bankable projects, et cetera But depends on the maturity of the private players.
They were thinking about some social projects, but with combination of their own interests, their own advantage.
There was a project that I was participating in, it was construction of the student dormitory, which was run under the PPP actually law.
At that time, there was no tax exemption on the public private partnership on the private investment in social important projects.
There was no clear even rules on how to transfer the land to the private investor, how to transfer back the ready dormitory.
The model that was used is built operate transfer, how to transfer them after the operation period back to the government.
All was absolutely unclear.
But what was important, it was great support from the regulator, from the Minister of economy who was driving this.
But even with this great support, it was mismatches or absence of the dialogue between the authorities, between different bodies because it's not only one who is driving this, it's also at the same time, the agency who is responsible for the land allocation or the transfer of the public assets into the operation of the private player.
But besides that, it was huge work done both from the government side, from the private player, which was building the financial model, the return of investment.
It's created from the student dormitory, which is absolutely social project for himself.
He created this as a profitable project.
Yes.
The return of investment was not so close.
It was in 20 years maybe, but still it worked.
And so when you say what the investor needs, most probably for the private player, how to track them, it's more about, yeah, the regulation should be in place, tax incentives should be in place.
But there is sometimes quite the awareness.
This was one case that I have shared with you.
It was the initiative of this private investor because he just wanted to make something important for the country.
But in most of the cases, there should be the awareness that Maybe most probably is the role of the government here that they need to play to create the ready project.
Generally, here's not just ideas that we need the investment in the sector, but here's what I need.
Here's the financial model, here's the loan, generally the most probably attraction of the IFIs international financial institutions.
What I need from you is a readiness to participate.
Yeah.
Thank you now.
Thank you very much.
Let's bring in Karina next.
Karina, there's a lot of conversation and a lot of debate about speed and we know that we need to build a pace, but based as well on the work that I&D Studio does on master planning across rapid urbanizing contexts.
I wanted to turn to this idea of, you know, mistakes that can be made because of speed.
What gets lost in the planning frameworks when we optimize for speed when it comes to delivery rather than the long term livability? I guess from your experience, where do you see cities make some of the more costly mistakes and what would a planning framework that takes both speed and quality in mind actually look like? Thank you.
Thank you, Carlotta.
I think it's a very important question indeed because when we speak about housing, housing delivery, we usually use the language of urgency indeed.
As we mentioned earlier today, by 2030, we need to deliver 96,000 units daily to a solve this housing crisis problem.
Speed is really something really urgent that I would not state against.
But talking from master planning perspective and landscape practice, I would say that the question is not only about how to move faster, but how to move faster without locking in this spatial, environmental, and, um, social problems.
In our work, the most costly mistakes, I would say, are made at very early stages, even before construction starts, before architecture is detailed.
It happens when such operational systematic problems are ignored.
When water retention, soil strategy, public space management, if these problems are ignored, they do not disappear.
They return later into flooding, car dependency, social isolation, et cetera.
For me, uh, the most important line here is not about speed versus quality rather than, um, regulation versus uncertainty.
These complex measures, they do not require any heavier regulation.
I think they do require an earlier regulation.
So, for example, if you're talking about blue and green infrastructure, it should be before the land is divided into plots.
Such such concrete measures um, risks and performance that we are taking into account in our work.
They should be discussed on very early stage longer before we get into dividing the land into plots.
I think good planning really accelerates delivery, and so this will help us to prevent from future costs that government would later spend years, decades trying to repair.
Well, it's curious you're mentioning there green areas and also this idea of open space because we do know the benefits of those areas in community building, and quality of life for residents and in mental health as well.
I wonder knowing all that evidence, that quality and integration directly affects community stability but also housing uptake, and the long term value of the land, how do you make the case to governments and developers who are under pressure to maximize unit numbers, as we've heard from the challenges that everyone is facing? Are there some planning tools that could help in not compromising and protecting quality as we try to achieve them? Well, for me as a landscape architect, I would say that first of all, it's important to mention that landscape is not only an additional layer to planning.
It's something that we should actually start from every project that we're talking about.
It's not about aesthetics or any greenery ideas.
It's the basic infrastructure that we need to develop.
Also framing it within the connections between housing uh, and proper public space maintenanceance, providing enough understanding on the questions of stewardships, whereas the private where the public spaces, who is going to maintenance later? And so these are basic principles that work for us as landscape planners and master planners as well.
And, um, uh, finally, I would really mention that, um, When we don't take landscape and proper planning into account at early stages, it means that these costs is really easy to cut in the end.
If we take it quite early on stage, we identify these systematic frameworks that help us to understand the future potential costs to maintain this land and understand the proper connections between the units of development.
Ka, thank you.
Let's bring in Rufat at the very end of the table, patiently listening and waiting for his turn.
I want to turn here in Baku at Cop 29, Koba launched the Baku Climate Coalition for small and medium enterprises.
Now, this was the first declaration of its kind globally, and this is the Back Climate Coalition for SMEs Green Transition.
Construction, as we know, is one of the sectors where the agenda will matter the most.
What does that commitment look like in practice for a small contractor or builder in Azerbijan today? Thank you, Carlotta very much.
Dear Excellency First Deputy Mr.
Nogov, colleagues, friends, media representatives, let me firstly greet you on behalf of the small and medium business development agency and express my sincere gratitude for all of you that despite of this weather you are here today on her own will.
So as Clot to mentioned, yes, at Cop 29, we launched some document which is called BC Climate Coalition for SMEs Green Transition, together with our international partners.
The Declaration supports better access for SMEs, green finance, technology, innovation, and capacity building.
And as of 2026, it has been joined by representatives from ten countries and 27 and international organizations, including Asian Development Bank and others.
It also encourages the creation of green SME resource centers to help small businesses to move to greener practices.
While at the same time, Cobia has been working actively to support ESG awareness and green business environment in Azerbijan, we have supported initiatives connected to ESG standards, sustainability awareness, and practical support mechanisms to help SMEs better understand and adapt to changing market expectations.
This includes ESG Hub, which brings together information, services, experts, and practical resources related to ESG and the sustainable business practices.
We believe these kinds of platforms are important because many SMEs want to adapt, but often do not know where to start with.
For a small contractor or builder, of course, this should not sound complicated in practice.
It can mean using energy saving materials, reducing waste, improving efficiency, using digital tools, and gradly applying greener construction standards.
But we must be careful because green standards should not become another barrier that only large companies can afford.
SMEs need training, clear information, and practical support, and the green transition will only succeed if SMEs are included from the beginning.
In Azerbijan, we already see green and smart approaches in new urban development projects.
For example, in Agali Village, energy saving systems, smart management solutions, digital services, and modern planning approaches are being used together.
Shows that urban development today is not only about constructing buildings, it's about creating comfortable, efficient, and sustainable places for people to live.
At Kobe, we believe that stronger cooperation between government institutions, local businesses, investors, and international partners is very important for building more sustainable cities and stronger regional economies.
If we want green and more balanced urban development, SMEs must, of course, be integral and indispensable part of the solution from the beginning because they are already working on the ground every day.
Rufat, I'll stay with you as we open up now to invite everyone to jump on and to have a bit more of a discussion.
I want to throw a provocation to the panel and while Rufat has the unfortunate maybe task of being the first one to answer the provocation, you have a bit more time to think about it.
But we've heard all these different perspectives and why building the housing that's required is not happening, you know, and I guess from your perspective, what is the single most important systemic change that would move the needle the most? Is it in planning, and land and regulation, something else? What is the thing that you see that could be a game changer in how we are approaching this challenge? Thank you very much.
Thank you.
From our perspective, one message is very clear, if we want faster and more balanced urban development, we need systems that work not only for large developers but for all SMEs as well.
Because as the same in the world in Azerbijan which is not expectation, the SMEs make up around 99% of all businesses in the country and they are also active in all spheres, including construction and urban development.
When we speak with business people, one problems comes up very often.
SMEs usually do not lack ideas, skills, or willingness to work.
The real difficulty ISA is often the process around them, long procedures, difficult and different approvals and lack of coordination between institutions.
Large companies can usually manage these delays because they have bigger teams and more resources.
For SMEs, time is much more sensitive and the delay can increase costs, create cash flow problems, and make it harder to join larger projects.
The biggest practical change would be this make the rules simpler, faster, and more predictable.
For many SMEs, predictability is even more important than financial support.
If a business knows the steps, the timing, and the requirements clearly, it can plan, invest, and grow on their own.
And this is why Azerbijan has focused on digital services and on one stop shop support systems.
For example, our agency operates and maintains SME houses, SME development centers, and SME friends network where entrepreneurs receive advice, information, and support in different regions of the country.
We also see that when SMEs take part in infrastructure and construction projects, the benefit stays closer to the local economy.
And local production grows, jobs are being opened, service develop and regions become stronger.
A good example is the reconstruction and development work in Gaba, in liberated areas and Eastern Gazul.
These projects are not only about rebuilding roads, buildings, and the infrastructure, they are about creating modern living spaces, new business opportunities, and long term regional growth.
Of course, for SMEs, this opens opportunities in construction materials, logistics, tourism, agriculture, manufacturing, technology, and services.
Also, I would like to mention that under CBA, we have a public council consisting of 15 members being the business associations, and one of them, the Azerbijan Construction Manufacturers Association, ATA.
They help us better to understand the needs and challenges of SMEs in construction sector.
And by the way, we also are maintaining a special stand within the exhibition.
So not today, but tomorrow we are inviting all the guests to see this stand as well.
Thank you.
Thank you very much.
Sitel, I want to bring you in because I could hear you muttering, saying, yes, I agree, I agree.
I want to hear your thoughts and how would you answer this question about what would be the thing that would drive most systemic change? No, I just want to concur with what Rafat is saying.
Absolutely.
Um, and in a way, I'm also answering another question about what mistakes did we commit in the 30 years.
So firstly, Rafat is correct.
You can't take these decisions and respond to the phenomena because it's a moving phenomena if you are not data based.
Because being data based and being data driven enables you to digitize things.
The digitization, which ordinarily was a scare crow and everybody was afraid of, I think it's an important ingredient to the solution.
It's transparent.
No one can say the deputy mayor is making decisions on behalf of his friends.
The digitization is there.
It's telling you everything and everybody can see it.
It's an important ingredient.
I must quickly hasten in saying, I think in our transformation for the last 30 years in South Africa, the one mistake that we've made is to become too expedient, if I may use that term.
We're too fast and trying to catch up with the world because we are a new democracy.
We ended up not densifying right.
We ended up using whatever amount of land that was there without creating the efficiencies, which include densifying the spaces like you were saying, just taking a hecta and ensuring that you're able to accommodate more than ten families in one hecta.
What we've done is to give each family X amount of hectors.
I think that was if we had digitized then, we possibly would have not made that mistake.
That's why I was trying to bring both of the solutions.
But yeah, I agree with what you're saying fully.
Let's bring in Gunnell next.
Don't be surprised everyone is going to have an answer here in the panel.
I guess now what I wanted to ask you on this point, but also this idea that we keep talking about how regulatory processes that are meant to enable often can end up delaying the delivery.
We take the risk by removing some of these safeguards that will push affordability further out of reach.
Where is that line and should we draw it? Yeah.
As a person who's a lawyer, so I and I know that even just in construction, without affordability housing and in a involvement of private sector.
Yeah, we should admit that sometimes the public authorities are not efficient, they're delaying in some giving the permits or whatever.
But, I would say, yeah, it exists, but despite these facts, still the private sector exists.
They continue to develop their own private projects.
It's not the obstacle, I think, exactly the obstacle for the continuing and scaling up the affordable housing.
I think it's a standard obstacle that any operation have.
The same as with the taxes, the same as with the customs, it's a day to day challenges.
What is missing, I think it's not one recipe for every country and for every city even Because when we were trying to understand what is the framework? What is the gaps? Every country, every city says different things.
For example, when we speak about Prague, they're saying, we are trying to combat the problem with the tourists and because of the number of tourists in the city, which brings money to the city actually from one side, but from another side, the local people cannot afford the flats in the city.
It's if we look the different country and different city, there will be absolutely different problems.
If we look to, let's say Azerbijan, I think, for example, even when I listen to the South African, I see that you have almost the measures that you have, let's say, as a government, you have been offered.
But where we have the lack, I think it's everywhere.
It's the involvement of the private sector and I think it's even right now it's a huge work that is done on the EU level, which are trying to a involve financing from the IFIs and to analyze to provide the strategies for the involvement of the private sector.
There is numbers of this collaboration with the private sector.
Most probably as I see, it's maybe more awareness, more information to the private sector, how they can participate, what it can bring to them, and from one side and from another side, it should be 100% a from the public sector, all these procedures should be simplified.
If we want to involve the private sector, it should be smooth from the side of the government, which is welcoming the private investors to participate.
From another side, it should be like clear transparency and Raf mentioned it's always exactly for many investors, it's more important that how the procedures works.
What is the precise, I know timeline or et cetera rather than any exemptions, for example, but more than stability.
Yeah.
Thank you.
I want to bring in the First Deputy Minister Mikolov now because this idea of similar challenges, but the same solution doesn't work across cities, across nations, keeps coming up back and back again.
I guess I wanted to hear from your perspective, one about lessons that your nation has learned from other partners and also the role that international partners can have and international partners from the private sector can have in helping contribute to building these systems we've been talking about.
Thank you.
And answering your question and taking a bit of previous discussions, you know, it's really interesting and you learn a lot from these discussions.
But coming to the case of Uuzekistan and as we are developing forward, we are coming across new things and new challenges and trying to find the solution to, you know, new questions.
One is that, you know, we found, you know, you know, this partnership is good, you know, is the importance of special planning.
Where you address a lot of issues which was mentioned about the master planning, which was also mentioned about the social isolation and which was also mentioned about the green requirements, other climate requirements shouldn't be barrier.
But in case of the special planning, what we are planning to do is that it should be a complimentary instead, it should be motivating.
And also, you know, give a lot of enough room for international partners.
So what we are doing is that with the support of World Bank, we start to ten global companies for developing the special plans for every region.
And so when we, you know, worked closely, you know, the one issue became, you know, very serious is that, you know, the land The population is increasing and you're losing the valuable resource, which is land.
Another thing is that you need a lot of infrastructure spending, but what's happening with the land value capture.
There was a huge problem that we have to resolve because you need more and more infrastructure for housing, et cetera, and of course, there was an issue of density as well.
From the other side, economic growth also requires the land.
You need the land to preserve the agriculture land for food security.
From the other side, economic growth and the population increases eating this land resource.
And so how we will resolve these things as well.
And so, you know, this tool mechanism, which is called a new concept, which is special planning, where you be more dynamic, more flexible, and, you know, visionary, this is important.
And this is, I think, something which is new and helps many countries and especially like Uzbekistan, you know, to find at the same time questions and to find the answers to the questions and put, you know, these solutions on the map.
So I think in a nutshell, this is very important.
And what is the practical aspect from this? You know, we started a small program with the World Bank under the PFOR Program for Results mechanism, and we picked up 16 districts where these districts are follow several disbursement linked indicators, starting with the right designing of the development agenda, the master plans, and following linking their investment programs based on these master plans.
And the master plan itself is a new concept and everyone has to understand that it's not you coming and saying that you're going to build a house here or there, it's you're learning and taking the information from the people, from the private sector, from the business, and based on their demand, you come back to the solution.
One important thing is that, you know, I will take your time, but this is very important that we learned is when we ask the French company, which is doing the special plan and the master plan for our Scandia and Cascadia region, joint companies, they want to tender for these regions French and a company from the United Kingdom.
They spent one or two weeks almost, going to the neighborhood, we call it Maha, talking to the people.
They came across with the a solution that the existing architecture and the placement of the apartment house we just inherit from the Soviet Union this architecture and doesn't quite reflect the real social situation.
Because in this Maklas people, they know each other for 100 years.
And there is no socialization in this housing design.
The second thing is that it doesn't reflect the issues with the energy efficiency like making it warmer in the wintertime and the cli, and if it is very hot, so are you going to make it cool in the summertime.
And another solution that we have been using is that it's greening the area.
We are using too much resources for reprocess the wastewater.
But instead, there are some better technologies where we can use this technical water for greening the area or rainwater, et cetera, so a lot of good energy efficient construction materials where we can use and it can be scaled up, et cetera having this special plan under them having the master plans and communicating with the people is very important.
One thing beyond this I wanted to add is that, you know, it is also linked with the previous question that, you know, what makes the balance of, you know, the designing the right housing policy? Maybe this is mortgage program, and what should be the role of the government? There should be the role of the private sector and the people themselves and I think the government is always interested in very good and efficient construction.
It's not only the utmost goal is, of course, providing the people with houses but from the other side, the house construction is the main driver of the economy.
And I remember that even COVID period, we first of all, tried to give permission for construction sector because construction is a driver for several sectors in the economy and government is always interested.
Private sector, yes, if you capture the land value in a balanced way, gives them, get the benefit from the infrastructure spending, increasing the land value, et cetera, so they will be interested, but we have to be careful with putting much more social burden on the private sector.
Instead, what we learned is that, you know, there should be a kind of a social contract with the people as well.
People, they have to have totally right that we have to send the right message not only to the private sector, but the people as well, that they have to work.
And of course, all has to be, you know, complement this stable economic growth environment as well.
So it's a complex issue, but it's interesting and pleasant exercise.
Thank you very much.
I want to make sure we have time to include Karina in the discussion.
Of course, it's towards the end that everyone has comments that they want to add, but it's a sign that we're up for a little break and more discussions to follow.
But Karina, the first Deputy Minister mentioned a few points that really lead to the work of your practice.
This idea of um, how master plan design and housing design can lead to socialization, can lead to better communities, the importance of taking into account greening the area and green infrastructure.
I guess I am really curious from your side if you are seeing clients coming to you prioritizing this and seeing these solutions as well, I guess, these options as part of the solutions that you can be, I guess, a conscious client wanting to deliver stunning master plans, but also while tackling the housing crisis.
Yeah, I guess I could start saying that those clients are one of my most favorite in our practice.
We do have such developers who determine landscape driven and master planning from the very start of the project.
There are a number of tools that, protect this understanding of what we need to deliver in order to make the quality of the project as well as the quantity of the units.
They usually support us in creating these tools in understanding the proper program for delivering public spaces so that they won't be leftovers off the land and buildings are planned They are also supporting us in understanding the performance based measures such as water retention, soil strategy, and all of these engineering work that has to be completed in order to understand that the public cost later will be much higher if we ignore these problems.
So yes, good planning deliveries of our priority is number one across these developments.
To more of those clients then.
Well, please join me in thanking our fantastic panel.
I wish we had more time, but time is against us.
Thank you very much.
Thank you.
We will take a short, I guess, now it's nine minute break and then we will be back.
If you don't want to get in the rain, just enjoy and we'll be back in 9 minutes.
Thank you.
Thank you.
Thank you.
I I.
Hey, one, two, E right here from art noth, Montag Desk, donna sack Fry tag, Zamzck Zon.
P me Pig they create a relative ser, create a relative liser on here.
Welcome back, everyone.
Welcome back.
That was longer than 9 minutes, do not say we don't allow you to relax.
We're going to be moving now into panel two, which will follow a similar format.
You know that at the end, there'll be another nine to ten minute break.
But yes, as we move into panel two, we'll be shifting from the enabling conditions of housing delivery to the question of actually what gets built.
Panel one, as we heard, focus on land, planning, and regulation, the foundations that make housing possible.
This session we'll be looking at materials, construction methods, technologies, innovation, and standards that determine whether housing can be affordable, sustainable, ideally, both.
The stakes are significant.
The building and construction sector accounts for roughly 34% of global energy related CO two emissions.
Nearly 60% of buildings the world will need by 2050 have yet to be constructed.
The sector is off track.
The question is not whether change is needed, but how to make that change economically viable at scale.
Three threads will shape this discussion, affordability versus sustainability.
Standards as either enablers or constraints and the persistent challenge of moving from successful pilots to real systemic change.
With that, let me introduce our panelists and join me in welcoming as each of them takes the stage.
First off, it is my pleasure to introduce Samir Mamadov, who's the country Manager for UN Global Compact, the world's largest corporate sustainability initiative, engaging over 20,000 companies and organizations in more than 160 countries.
Thank you.
As long as it's not this one, you sit wherever you want.
Thank you.
Up next, we have Gul Nader, who's the head of Secretariat at the Global Alliance for Buildings and Construction, is the primary international platform for accelerating the decarbonization of the building and construction sector operating under UNEP.
We continue then with Sergius Stykv, the CEO of Wholesom Azerbijan part of the Wholsim Group and one of the largest building material companies operating across more than 60 countries and increasingly repositioning around sustainable construction and circular building solutions.
The next panelists joining us is Alexei Spirin, the Director of Climate Regulation and International Certification Department.
Please join me in welcoming them to the stage.
It's the world's largest aluminum producer outside China and a core operating company within EN plus Group, which combines one of the world's largest hydropower businesses with a major low carbon aluminum production base.
Lastly, but not least, we have Perisa Klotz, who is the CEO of Smart Sylvan, a startup working at the intersection of nature based solutions and sustainable urban development.
Thank you all for joining us.
Now, I need to swap microphones.
I forgot that it's not attached to me.
I'm used to having one of those and I can move freely.
As we know, there's a lot to get through and I want to make sure to leave enough time for everyone's remarks and for an honest conversation at the end of our panel.
Perhaps to get us started, I will turn to you, Samir first and if I can find my note, where did the page with your questions go? There we go.
Now, Samir, I want to ask about this idea of corporate sustainability, often can be described as low hanging fruit for shareholder value and improved operational performance.
So if that is true, why is it still an aspiration rather than an industry norm? What are the underlying challenges that prevent the acceleration of sustainable construction as an operational approach? Thank you.
Welcome to everyone on this beautiful rainy day.
I did speak about this shortly at the opening and I was asked to share expectations from Wolf 13 and the expectation is around private sector.
It's not only sustainable, green, affordable construction, it's operational sustainability in general that unfortunately is still perceived as something that goes in parallel to shareholder value instead of being part of a shareholder value.
And I don't mean it in a sentimental way.
I mean it in a very much commercial way.
So for as long as sustainability finds its place in a PR and a corporate responsibility part of budgets, it will have to be promoted.
I will have a job for as long as that happens, right? And I would love to lose my job because corporate sustainability is in an operational part of the budget, where the owners, internal owners of corporate sustainability are chief financial officers, commercial officers, the CEOs.
Then the question is, if it's a low hanging, if there's a way to capitalize on sustainability in a business sense of it, why doesn't happen naturally? Well, there's habits, and I think we as humans are lazy in a sense that will go the route of the least resistance.
I think that's the honest question.
We usually find ourselves in a situation waiting for either regulation to pressure us or for emotions to lead us that way.
For as long as we look at sustainability as something inevitable in a sense that we will have to deal with sooner or later, and hoping that it may pass by, it will pass by, but it will pass by as an opportunity.
If we don't ride that wave, it will be an opportunity that will then turn into the norm of the market, yet we're not there to capitalize it.
Now, I spent most of my career working for a great organization called Save the Children.
In no way I canceled the emotions, in no way I canceled the individual responsibility.
That's absolutely there.
But the corporate sustainability is not about sentiments.
For business, it is about planning.
It should not be on the slide shows, it should be in P&Ls, it should be in Excel spreadsheets.
My expectation of this wolf was that there is more private sector engagement, in fact, there already is and I'm seeing that.
Then the investors, CEOs, CFOs that are here today and across this week walk away with the notion of, how do we capitalize these conversations? How do we capitalize on these new ideas and how do we promote this further in the business community for the business community to again, view it as nothing but a risk of lost opportunity? I want to stay with you because this is quite a fascinating figure, the one of that 60% of the buildings needed by 2050 are yet to be constructed.
With this context, what should be the approach then to integrate sustainable construction practices in Azerbijan and in the region as a whole, when you have such a daring number in front of you, It's not my area.
I will not speculate on technicalities, but one thing I want to stress is that private sector when it comes to sustainable and affordable housing should not be viewed as a contractor.
It should be not just viewed, it should be treated as the driving force.
The analysis, the planning, the design with the advocacy and policy change should be coming from the private sector.
For as long as the private sector position itself or is positioned as a contractor and only bids at a tender to implement it, we will be guessing, we will be looking back, we will be fixing the mistakes of the earlier planning cycle.
If there's one wish or advice or wish I have is for private sector not to come into play when the bidding is announced, but be there with policymakers to influence those decisions.
Thank you.
Let's bring in Glnada next into our discussion.
Now, you were at the global ABC Sustainable Buildings and Construction Summit in Lausanne, where the built environment community debated how to make low carbon construction the norm rather than the exception.
What conversation tell you about whether the industry is genuinely considering and working towards closing the gap between sustainable and affordable? Or did you come out of the summit with a feeling that we're still treating them as competing priorities? No? Thank you so much, Cota.
Well, first of all, maybe to colleagues to explain what this global alliance for building construction is.
It's 380 organization where actually 38% of the membership is private sector.
It is governments, researchers, cities, and the private sector working together in that community.
In a very operational practical level, we have a thematic working groups, hubs who are working together, developing products, developing pilot projects.
Also, in addition, there is also intergonmental committee on Buildings and climate, which is intergovernmental platform on the top.
Where we're working with the policymakers directly.
Therefore, just to explain that Lausanne building construction summit which took place now two weeks ago was this meeting of that community of many governments and it was organized actually with the EPFL.
It is political de Lausan which is actually famous for it, for the low carbon cement.
Indeed, the main message was that you cannot really a detach affordability, sustainability.
I'm very happy that here in this room, we have the same discussion.
I mean, I feel it's continuation of discussion and I also mentioned to Samir before the start of the meeting that maybe as we did last year before COP, this business assembly should not be just an event, that we should really go and continue going until at least CP 31, at least it's this year objectives to continue the discussion because this discussion is very, very important to bring together indeed sustainability, climate neutrality, and affordability of the housing.
And why it's important.
I think it was very good to have the previous panel where, you know, colleagues were speaking about planning and, you know, cost of the construction.
And I also appreciated the South Africa presentation about the informality, because most of the construction will be driven by the informal construction.
It will be huge amounts of it.
Of course, this is communities who don't have much money, who prefer the cheaper materials and maybe the local developers prefer cheaper materials, but then it will be people, those vulnerable groups representatives who will be paying the costs of how to address the floods, the heavy rains, extreme heat.
Therefore, that affordable housing which is not sustainable, will be much more expensive with the time.
Therefore, I agree with the previous speakers that the developers should not be left alone without a regulatory framework, without trained specialists, without the financial financial mechanisms.
This is why global ABC exists.
In order to have this discussion, facilitates the discussion among all the stakeholders and the government.
But in terms of the global ABC, what the three key topics which came out of Los Anos and Buildings and Construction Summit was first of all, thematically, we speak about thermal performance and passive cooling.
Passive cooling topic, especially is coming from the developing countries we're working very intensively, for instance, in India.
But this extreme heat is coming very much to Europe as well.
And the passive cooling like ventilation, shading, greening is cost effective, but if it needs to be taken in the composition with other more hard measures.
We're developing quite many of the guiding documents, policy documents, but also training programs on this topic, how to provide thermal performance and passive cooling.
I think this is the first topic we're working with this big community as a priority.
Secondly, we're working to reduce emissions from materials.
Of course, cement, steel, other materials is a major part of the sector's emission, and this is where we're looking into all different materials, of course, and this is where sufficiency, one of the big topics, how to build more with less.
For instance, our office is in Paris, so I think Paris Olympic Games was a super good example.
You know, where lots of module construction was built, lots of infrastructure was constructed, everything was dismantle and shipped on other locations.
So something like this is definitely a priority.
And the third priority, of course, what was discussed probably in the previous planning, how to connect urban planning tools, water, energy, sanitation, green spaces with the building.
So Building shouldn't be treated separately, and I agree with Deputy Mint for the Pagestans that urban planning is sometimes underused.
A tool, which we were using a an old way and we definitely master plans, we should be using much more effectively, but bring together with the materials with the efficiency, with the passive cooling, and this is why all these communities are very important.
Saying with you, Golna, this idea of, I guess, sustainability standards, as we've heard so far, they can both act as enablers or might be viewed as constraints.
I wanted to get your take on that, from the work and what you observe across your network.
What makes the difference between a standard that transforms the market and one that just adds a compliance burden? Yeah.
Thank you so much, Carlotta for this question.
One publication will be launched actually on Tuesday, which is a global status report on building construction.
It will be Tuesday at 12:00 P.M.
We're looking actually into the whole development of the sector, including the building standards.
But indeed, I think there is a parallel with the urban planning discussion, I think for the building standards as well.
When the building standards taken alone in isolation, it is a burden.
And it's not implementable, but it needs to be very transformative and we recently published nearly zero emissions building standards publication, which is the global ABC website, which is looking exactly on what these transformative standards are.
Basically, it's very important that first of all, they are looking at both climate mitigation, climate adaptation, looking both into the mitigation aspects and the resilience.
It has to be very, very comprehensive tool.
It needs to be flexible because obviously, as we all in this profession knows there is no one standard which fits all.
Uh, so they have to be flexible to the local communities, but also they need to be connected to the finance and also to training.
For instance, one thing what global is doing right now, we're creating a consortium of several universities like the best universities working on buildings, which will be running construction thematic trainings for professionals so that How to develop standards, how to implement the standards, how to connect to finance and implementation, it's also done by professionals.
The private sector is not left really without experience, but also qualified experts.
Granada, thank you.
Sergio, if I could come to you next.
One of the persistent barriers to sustainable materials in affordable housing is the upfront cost premium.
What would it take to make sustainable materials the economically rational default choice for developers that are building at volume and at scale, particularly in emerging and transitioning markets like those across the South Caucus and Central Asia? Yes, Carlota, thank you very much for the question.
Indeed, a good one.
Let's start by accepting and recognizing one important issue and probably the most challenging one.
If we want to make affordable housing sustainable available for a lot for most people, so we have to change the paradigm.
Now, we have to understand the cost of construction a bit deeper.
So in our industry, we think about not only about the initial investment, but we think about the total cost of the lifespan of the construction.
So initially, if we think that we invest small money in order to build cheap, it doesn't truly means that it's a cheap construction.
So we have to calculate and to take into account the maintenance.
We have to calculate and take into account the cost for cooling or heating of the house, and at the end of the day, if the total cost is much more expensive, so it means that this is not a truly affordable house.
Now, we at wholes will look to this question from a different standpoint.
So we look beyond the price tag of materials and construction services, and we investigate, I would say at four level of elements that contributes to the total cost of construction.
Now, first of all, we speak about smarter design.
What does it mean a smarter design? The most sustainable cubic meter of concrete is that one that is not used.
Traditional construction means heavy investment in massive beams, massive columns, a lot of concrete that not always are efficient.
Now, what we have to do? We have to switch the paradigma from mass construction and strength through volume to strength through design.
I'll give an example.
Ribbed shell structures are more efficient and less carbon intensive by 17%.
And can reduce the mass of the concrete by 50% only by adapting the geometry of the concrete structure.
And this create multiple effect.
We reduce the weight of the construction.
We reduce the dimensions of the beams and the columns, it means less investment in the foundation, and at the end of the day, so this is the less cost for the end user or for the constructor.
This is not a category, this is a concept which has been proved by practice and this concept have to be scaled at the level of affordable housing projects.
Secondly, it is about the connection or the availability of local low carbon materials.
So we believe that cement and concrete will remain essential materials because they are durable, scalable, and available locally.
Now the challenge is how to make them low carbon.
Globally, at whole steam, we reduce the clinker content in the cement.
We use alternative raw materials, we use circular materials, and we do it at global scale, but we do it as well in Azerbajan.
In Azerbijan, there are already available low CO two cements, low CO two footprint, road solutions that saves up to 50% of the CO two while constructing the erotic infrastructure for those materials.
As well, we aim further to promote and to implement the larger utilization of construction demolition materials as alternatives to virgin aggregates.
This matters economically.
Why? Because this reduced the impact of the logistic cost.
This reduce the variation of unstable supply chain and of course, volatile price of energy.
The third element in our approach is the industrialized productivity, and we believe that affordable housing requires speed, quality, and smart resource management.
Now, in the traditional way of building house, the process usually is slow.
It generates waste and it's quality inconsistent.
The solution is to appeal and to utilize more dry mortars, ready made concrete, which are industrially produced by dedicated teams and the processes.
As well, we believe that the digitalization in the construction is the next level of bringing sustainability and floatability on the construction side.
There is, again, an interesting example to share with you.
In East Africa, we already use the three D printing technology.
To build walls that allows us to build walls for standard two or three bedroom house.
In less than 24 hours.
This is amazing duration.
This is amazing financing process because this reduced the cost and it makes quicker house available for the market.
Finally, we speak about resilience and life cycle value of the building.
The cheapest advanced investment at the initial stage, again, doesn't mean that it is affordable house during the full process of the construction.
Then low income families, they suffer the most because of high energy bills, because of poor insulation and overheating.
Again, at the end of the day, this generates extra costs.
Now, our belief is that we have to think system wise.
We have to see the construction process from the starting point until the end and to visualize the concept itself, not as separate stages, but a full process that allows to build and control the budget and the cost at each level.
Now to conclude, if we combine together, optimized design, local materials with low CO two footprint, industrialized technological process on the construction site, and digitalization, so we bring the sustainability and affordability on the market and we make it available to entire types of consumers from low income to more developed entities.
Sergio, thank you.
Alexei, coming to you next, in many cities, construction and demolition waste represents more than one third of total urban waste.
While materials like aluminum can be recycled indefinitely using around 95% less energy than a primary production.
I wanted to know how we can, in your experience, in what ways circular construction materials and recycling systems reduce not only lifecycle emissions, but also long term housing costs and this cost volatility that we've been talking about for cities and for households.
Thank you for your question.
I'm representing here aluminum company and maybe aluminum industry as it is.
I will talk about aluminum specific topics.
Circular materials such as recycled aluminum simultaneously reduce greenhouse gas emissions and build a resilnt economic model for housing.
The environmental savings are massive.
Primary aluminum production generates 12 16 tons C two equivalent emissions and requires the similar amount 12 16 megawatt hours electricity per ton of aluminum.
In contrast, secondary aluminum produce only 0.5 tons of CO two and use just 5% of electricity required for primary aluminum production.
In Europe, the share of recycled content in construction aluminum already reached 75 95% with carbon footprint less than 2.5 tons C two per ton of aluminum, that is five times less than global average for primary aluminum.
For households, it's beneficial to use aluminum as a material.
The financial benefits are direct and significant.
Modern aluminum windows with sternal breaks cut heat losses by 40, 50% and each save 2400 annually on heating for typical European flat apartment.
I Furthermore, aluminum facade system last 50, 80 years with minimum maintenance.
Whereas plastic facades needs repairing every ten, 15 years, a quality deep retrofit typically pays back within seven, 12 years.
Prime example is empire state building constructed in 1933, whose original aluminum facade remains intact without replacement.
And circularity also reduced price volatility.
For instance, primary aluminum prices fluctuated between 1.53 $0.8 thousand per ton of aluminum recently.
The secondary market shows roughly half that volatility.
And this stabilize cost for cities, of course.
Recycling construction waste is also important because you need to pay for landfill waste and recyclability will reduce, of course, payment and reduce fees for that.
For instance, in Amsdam and Hapagen if you use recycled aluminum, it will save 30 50 euros per ton of landfill fees.
Additionally, design for disassembly preserves 60, 70% of residual value of materials.
This is very important, especially for aluminum because the main problem for recycled aluminum is contamination of different metals like steel, copper or others.
A usage of aluminum, it's difficult to to produce appropriate alloys because secondary aluminum contaminated by different materials and it's very difficult to make appropriate alloys from them and it's required special efforts how to purify such kind of aluminum or you need to melt it with primary aluminum with a certain proportion.
Of course, it's a big problem and design for disassembly allow to segregate waste In the early stage and separate aluminum for particular alloys and use it in appropriate way inappropriate alloys after usage, and it will reduce, of course, cost for recycling.
All of these allow cities to predict expenditures and reduce costs for housing.
Can I ask you a question of someone who knows nothing about aluminum industry? Definitely not as much as you do, but the numbers and the figures that you're mentioning there, they're quite impressive.
Being a company that's the world's largest producer of aluminum outside of China, the potential there to really have an impact in the future of cities is huge.
I wonder, using it as a material for developing housing at scale, what is the impediment you're having when you're talking with contractors, with developers, with institutions or governments.
What is the convincing that still needs to happen? Sorry, I went off script.
I just got curious.
Okay.
So What I might say, my concern about using of aluminum in construction and what is the problem, why it is not so widely used.
Of course, aluminum is quite expensive more expensive rather than, for instance, steel or concrete or whatever.
By the way, from what I think about that policy, public requirements still evaluates material based on upfront capital costs rather than whole value chain.
This automatically leads to disadvantage for usage of circular material like recycled aluminum and because nobody thinking about overall costs, unfortunately, and the What I might say, of course, will be profitable, I say, it will be implemented anyway.
If not profitable or maybe some restriction exists or barriers.
In that case, of course, it's necessary to have some motivation why you need to use it.
And one of the motivation could be of course of construction standards.
For instance, worldwide, not so much country use such kind of standards in respect to the emboded carbon.
For instance, in Europe, there are only five countries which use such kind of standards like France, for instance, where our E 2020 mandates cap for 190 kilogram C 2/square meter.
If you construct that you need to fulfill it.
But this required for construction, you need to achieve it by 2031, and it will reduce around 30% of emission compared to 2022 level.
From my understanding and opinion, I think that governments need to have a goodwill and need to establish some kind of regulation or standards for construction to use such kind of materials because without that, it will be difficult to change mind of developers, of the companies who construct anything.
I think it will help to go forward.
Thank you very much and thanks for taking a question that wasn't planned, but we keep going back to that idea of standards as either enablers or something that's in the way of innovation and it was interesting that we ended up there again.
Perissa at the very end, hi.
Thanks for listening patiently.
I always feel bad for the person at the very end.
But I really want to know more about your company because it sits at this fantastic intersection of nature based solutions and sustainable urban development and The honest challenge for the housing sector is that green infrastructure, living walls, urban canopies, biodiverse landscaping is still perceived as a sustainability premium that affordable housing programs simply cannot absorb.
Where do you see the tipping point where these solutions become commercially viable at volume? What do you think you need to change so that they're not perceived as they are now? Yes.
I think the tipping point comes when green infrastructure stops being treated as visual and architectural premium and it starts being treated as measurable climate infrastructure.
We know that in many housing projects, greenery is added very late in the process.
They're often part of landscape budget, and they are one of the first things to be reduced when costs increase.
Its value is described in quite general terms like biodiversity, sustainability, quality of life, beauty.
These are important, but they're not strong enough to survive the pressure of affordable housing budget.
So I think the real shift will happen when we measure green infrastructure in the same language as the rest of the housing value chain while we are putting people at the center of the measurement.
For example, heat reduction where people wait, walk, gather, shade hours when they are most exposed, avoided cooling demand, lower health risk, better long term asset performance, and many other things.
I think the real change does not happen only when the technology works, it happens when business model, operational model, as well as financing logic become scalable as well.
The green infrastructure becomes commercially viable at a scale when it moves from being treated as a cost item to being understand as a performance layer.
That matters because affordable housing cannot vulnerable housing.
Housing is not just to provide a shelter, housing is also about to create places that people can live there safely, comfortably and with dignity.
The problem is not that green infrastructure has no business case.
The problem is that the business case is often hidden in another budget like energy, health, resilience, long term asset value.
This is exactly how we think about the smart Silvan.
At a smart Silvan, we are developing mobile green climate infrastructure.
We are combining real trees with technical platform and environmental sensing that they can deliver shade and cooling where traditional planting is impossible due to underground infrastructure, high cost of excavation and many other reasons.
We are not basically replacing traditional urban forestry.
The cities must plant permanent trees wherever as possible and as much as possible.
What we are doing, we are addressing the gap between climate need and physical limitation of the cities, especially where shade and cooling is needed now, but permanent planting cannot happen exactly where heat exposure is highest.
So I think one important thing is often overlooked.
Affordable housing does not only need cheaper building, it also need places that can remain livable over time.
When the heat stress increases, for example, the outdoor areas like courtyards, entrances become part of the housing performance.
When these places remain unusable during summertime, the housing environment loses its value even if the construction cost was too low.
So I think commercial opportunity is not just about to add more greenery, is also about to create measurable climate performance systems that developers, housing providers, municipalities can plan and operate as a part of housing value chain.
So to get there, I think three things need to be changed in the housing value chain.
First, climate comfort needs to be integrated much earlier as part of site planning, public space, energy, mobility, long term operation rather than later stage landscape addition that we heard it in previous panel as well.
Second, we need to move from square meters of greenery to hours of protection.
Instead of asking how much greenery is included, we should ask how many people are protected from heat? How many hours of shade are delivered, which places remain usable during peak heat? And third one, the deployment needs to be modular and financially realistic.
Of course, affordable housing cannot absorb high risk innovation at once, so the solutions need to start practically and over time at the different layers.
To conclude this part, I think the question is not about that we can afford shade cooling, risk reduction livability.
The real question is about whether housing can remain affordable without them.
Thank you.
That's a great way of going into our discussion part, which I know that Gulnar is already ready to comment on, please go ahead.
No, actually, I appreciate it, Paris, you're bringing into the discussions on nature based solutions.
Actually, as it is already, we are also secretary to the so named Cool Coalition, which brings together 330 organization with lots of private sector where we are really trying to push this approach of having the NH based solution as a part of shading and ventilation, part of this affordable housing, which brings really more health and dignity of population.
We're also implementing projects in India.
Where we have already calculations that combination of low carbon, local materials, and shading brings up to four decrease of the temperature for the extreme heat.
On 4th of June here in Baku, there will be the World Environment Day celebrations, where we will be also launching an awareness initiative named 50 cities at 50 degrees.
This is actually led by many big cities where they are looking into kind of how they can react in the situation of the 15 50.
For instance, our offices in Paris.
For instance, we had this summer last year, and then what the city government did was they opened parks for later, they prepared the health facilities.
Lots of things actually already operational taking place, so we'll be really happy to continue discussing and also would be really happy to tell more about this 50 treaty initiatives because so many countries already suffering from 50 50.
A based solution is really the most cost effective way to address this issue as a part of this affordable, dignified housing.
Thank you.
Thank you.
Also to say, we have a microphone somewhere in the audience.
So if anyone has questions, raise your hand and I'll try to catch you and introduce you into the conversation because we want this indeed to be both ways.
We're all here to lean in on the expertise of each other.
Perhaps coming to you, Samir next because these points that we've been raising, green infrastructure, circular materials, and low carbon construction, we know that they're no longer niche.
So I guess we've touched upon why they may still be treated as optional features, but I guess who needs to move first to change it? Is it the regulator, the developer, the financier, the standard setter, in your opinion? It's simultaneous.
I mean, we can go to grassroots and create a demand and not deliver.
We can go to regulation, create a regulation, and create the infrastructure that is not usable or affordable by the grassroots.
It is really it really is simultaneous.
Now, I think what's lagging behind at this point or in this part of the world is demand probably.
I mean, the regulator knows the business is preparing and now again, whether out of sentimental compliance or commercial reasons, that's another conversation.
But businesses get and usually businesses fast to catch up on things.
I I don't think the user, the consumer is there yet, and I think that's missing pieces that we assume everyone knows.
We assume people sit around and wait for affordable and green and sustainable housing and infrastructure.
But in reality, I mean, even the terminology is not there, it's not accessible.
One of the areas not to say first or second, but one of the areas to focus on now is to educate the communities what the what the course is, what the challenges are, what to expect to create demand management.
When you talk to business about this business usual is as well, but there's no demand, and they're not necessarily wrong.
One area I would draw the attention is to prepare the mindset of the communities and grassroots, the end user, if you would, especially in the world that sort of consignment purchases of properties is kicking in.
Again, I'm talking about Eurasia in particular.
The dissolved upfront costs and the importance of low maintenance and running costs, the utilities is yet to be broken down and sold to the communities, right? And I think that will be a major leap forward where the constituencies then demanded on their elected policymakers and then policymakers reach out to private sector for consultation, and I think that's where the natural cycle starts moving as opposed to the activists or the regulators trying to enforce this.
It's an issue of branding almost.
Always is though, isn't it? It's an issue of perception, let me put it this way.
Serge, I want to bring you in here.
I saw you nodding.
I don't know if you have anything to add to these comments, but if you do, please go ahead.
If not, I'll ask you a question.
Yes.
In fact, I will take over the comments that were mentioned before.
Now, of course, the private sector can move ahead.
This is the evident case of whose in Azerbijan.
In 2022, were the first launching the green cement in Azerbajan -50% of C two reduction in rapport with ordinary portland cement.
Two years later, we are the first introducing the concrete with lower CO two footprint, again -50%.
Now the challenge that we face is the lack of demand.
Now the way forward is to have collaboration with the regulator, because we have to introduce to move ahead, we have to have in public tenders specific criteria that are related to sustainability, CO two reductions, lifespan of the building, and the total cost of the project.
Secondly, we have to change standards because standards are not up to date.
We still have standards in the industries that are dated to 16 years ago and those standards do not reflect the situation related that follows the innovation and the progress.
Now, in order to motivate further the implementation of sustainable solutions, so we have to embark developers.
But we have to have a system of motivation or to incentivize them, and here is the role of financing the sector.
Because altogether, sustainable buildings cuts down the bills, they protect the family and the city from extreme weather conditions, from extreme variations from the cost of electricity or gas supply and so on.
This is not reflected in the cost of the law.
Now is required as changing the setup of the cost of the capital.
Lastly, We have to rise the awareness because private sector can introduce the materials.
Innovative solutions can be brought on the market.
But at the end of the day, we have architects, designers, urban planners that have to reflect those solutions in the design project of the city and of the house.
Now, we have to bring together government bodies, industry, and academia as well.
Yeah.
Just a quick one Azerbijan has started already to use of capital access to capital, but also cost of capital as stimula although it's in a pilot stage and mainly focuses SMEs and absolutely I think that would be instrumental in getting things moving.
But let me ask you a conceptual question.
You first say in Green Cement and Azerbijan the genuine question, why? For two reasons.
Reason number one, Azerbaijan took some commitments in the report of CO two reduction initially by 30% by 2050.
Secondly, but as well important for us, we as whosim group, we have specific CO two reduction targets that we took as industry.
Now, we as forum Azerbaijan, we follow both strategies, the country strategy and the group strategy.
Once we started to investigate the process and the construction activity that happens on the job site, we understood that cements not always are used in accordance with the application.
There is over design, there is overspend of material, and this overspend of material increases up the cost, but do not deliver the right quality.
Okay.
Then we started to think to digest a bit.
We brought from developed countries some best practices here in Azerbijan and we developed some named a mortary cement that is used to build and to plaster walls.
This was the first product that we launched on the market in 2022.
We are proud to confirm that this was one of the first cement low CO two footprint that was used for reconstruction of Karabakh.
Okay.
So the mobile was in two parts the country strategy and group strategy.
Thank you.
Thank you.
Any questions from the audience? What if we throw in an umbrella that make a difference? Hey, they're really good.
If there's no questions, I'll have one for Perissa at the very end because I made a note of what you were saying about that climate comfort needs to be incorporated much earlier in the process.
I love this idea that when heat increases, courtyards and outdoor areas become part of the living area, they become part of the house and an extension, this idea of a public living room.
I really wanted to ask you about this idea that we know that the households that are most exposed to heat stress, flooding, and energy poverty are also the same households that are at least able to absorb a cost premium in their houses.
How do we ensure the sustainability transition is reaching those people? How do we ensure everyone is part of this process? Because as you highlighted, it impacts quality of life for everyone.
I think this is the responsibility of all stakeholders.
This is not just responsibility of the private sector.
I think the responsibility has to be shared.
For example, in our case at a Smart Cellvan, developers need to design for term comfort from very beginning as already mentioned in several by several panelists, municipalities should identify the high risk areas and also enable deployment where traditional planting is impossible or too difficult in our case.
Also the regulators have to move towards performance based standards.
So performance based standards means that instead of concentrating on actually the methods that we are using to achieve the result, we have to concentrate on the results.
So as I already mentioned, how many people are protected and basically seeing this as a kind of baseline service, not as an optional sustainability, features.
So the real baseline is, as I already mentioned, is not about to add more greenery.
The real baseline is protection from heat.
So when we are providing this platform for the people, any way, people are going to benefit out of that.
They are going to leave there.
Let's say the housing environment is remaining safe, not sustainable, in that case, safe, actually livable, as well as human under the new climate condition.
And of course, for example, in our case with our experience, I can share with you the real challenge is not about whether the technology can provide shade.
So as a solution provider, we can develop mobile green infrastructure, the safety concept, um, their operating model, as well as the measurements of climate comfort.
But to scale that, developers, municipalities, as well as regulators has to develop a framework for deployment and ask themselves, how we are going to integrate this solution into that particular site or the target public space, how we are going to finance it or contract it, how permissions are handled, and of course, how it's climate value is measured and measured and also accepted.
So the goal is not greenery as decoration.
The goal is terminal dignity.
As I already mentioned, the housing environment that remains safe, comfortable, and also human under the neo climate conditions.
Thank you.
Thank you very much.
As always, the clock is against us just as we're getting started.
Now I could see people nodding along, but unfortunately, that's it for our panel.
So let's recap a few quotes that I was writing down as people were speaking.
I think it was you, Samir, who said at the start that private sector when it comes to sustainable and affordable housing should not be viewed as a contractor but as the driver.
Then Gulna talking about affordable housing that is not sustainable will become expensive over time.
Then Sergio here, we have to change from mass construction and volume to strength through design, which I think is a very important message.
Alexei then talking about putting this challenge to national governments to set ambitious standards that can really help with this transition.
Then, of course, Marissa talking about the importance of nature first and, you know, challenging all of us to think about if housing can remain affordable without nature based solutions.
There were no questions now, but they'll be around if you have them in a less public setting and we have a panel next.
We'll take a short break.
But for now, please join me in thanking them for such a fantastic conversation.
Thank you.
Welcome back, everyone.
Welcome.
I bet you're regretting not asking a question now and getting that free umbrella? You have another opportunity.
Again, we will be opening the floor to questions.
If you do have any, start thinking about them because we want the conversation to go both ways.
Now, we're going to be moving into our final panel to complete this By Assembly's journey through the housing value chain.
A quick recap, Panel one focus on the planning and governance conditions that make housing delivery possible.
Panel two examine the material technologies and construction methods that shape what gets built.
The final discussion will be turning to a critical question, what makes housing truly livable after construction is complete? Because as we know, a home without reliable energy, safe water, sanitation, transport, or digital connectivity does not meet the standard of adequate housing.
The scale of that gap remains enormous.
Around 2.2 billion people still lack safely managed drinking water, 3.5 billion lacks safely managed sanitation and access to energy and digital infrastructure also remains deeply unequal around the globe.
At the same time, residential buildings account for nearly 80% of global emissions.
This panel is not asking whether these gaps must be closed, but how who coordinates delivery, who finances it, and what models can operate at the scale the housing crisis truly demands.
Three threads will guide this next discussion, the sequencing problem of infrastructure arriving after communities are built, the adequacy gap that remains invisible in many housing metrics, and the opportunity presented by digital platforms also to scale faster than traditional infrastructure systems.
In a second, I will invite our panelists on stage.
But first, we have a keynote address via videolink by Akanska Sharma, who's the head of climate tech and digital utilities at GCMA, the global body that represents the mobile industry across more than 220 countries.
Do join me in welcoming her via videolink.
Thank you.
Hello, everyone.
I hope you all can see me.
I've been listening in the previous two panels from London.
Unfortunately, I can't be there with you today.
I do have a representative from the GSMA in the team today.
I mean, you'll see her on the panel.
It's been a great conversation, undoubtedly, and also thank you to the moderator.
You've been doing a fab job.
I am delighted to be here and to set the scene for what I think is one of the most important conversations we can be having right now.
How do we actually complete the system? You know the system I'm talking about.
How do we align housing, services, and digital infrastructure so that the cities work for everyone? Look at any fast growing city in Africa or Asia right now and you will see a paradox.
People have smartphones.
They are using money on their mobiles, be it mobile money or through wallets.
They're streaming video on four G, sometimes five G, and yet, they're walking kilometers for clean water.
They're cooking on charcoal inside their homes.
Their children go to school by roads that flood every rainy season.
That's the paradox I want to start this afternoon's conversation with.
Come to think of it, we've never been more digitally connected and yet billions of people still cannot access the basic urban services that make a city livable.
There is a gap, and it is widening between the digital infrastructure that we have built and the essential services that the infrastructure should be enabling.
As the GSMA Digital Utilities Program, we frame this challenge in six words.
We say that the services are unaffordable, unconnected, unreliable, unaccountable, unplanned, and unsafe.
We just got the numbers from the moderator as she started, but around 700 million people lack access to basic water services and a vast majority of them live in Sub Saharan Africa, South and Southeast Asia.
3.5 billion people live without reliable access to electricity.
In city after city in low and middle income countries, the poorest 20% spend a disproportionate share of household income just to get around, not to thrive, but just to move.
It's getting harder, not easier.
Often, there is a debate that, it's a development story.
I would argue that this is not just a development story.
This is very much a climate story because the communities that are bearing the heaviest burden of these failures are the ones that are most exposed to climate shocks, floods, heat, displacement, and they contribute the least to this problem, despite their position to suffer the most from it.
So when we talk about digitizing urban systems, we're not talking about a tech project.
We're talking about survival infrastructure.
What gives me optimism and I hope La will talk about it a bit more as well, for the first time, the foundational conditions for digital transformation at urban scale are genuinely in place in ways they were simply not there a decade ago.
Think about what has happened in the last ten years.
Mobile connectivity has expanded dramatically across low and middle income countries.
There are now more connected devices on the Earth than there are people.
The mobile money ecosystem circulates a vast amount of money.
It's a financial infrastructure that simply did not exist 15 years ago.
It was built not by banks or governments, of course, with them, but it was built by the mobile industry, serving people that formal finance had pretty much written off.
I'm not trying to make a case between, you know, who led it, who worked on it the most.
But the point I'm trying to make is that the private sector can really do wonders if they put their mind to it.
In terms of the digital connectivity, again, more people have devices, more cities have networks, the infrastructure layer connectivity, identity, payments, they're all increasingly in place and the policy landscape has also caught up.
We've seen strong national digital programs create real structures for city level implementations, albeit with their problems, with their misgivings at times.
But there are models that are being studied and adapted across low and middle income countries, increasingly also in Africa.
Um, my team did a research piece last year and the research piece was called Digital Foundations for Smart Cities.
The research showed that we are at a genuine inflection point.
The question is no longer whether the tools exist.
The question is whether we're using them to close the right gaps.
And so if I can be more specific, I mean, smart cities is one of the terms that can mean everything and therefore sometimes mean nothing.
No point of guessing what kind of conversation I want us to avoid today.
But let me be specific.
Like if you think about affordability and payments, I just mentioned mobile money.
The mobile money ecosystem now processes 2 trillion in transactions.
Annually across 2.3 billion registered accounts.
It's not a statistic.
It is a platform.
In the past decade, mobile money providers have opened up their systems such that utilities, governments, developers can plug in directly.
What that means in practice is that a utility, maybe a water utility, can collect revenue digitally at scale, at low cost.
It can reach households that no cash based system could ever serve efficiently.
Think about India where digital public infrastructure is gaining traction.
India's UPI, the unified Payments interface, now handles more than 80% of the digital transactions in the country.
The model for targeted subsidies, user based pricing, in real time disaster relief, it's becoming a genuine template for other markets.
I would say that again.
I'm not trying to paint everything in a shiny light.
They all have their faults, but these systems are in place.
Affordability and payments are getting easier.
When you think about connectivity and planning, again, going back to the six challenges I said, we don't plan really well, we are not very well connected.
GIS can map service gaps at block level.
So that means that the city can finally see precisely where people are being left out and coordinate across utilities, transport, health to reach them.
AI will also help doing the subscale.
There will be traffic optimization, there will be load forecasting on smart grids.
It's in the works, but it's progressing urban heat island monitoring.
Live use cases are currently being trialed from Lagos to Jakarta to karate.
And why is this happening? If you look at the digital infrastructure, 2020-2024, smart city IOD connections in these LMIC, so Sub Saharan Africa, South Southeast Asia grew 173000000-71 million.
That is meters, sensors, monitors, turning reactive service delivery into proactive management.
So you are able to see what's happening, how RSS is being consumed and react.
In India, the partnerships between mobile operators and utilities have accelerated smart meter rollout, specifically to cut losses and improve revenue collection.
This is mainly for energy utilities.
Instead of waiting for a water main to fail, sensors can flag it before the pipe bursts.
Again, the last one and I won't take a lot of time.
I know we are running a little late here due to the storm.
One of the most important shifts that's happening right now is the move towards open networks.
Um, again, if I were to code the unified energy interface in India, it's an open network that's allowing multiple energy producers and users to communicate, share data, transact, it's being held up by the International Energy Agency as a model for the future of decentralized energy systems.
Kochi, which is a city in India, has open mobility network that integrates public and private transport on a single platform.
There are innovations and while I say this, I totally listened to the previous panelists who was saying, there can be multiple innovations, but you need urban planners and architects to really implement them.
But all to say that, um, These are innovations, these are technical, but these are also institutional and they matter because they prevent any single provider from locking in the city's infrastructure for decades.
You are democratizing a lot of things and that has power.
These deployments, as I said, exist.
If the tools work and foundations are increasingly in place, technically, we should not be having this conversation.
The question is why haven't we crafted it? That's the topic of today's conversation as well, integration.
That's the hard part.
It's relatively easy to deploy a smart meter.
It is hard to connect that meter to a billing system, to a customer identity database, to a mobile money platform, to a government revenue authority, or to the climate monitoring network as one of the previous panelists was saying.
And to do all of this across agencies that don't naturally firstly digitize a lot of data, then they don't share it at scale, in a city that is growing faster than the systems can keep up with, that is the hard part.
Tech, I feel is the easier bit.
The hard parts are data governance, the hard parts are interoperability, energy security, I mean, this is a point we should sit with for a moment because it's critically underappreciated, the power of energy security.
Digital infrastructure requires reliable power, smart sensors, sensors, data centers, connectivity nodes.
None of these will work if there is a blackout and brownout.
For many cities where digital transformation matters most, energy reliability itself is one of the things they're trying to fix.
Therefore, you cannot digitize a system that is running on intermittent electricity.
Of course, capacity financing issues.
We're all implementing complex digital infrastructure programs with limited tech capacity.
The financing is poor, political cycles change, so long term investment is hard.
Anyway, none of these are reasons not to do it.
There are there are reasons to do it more carefully with the right sequencing, as was previously being said, getting the right partnerships, getting the right design principles from the start where we can start from scratch.
It brings me to what I hope this panel discussion today achieves.
We have specific challenges in front of us today.
Thinking about energy security as a prerequisite, not an afterthought.
Um, um, sequencing.
Not every city should try to do everything at once.
The most effective deployments that I've seen, uh, start with a single high impact use case, often payments or identity or waste tracking, and we but upward from there.
There needs to be sort of, you know, um, the question should be, How do we build a smart city? It's more like how are we going to sequence things? Where do we start to create the conditions for an integration over time? That is a very important consideration.
Finally, the role of digital platforms and you've only heard me talk about digital platforms along because that's my bread and mother.
But the role of digital platforms in making integrated service delivery should be seen at scale.
Real prize is not in smart meters or DIS dashboards.
Yeah, that's there.
But it's a It is the moment when a platform that can connect energy access, water payments, sanitation, transport into a coherent system where data flows.
Things are more accountable, services become more efficient and more equitable.
That is the price.
It is within the reach of cities to make those right architectural choices right now, hard to implement, but if you think back, really integrate with people who are decision makers, it's doable, it is hard, but it is doable and it should be unavoidable for us.
We do not have the luxury waiting for perfect conditions.
The cities in low and middle income countries are growing, climate stress is increasing.
The decisions that are being made today about digital infrastructure will shape who gets served, who gets left out? The AI that we are all scared about, who feeds into those AI decisions? Who feeds into those AI brains that are computing behind? Are we even see The decisions that we make about digital infrastructure will inform all of that for the next 30 years.
The foundations are there, the tools are proven.
The integration gap is real, but it's closable.
Let's close it, and I'll close my talk here as well and leave it to the panel for a fruitful discussion.
Sorry for not being there, but hopefully we'll see each other in person the next time.
Thank you so much.
Thank you.
Thank you, Akansa.
In the interest of speed because I don't want to take any more time from the amazing discussion we're going to have, I'm going to introduce the panelists and just feel free to come up as soon as you hear your name.
We'll applaud everyone at the end.
That's easier.
Let me introduce the fantastic panel we have ahead of us.
Nargis Viek joins us from the German Azerbijani Chamber of Commerce.
She is the Executive Director.
We also have Eric Fang, who's the General Manager of Pigo and Energy Storage at Bluett.
Um, and Eva Kersh Holt, who's the Regional Director, AMA Water Management and Water Treatment at Wo, a global leader in pump technology and water systems.
And last but not least, also La Gucci, who is here representing JCGSMA.
Also, one of the interventions won't be in English, so if you do need translation, our kind volunteers are at the back with the headsets, so make sure you grab one.
Thank you, everyone for joining us.
Now we can applaud the panel, yes.
Thank you very much for joining us.
Perhaps I can begin with you, Nargis, because we are living through what many analysts are calling the most severe energy disruption since the 1970s oil shocks with price volatility, supply chain fractures, and accelerating climate commitments that are forcing this fundamental rethink of how regions produce, distribute, and consume energy.
And Azerbijan is uniquely positioned and now actively building its identity as a green energy corridor that's connecting Central Asia and the Caucasus with Europe.
From your position, how do you see this energy transition reshaping the region's broader development trajectory, and also what conditions need to be in place for that to translate into tangible gains for cities and infrastructure? Thank you very much, Kota.
Just to let our audience know about who we are, German Azerbijani Chamber, we are German organization here situated in Azerbijan and we are supporting both German and Azerbijani companies in bilateral cooperation.
I'm not the expert in infrastructure development or urbanization, but what I would like to share with you our view on questions you raised with regard to the energy transition, resilience, connectivity.
For I think what we are coming from Germany and knowing that Germany is always talking about the energy transition is integrated process, I would like to compare some fields with Azerbijan.
I think what we are talking about it's not only about the energy transition.
This is also uh, the transformation of cities.
Transformation of cities means how we are going to plan the cities, how we're going to finances, and how we connect the cities with necessary services.
Across Caucasus Central Asia and Europe, um, those countries are witnessing very hardly shift uh to that is driven by, um, by three forces.
This is energy security, climate commitments, and very rapidly growing urbanization.
This is probably not the question of corridors only.
This is also how we can integrate cities and villages into these corridors to make these cities livable, resilient, and economically successful.
Azerbijan is very interesting country from the geographic point of view.
Azerbijan is somehow in the middle of bringing different sources from Asia to Europe.
This is not only true for the energy, energy until gets mostly gas and fossil fuels to Europe.
But this is becoming interesting in what you have mentioned that the country is a very much active in produce green energy in the region and bring green electricity to Europe.
This is probably unique for the region, but this is, I would say initial for this region, for Azerbijan but also for the countries in Central Asia because the transformation from fossil countries into the green countries.
This is initial for the region and for the future.
This is, as I said, not only about the energy, this is also about bringing goods from Asia to Europe.
Again, here we are talking about sustainable transport corridors, and this is very much important if you see what is Europe expecting countries who is exporting to the EU when it comes to climate neutrality in the EU.
We don't have to talk about CBE, but there are some regulation that are necessary and very important for export countries.
I think what we see is shifts that is visible and that you can't ignore.
Energy is becoming um, regional platform, it means for the climate neutrality in Europe, we are very much dependent on imports of green molecular or electricity.
I think this is a huge potential, as I said, for Azerbijan.
But what is difficult and what is probably major challenge for here is You have to cross many, many borders, and this is probably from the business point of view, from the investor side.
We have to harmonize these corridors.
We have to have the standards, we have to improve our digital solutions in order to make it bankable with visible investment that are needed to build these corridors.
Also, the question of energy resilience is, This is something what we see.
We see this disruptions within of the recent years, insecurity directly as implication and for the housing affordability, business continuity, water system transport.
This is why investors increasingly look at if the city or the project, how it withstands with shocks and is digital infrastructure integrated? Are services planned together rather than separately? This is a In other words, integrated infrastructure is becoming an economic competitiveness factor.
And third, I think this transition creates opportunities and we see that we have already technologies in place.
We have also here companies who will share the problems, the technology side, but we do have smart grids.
We do have decentralized renewable systems.
We do know how to build energy efficient building, U But what is needed and what is critical, I think the long term regulatory predictability, it means we need legal framework that is sufficient and important for the investors.
We do also need cross sector coordination.
It means we need all the stakeholders in one room, energy ministries, housing, utilities, service providers.
This should be coordinating from the beginning because other colleagues already mentioned this, and I will stress this as well.
Third is workforce and skill development.
We haven't talked about this in yet, but I think this transition is also mean human capital challenges.
Countries need engineers, digital specialists, planners and integrate them into the project.
It means all these need partnerships like partnership, also, this kind of organization like a chambers where we bring different stakeholders on multiplicator.
Thank you, K.
Thank you.
Thank you very much.
Thank you.
Eric, Niehau welcome.
You represent Blue Etti a global leader in port and modular energy storage systems.
Now, we know that housing and energy planning still operate in separate silos, managed by different ministries, different budgets, different timelines.
Blutti works at this intersection of portability and permanence.
Does the current energy security context actually make the case for embedding decentralized storage into housing delivery as recognized infrastructure component? And what would that shift require from developers, planners, and regulators? To 11 dial dilue to the way the phase change in four.
Hot.
Non blue lain.
With me one who takes three time with 121, gods who is two.
The two to one made yellow to put in that way line, when the non Yang 21 Hwang.
You see the change.
The two searching by 11113 to 4321 Washington is 30.
Early Union, blue fashion phase 10 LAF is Latin and Af family.
P three phase three cost 9320 phase two, N plus three high end inline.
2319 midian lead gt T questions 3.21.
When you down did the NGOs, you search ago about.
Last year we formed formerly partnered with habitat to help LAAFs grow in a more organized and sustainable way.
LAF is not driven by a big budget.
It is driven by belief, the belief that clean energy should be for everyone.
Our employees contribute our customer support and our partners help us deliver.
So far, over 20,000 families have received clean light and basic energy.
Over 30 schools and communities have been supported and more than 60,000 people in Africa have benefited from this project.
So in order to bring more energy to Africa, we need to move away from donation to scale.
That is why we have developed pay goal, meaning pay as you go.
It is a solution consists of PV plus storage.
It's not just a financing model, but rather it is a product system designed specifically for Africa from basic home needs to small business use.
And the idea It's pretty simple.
Instead of paying a large of money upfront, families pay small amounts over time.
This makes clean energy truly affordable for many more people.
But the most exciting part about this is not just about energy itself, but rather it creates lots of jobs.
Through this model, young people can become sales agents who bring energy to their communities, and they could become technicians who install and maintain systems, and they could also be service providers who supports users long term.
What we can provide and Blue T is start support, technical training, and ongoing guidance.
We're also working with financial institutions and governments to offer low interest loans for young people who want to grow their businesses.
Neutral so that energy becomes more than just power, it becomes jobs, it becomes entrepreneurship, it becomes local economic growth drivers.
Putting it all together, let me summarize LAF makes sure that no one is left behind and PGO makes clean energy scalable and sustainable.
We also empower the younger generation, making sure that the system can grow from within.
This is how we complete this whole path from lighting the home to empowering the community to supporting long term urban development.
We look forward to working with all of you from different industries and sectors.
Together, we can expand eng access and build cities that are powered, inclusive, resilient, and full of possibilities.
Thank you again to you and habitat for your trust and partnership.
Thank you all for your attention and you're most welcome to visit the Blot booth and continue our conversation.
Thank you.
Thank you.
Thank you very much.
I really think it's important that message of bringing in, I think I wrote it down here, that what happens after moving in decides whether or not a house becomes a home and the role that energy plays there and this idea of energy as a driver of entrepreneurship is very important.
Let's move on to water now with Eva, because it is quite interesting that despite being a basic infrastructure, water infrastructure is still so much disconnected from the housing construction process.
I wanted to know from WO's point of view and operation experience across the region, where do you see the water housing nexus being managed most efficiently, and what distinguishes the contexts where water and energy infrastructure is delivered from the outset from those where it remains an afterthought.
All right.
Thank you very much for having me, first of all, and also for the question.
Before I elaborate a bit on what you're asking, I would like to leave some words on what Vo is doing.
We are a German based water technology company.
We supply pumps and pumping equipment to building services.
We are talking a lot about buildings here, but also to cities to water infrastructure.
And with my colleagues here, we were just smiling a bit this morning because he said it's a perfect day for us to be here in Baku today.
Um, We see exactly where we can make or companies like ours can make a difference in urban life, actually.
In Vilo, as I said, we're a German based company.
We are operating across the world.
Myself, I'm from German origin, but last 3.5 years I have lived in Southeast Asia, so I have seen the span of what it means living in highly developed countries like Germany where you have a great regulatory framework down to countries which are really just emerging and working with a lot of challenges still until today.
And In Vilo we defined our whole corporate strategy as a sustainability strategy.
We say it's definitely on us to come out with products and solutions that help people, that help cities, that help countries to manage their water topics.
It's about taking care of our customers, employees, and it's also about finding this piece of connecting and this is why I'm really happy to be here because in the end, the private sector alone cannot do it, the government alone cannot do it, the communities cannot do it alone, so we will need everybody on the same table to discuss, and I think this is a perfect event.
To do so.
Coming back to your question of connecting with water and housing and water management is coming together.
To be fair, I will say it's still a big challenge everywhere.
It doesn't always go hand on hand.
Of course, we have landmark countries like countries like Singapore, which are a city state and because it's so small, everything is interconnected.
For them, I will say it's easier to manage the housing development, the water supply, the treatment of used water.
This is all comes into the picture when you talk about cities and how countries develop.
But in countries which have a large geographical area, the challenges are completely different.
I want to make my point that to be fair to everyone, it's not as easy for everyone as it is for smaller countries.
Then it also depends on the government structure.
How much decision power is on a national level, on a federal level, on a local level.
It's very difficult to be fair to really compare countries, but countries like Singapore or I've just spent three weeks in my home country in Germany and I visited some sites for supplying water to cities.
It's amazing on what kind of level actually this is being done.
Even I can also say China, I spent some time in China.
I will move to China very soon.
What I have observed in China is, it goes back to the regulations.
It has been discussed, I think many times before, but whenever we see countries are really looking at their regulatory frameworks, then things starts to move.
The private sector can contribute.
We can say, this is the technology that you can use, this is what this technology can do.
We have fantastic solutions for a lot of things, but we need somebody to set the standards.
If nobody is setting the standards, then as I said, it cannot be the private sector alone to solve it.
Good examples in Europe, definitely, good examples also in Asia, but there's a range of countries in this world where still a lot of things can be done, to be honest.
Thank you.
Thank you.
I want to bring in La because I really want to ask you about the context where grid connection is unreliable or absent and the emergence of mobile enabled pay as you go solar, which is quietly becoming quite an effective tool for giving low income households genuine energy security.
I do wonder that imagine there's a moment of global energy disruption.
Could that system stop being a workaround and start being a legitimate energy security strategy for housing? If so, or if not, what conditions need to be in place? Thank you very much.
I will try my best to not repeat too much of what Akana said earlier today because we work very closely together, so obviously we're on the same page there.
Just a couple of words about the part of GSMA that we work at.
We work for the part called mobile for Development, which is our international development arm, and we are focusing a lot on low and middle income countries.
Besides doing research, we also have an innovation fund that we support startups and SMEs with grant funding and capacity building.
To answer your question, the question of pay as you go and what does it take to shift it? Essentially, what it does is shift energy access from an infrastructure problem to a service delivery model and it removes the reliance on the centralized grid.
I'm sure Eric can tell us a lot more about how it works in detail.
But in general, a pay as you go solar home system would provide a power for lighting for phone charging and small appliances and it would use digital payments like mobile money where you can pay in small amounts, just like Eric said earlier, which makes it a lot more affordable obviously.
And the payments also give the user access to electricity during that period of time that they have paid for, and then it can be activated or deactivated remotely.
GSMA has been an early supporter of the sector through our Innovation Fund, we have supported quite a few pay as you go models, and we've seen the sector grow to the size that it is now, and it is a great alternative, but there are a few a few things that need to happen in order for this to scale properly and one of them is policy recognition and governments need to integrate off grid solutions into their national electrification plans rather than seeing them as temporary.
An example like Togo, where the government actually subsidizes pay to go solar.
One of the distributors there that the government works with is a previous GSMA Innovation Fund grantee called B Box.
Obviously, that helps in making energy a lot more affordable and therefore also increases the usage and this can be a way to scale it.
Another thing that needs to be in place is the digital infrastructure, because it only works at scale when it's part of a wider digital infrastructure and ecosystem with reliable mobile connectivity, and mobile money ecosystem, et cetera.
Reason why PSG works so well in East Africa, for example, is because of the uptake of mobile money there.
It is so widely used that this is a solution that works there.
And In the B Box example, they also have a strong partnership with local mobile operators where the mobile operators provide them the opportunity to connect with their end users, the government and databases to understand eligibility of the customer, and all the payments also go through mobile money.
Today, around 4% of the world population is still not covered by mobile broadband.
4% sounds very small, and It is still a few hundred million people and most of them live in low and middle income countries, but most of them also live in very rural areas.
Another problem though that we have is more on the usage side rather than the connectivity side, where you live in an area that is connected, but you're still not using it, so we need to work a lot more with digital literacy and affordability there.
Yeah.
Thank you.
Nags, can I bring you in here because of course, through the work that you do at the German Azerbijani Chamber of Commerce, you really do facilitate these bilateral business partnerships and bringing in people from trade, energy transition, from institutional development.
In your experience facilitating these conversations and eventual partnerships, where do you see the strongest private sector appetite for investing in integrated resilient energy systems at the urban and regional scale? This is actually quite difficult to answer this question because if I look at the numbers, how many German companies are direct investing in Azerbijan I would say there's definitely room for improvement.
But to be honest, just to speak about the foreign investors who is interested in investing in infrastructure, who is interested investing in construction project.
The I would say there's definitely interest, but what we are missing still and not only in Azerbaijan, but also in the wider region, we are all missing a First of all, reliable partners.
I think the question of compliance that we as a foreign companies are facing in our home countries and probably also the risk sharing.
Let me be more positive.
If you look, I see actually a lot of opportunities to invest in Azerbijan.
What I would like to share with you my recent experience in visiting Karabakh region.
Um, what we see in Karabakh is that there's big efforts from the government to rebuild this regions.
We're talking about the regions where only 30% of the territories are demined.
We're talking about the 30% land where the urbanization is going.
But what was positive and what was I surprised that if you're planning smart villages or village a city building from the scratch, it works.
This is actually if there is a strong interest from government, utilities, investors, developers, it works.
But what is difficult is if we are talking about retrofitting, if we are talking about existing infrastructure and how we can, for example, decarbonize.
Coming back to the technologies, the investors are very much interested in trading their renewable technologies, efficient technologies like renewable energy technologies, battery storage.
If we are talking about decentralized energy, we are also talking about single source supply.
Um as I already mentioned, what we already have, we have technology, and this is not the question of, can I as a standalone company bring my technology to this project? It's about how we are going to plan our project.
It means that this technology can be integrated in the whole project in the system.
I think what is also interesting if we're talking about the city is this industrial potential, it means Will this city have some industrial infrastructure? It means is it visible for me from the investor side and how we can create decarbonized industrial sides.
Last but not least, I think you already mentioned digital infrastructure, how we should be connected and how we can connect urban services.
I would shortly highlight probably some critical points that are needed.
This is all investors, we look at bankable projects.
It means our cost, our return on investment, and so on.
I already meant risk sharing this I think urban development needs public private partnership.
If you look at the, for example, facilities or financial facility like Global Gateway from the EU, they are very open talking about using private and public capital for the connectivity project in this region.
Yes, permission.
It means how fast can I get permission to start with the project and implement this probably Last but not least, and we are talking about connectivity a lot, this is a regional connectivity.
We are now talking about visibility of project, and if my project can, for example, buy the energy from It country abroad, and this is much more visible for my project, it should be possible.
This is why I think this regional cooperation, especially for Caucasus in Central Asia is essential.
Thank you.
Thank you.
Thank you.
Well, staying on those points you raised of energy, water, digital connectivity, and transport, being part of this persistent structural failure where they're often planned and delivered after communities are built rather than integrated from the offset as we've been discussing.
Eric, perhaps to bring you in here, Which actor do you think has the greatest leverage to change that sequencing? Maybe someone here in this room, maybe not.
But what do you think would it take to make integrated delivery the default rather than the exception? Thank you.
Well, based on our real experience in Africa, infrastructure building is always delayed behind the housing building because the cycles are different and when you build a house, you can quickly get return by selling the house.
Developers are motivated for grid and broadband, the investment is very long cycle and return is slow, usually is pushed behind.
Secondly, the responsibility is not really balanced.
Usually, housing is being developed by private developers, however, energy, water, Internet are usually led and coordinated by governments or state owned companies.
So are different paces in different things.
That's why there's always a gap in our experience in Kenya and Nigeria are always like this.
Houses are built, but the residents do not have access to electricity until six months or one year later.
Secondly, I think three party agreement should be signed between developers, utilities, and the city governments.
It cannot be afterwards.
Secondly, the policy leverage.
Municipalities should include access basic service as prerequisites for licensing or permits.
Without access to electricity, water, there will be no acceptance so that developers will be more motivated to coordinate.
Thirdly, which is also the most important point.
Distributed energy should serve as a transitional solutions in areas where there's no grid.
Solar power should be the power for all communities.
That's how we do in Kenya.
We work with local developers and to use our system as a supplementary in the beginning or later before and after the grid is connected so that no energy is wasted.
Impact on the occupancy rate, I would like to also explore some of my answers.
First is impact on affordability without the grid.
Many families were forced to acquire diesel generator or lead acid batteries or buy power from their neighbors with rising fuel costs, their cost is going up, usually much more expensive than the tariff.
According to a survey that we found that many households, monthly electricity utility bill is more expensive than their rent.
The energy cost is so high.
Secondly, impact on livability without stable and power, the fridge cannot work.
Children cannot learn at night.
Small business cannot run.
This is not just about life quality, but whether their life can be up and running.
Thirdly, is impact on occupancy rate, which is the core concern for developers.
In many projects, we see that once a house is built, But power, water, and Internet are not in place, then people will not move in or they will move out very quickly.
Low occupancy rates affects the return for developers, and this will also delayed and also impact the visibility of the whole project.
How to solve these problems, one is remote monitoring.
In the regional office, we can monitor the operation status of each system, whether the voltage is right or not, whether there's still electricity in every battery.
Whether there's need for maintenance.
We do not need to send people to inspect household by household.
We can lower the O&M costs.
Secondly, the smart alert system.
We The back end would automatically alert once there is fault.
Technicians can go there with the tools and the spare parts, so they don't need to go twice to diagnose first.
Third is data analysis.
With long term data, we can predict which parts may break down when it's time to maintain.
To shift from passive maintenance to active maintenance and digital operation can save 30 to 40% of long term operational costs.
The cost saved will eventually be reflected in cheaper utility bills for users.
On the digital platform and pay goal, I would also like to add what kind of role it plays once it can solve the affordability problem.
A small solar and energy storage system is a few hundred dollars.
Families cannot afford, but with pay goal, they only need to pay a small amount of bill every day or every week, usually it's several cents or several dollars.
So that they do not need to pay upfront a large amount, instead a small bill every week.
Secondly, it builds a credit system.
Once users pay on time, they will accumulate some data once they want to get a loan for bigger business, bigger equipments, pay for their education or healthcare bill, and Their energy bill records can serve as their digital ID or their access to bigger financial service.
Third, this model is validated.
Take our operation in Nigeria for example, we have a very mature pay goal system up and running.
The payment habits and long term credit performance of local families boost our confidence in this model.
This serves that this not only meet their real needs, but the families have high will to pay.
The assumption that poor people cannot afford is proven false by our model.
Pay goal model does not only solve energy access problem, but also creates employment.
Thank you.
Thank you very much.
We will have time for one short question from the audience.
If anyone has one, start thinking about how you would like to have the last word of one of these fascinating sessions that we've had, but I know that we also have someone else in the audience who I'd like to invite to join us to speak.
Kitchen and Bauer, the Executive Secretary of the Pan African Association of Sanitation Actors.
I was told you were in the room, did you survive the rain? Hi, do you want to come and join us here so we can be on the microphone because then everyone on the broadcast can hear you as well.
You can sit down at my chair if you don't want to be intimidated by the lecture.
Go for it.
Thank you.
Thank you too for inviting me.
I'll start by introducing myself.
I'm Kit Bauer, the Executive Secretary of the Pan Africa Association of Sanitation Acts.
First of all, let me say that a house without energy water and digital connectivity, a house with energy, water, and digital connectivity, but without sanitation is incomplete.
And I'll use the same is true for a city.
I'll use two illustrations from what my experience today on on the way here, I came very early and all my clothes got soaked by the rain down to my socks.
So on the on the way, I saw a failed sewage network, and it was just gushing into the fecal slouch gushing into the street.
And many people had to change their direction, avoiding the contamination and all of that.
Then I got here and I was alone in the one UN room A.
And a lady came.
She was very restless.
She didn't know me, but she she was looking for a toilet.
And she eventually left all her bags with me and went she she really went very far to get a toilet and came back and took her things.
So you can see how how how a lack of sanitation or poor sanitation can disrupt a whole setting, even here if you don't have access to sanitation.
And so it is an understanding of this that the Pan Africa Association of Sanitation Actors was formed, which is a network of private sanitation enterprises across 31 countries in Africa.
And our aim is to fully exploit the multi billion dollar sanitation industry in Africa.
Many people do not know, but at least 80% of the people with access to sanitation in Africa, they depend on non seawater sanitation.
If you look at that alone, there are three big markets.
There is the manufacturing market, which unfortunately is controlled by Asia and Europe, even for Africa, which is the big market with the highest number of people without access to sanitation now, and of course, a very large number of people using sanitation.
There is also the services market, which is mainly provided by members of our association.
And then there is a circular economy market which contributes to energy security, food security, of course, and public health.
For us, that is a very important area where the private sector plays a very big role.
If you look at the hardware that is used in sanitation services, everywhere is controlled 100% by the private sector, so are the other services.
So for the private sector in Africa, there are just three major areas that we need support and we need improvement.
One is government recognition and endorsement and the enabling environment.
It would be shocking to you to know that even though 80% of the people would access sanitation depend on the surfaces of these small and medium scale private entrepreneurs, In most countries, they are not recognized, but they operate anyway.
And this is what we are hoping that in forums like this, for Africa with some of the fastest growing cities in the world, it is important that the private sector is recognized and is enabled to provide the services.
Then the second is access to credit.
We did a survey among our members in about 25 countries and one of the major challenges is that they cannot go into a bank or any financial institution and access credit.
So we're working on that and we're working with the Afghan Development Bank to risk access to credit among commercial banks.
For now, six countries and going forward, working with other sectors to spread to the other the remaining of the 31 countries that make up our members.
And then another critical, the last critical area is operational health and safety.
And this is very critical because sanitation workers in the sanitation industry are at the front lines of the public health issues that sanitation pose.
Now, if without proper operational health and safety, they end up being victims for providing critical services that safeguard our public health.
I'm happy to share with you that we are working on partnerships to strengthen national associations.
We are working with our members to formalize and certify them based on the services they provide across the service chain and within the industry.
And we hope that my presence here, we're open to partnerships to work with you.
We're already working with the Gates Foundation, GIZ, and a couple of others, and we look forward to building partnerships to strengthen the private sector service provision and sanitation.
Thank you very much.
Thank you so much, Kitanet.
Thank you.
A great reminder that when we talk about, of course, essential services in our homes that of course, sanitation is a huge part of it too.
Now, I said there was time for a question from the audience.
Anyone brave? Do we have a shy hand at the front.
Go ahead.
What is your question? You can take it from there excuse me.
How can governments such as balanced rapid restructuring of smart cities in some borders that you say Kara that long social sustainability and local participation with foreign investment, for example, from Germany to new power in the Azerbijan.
Thank you.
The last part can? We can balance it together.
Yeah.
Another question from.
You have one.
So, you had your one question.
Go ahead.
Actually, yes, very important question, very important remark, if we're talking about how we can include the people in our project and city and village development.
If you are talking about especially about Kabus or what I've learned because I'm not from Azerbijan, but what I've learned, that this is mostly about how to bring back displaced people.
I think from the business point of view, this is not only about building cities and villages, there should be infrastructure also for people to work.
It means we have to bring also industry, enterprises and so bring to the people the work where they can be involved in the development of the cities.
If you compare, for example, I would probably Eva can comment as well, if I would compare this with Germany, the engagement, social engagement in Germany is very important because on the level of communities, it's also the community who decides on what kind of energy we would like to use.
Should I invest as a person who is living in this village in the sustainable project.
It's about, yes, also the interest of the people who is living here and probably you can also comment on it, but if not if you want to comment, I can give you 30 seconds.
Okay.
Now time is running.
No, it's true what you're saying.
So it's a highly democratic country, so everybody has a say, which is good and bad sometimes good in the sense that people can express and people can really actively participate in how the society and how the country should run.
At the same time, sometimes it can also slow things down.
I think it's really finding the healthy balance of it.
Thank you so much.
30 seconds.
Perfect.
Well, join me please in thanking these guests because it really was a great reminder that the social and economical potential of housing is only really realized when services function.
Thank you.
Thank you, everyone.
Now, just to help us close today's session, today's business Assembly, I'd like to invite to the stage to the lectern Prason Kumar, who is the CEO and co founder of Billion Bricks, a Singapore based social enterprise that evolved from a non profit into a startup by applying a fundamentally different logic to housing delivery, starting with the end user and building backwards.
I leave up the provocation.
Can we solve the housing crisis by building backwards? Well, Prason will tell us.
Thank you and welcome him to the stage.
Thank you.
All right.
Thank you for having me here.
I know it's end of the day, so I'll keep it light, a little bit humor as well, and don't take me too seriously as you hear my story.
But I must say that I've been listening to the three panels since the morning, and I think the key question remains in front of us is if the idea is about solving the housing crisis, then how exactly are we solving it? This is a question that has bothered me for the longest of time.
In fact, in 2002, when the world's first World Urban Forum happened, I had just graduated from the architecture school.
I was looking forward, what shall I do as a career? I realized that since 1,200 experts like yourself were meeting in Nairobi, the housing crisis would probably be taken care of.
I could actually consider doing what architects do best is building tall towers, airports like this one in Mumbai, or hospitals like this one in Singapore as well.
But 12 years hence, as 2014 happened, the housing crisis continued to grow, none of those expert things were really working.
I thought maybe I should probably join all the experts and actually start implementing all the policy papers that I see, all the recommendations, the way I'm hearing them today, and actually go in and implement them on the ground.
I quit my job and I founded Billion Bricks, as was mentioned, originally as a nonprofit and now as a for profit enterprise with a singular vision to end the housing crisis in the world.
So we went around building houses in Cambodia, schools for homeless children in Malaysia, some rural development work to improve the housing conditions in villages in India, and doing temporary shelters for people who face disasters across the world.
This is in the United States as well.
But in about ten years of my career doing this work, we hardly helped anyone and we were not even close to addressing the housing crisis.
The question really remained as to what is it that I'm doing wrong if I'm implementing all the discussion that I'm hearing on the ground? Why is it that the crisis is not being solved? It's actually increased from 1 billion people when the First World O Urban Forum happened to about 2.8 billion now.
In order to take this conversation further, I'm going to share my experiences and my stories, but I received a protocol notice from UN Habitat saying that I should refrain from making any direct accusations and names as well.
I come here with some disclaimer that all the names in my stories and experiences have actually been changed.
There's no resemblance to anybody in particular, but the numbers are real because I think housing is very strongly economically driven.
And these numbers come from a country, which is where I work the most, which is an island nation of Philippines.
A city called Manila, on the banks of Vanilla Bay is where the setting is, and we start with a gentleman called Mr.
Rusk, who's an entrepreneur, a tech entrepreneur trying to build the world's first cars that can drive on their own.
I'm sure he also wants a house for himself.
He's got around 14 children, so he visits Citibank to get a loan and a mortgage for himself.
You must be curious what his income is.
His income is just around $5,000.
He's quite an average citizen like one of us and the bank says, Okay, we'll offer you about $200,000 and you have to pay us one third of your salary over the next 25 years to be able to afford the home.
He goes to a developer called Trillion Tricks and offers him $50,000 in down payment and gets a house for $250,000.
The developer tells him, come back after five years and your house would be ready.
The developer goes back to the bank.
He needs to raise project financing and the bank offers him 70% of the project financing.
I'm just giving you an example of how actually development works in reality.
But here's to raise remaining 30% as equity to be able to actually buy the land before the bank will give the financing as well.
The equity is far more expensive.
Trillions is very, very good with numbers, so they run the spreadsheet, as you see here.
The cost of capital is almost 50% of the entire cost of the house.
That, ladies and gentlemen, is a big part of solving the housing crisis.
When we look at things like materials, et cetera, they part very small fraction of what the housing actually costs.
As you see the Excel at the bottom on how the numbers actually get divided, this is real from the country of Philippines.
You can see it's quite healthy in terms of the trillion tricks going to hire the best architects, best contractors, they can actually provide insurance, bonuses, safety standards, and really build a nice housing community.
After five years, Mr.
Russ goes and gets his house.
The house is beautiful with a lot of glass windows, Marbth flown in from Italy, and a lot of wood flown in from Bazerbijan as well.
He loves the house, but his venture of building self driving cars hasn't really worked.
He's come in a car with a driver in it and his interest has now moved into rockets.
But the driver is very impressed by the house and now he wants a house for himself as well.
The driver actually lives in a slum outside the city of Villa in the suburbs across the Vanilla Bay.
His income is measly $500.
So he's one of those income people that we are talking about here and he goes to the bank, bank offers him $20,000 in loan, He goes and buys a house for $25,000 and the developer says, Okay, sure, come back in five years time, your house would be ready.
Now let's look at the economics carefully.
This is how the world really works.
So the cost of capital remains the same as for anybody else, so 70% project finance, 30% equity, and now you can compare the cost of capital between the two sides.
So if the house is $25,000, almost half that number is wrong, should be $12,000.
So now you are left with only $12.5 thousand to build a house, which means the land that you need to get is going to be so far away, which will not be accessible, which will not be in the city.
And more importantly, the construction cost is so low, that you can only build about ten square meter of house space if you were to build a house.
So now the governments mostly for affordable housing will require houses which are 25 to 30 square meter in area, it means the financing doesn't work.
This is the core problem behind affordable housing.
None of what we've been discussing actually hinders affordable housing.
It's just way too expensive to the cost of construction to what can actually be built.
In order to facilitate because Australian Trex is really wants to build it, they hire a manager like myself to do it.
He has to cut down the team costs.
He can no longer afford the top architects, engineers, contractors.
They can't afford safety standards, no bonuses, no health insurance.
They have to cut down on the profits for themselves, and they have to cut down on the risk, which is political risk, delay risk, marketing risk, which is essential to get the financing that Bi Bank was giving to them.
What that means is that the project is no more financiable.
He goes to BitiBank and says, Why don't you reduce the rate of interest that you are charging me on this particular financing that you are doing? But BitiBank says it's not in my control.
It's governed by the treasury bonds, which are out of my control, and I have no leverage to go and change that.
It means the system is so rationally organized that it's very difficult for anyone to change it.
They go to capital from where they've got equity, they said, why don't you reduce your spread on this capital? But they say, our team is very expensive, we've got a building downtown.
We cannot afford if we reduce our spread and don't pay our people enough money, they'll actually go and start working for somebody else.
He has to further cuts profits, cuts risk, and eventually end at somewhere around 30% IRR, which is no longer fundable by private capital.
But there are banks like BFC, which you may have heard of them, which are required to provide for housing for affordable segment.
The moment you go to them, that money actually comes with a lot of strings attached, such as the site needs to be accessible, you need to look for blended finance, you need to get edge certification, you need to make sure it's sustainable materials, all the good things we are talking, but that costs money, time, and affordable housing cannot typically afford it.
It's also important to know that the cost of money and cost of capital is actually attached to time as well.
There's a time value to money, which is what a development IRR is.
By the time it takes to solve all these things, which we don't have to do for commercial projects, the projects become unfeasible, and the project has to be actually shelved and the poor driver never gets the house.
The point really here is that if you want to solve affordable housing, it's a very precarious balance between risk and reward.
Real estate infrastructure construction is a high capital projects.
They are very long term projects, and therefore the risk is very high, and hence the reward needs to be equally high as well.
The moment we talk about affordable housing, the risk becomes higher and the rewards become lower, and as a result, the balance is off, and therefore it cannot be built.
That's one of the reason why the number of affordable housing needed continues to increase, and we often are unable to address it because we just don't know the crux of the problem lies in the economics behind it.
I'm sure there are great examples that we'll be seeing in this conference, which are mostly pilot projects.
We should go out there and ask those people, were you able to scale those projects beyond pilot to 1,000 homes, 10,000 homes, 100,000 homes, 1 million homes, if you want to get to your 2.8 billion homes to be provided for.
That's an important question to ask.
Pilot projects are easy to do because they create exceptional conditions where people are motivated and the balance is established.
But the moment you have to scale, the incentives are not aligned, pilot projects don't work.
So the tragedy of us not meeting our targets of providing affordable housing is actually not that we don't want to do it.
It's just that the rational system that we live in, which is today a capitalistic society, we're trying to use capitalism to solve a social problem, and there will always be a tension and there will never be a solution which is scalable.
We should really think the conversations we are doing.
If you are committed to this question that's written there about housing, then I think we have to write the right question as to the actions we are talking about, are they going to solve the problem or not in a fast space of time.
But just going back to the story, I didn't just finish my work to say that, I won't be able to do something next.
I went on to design these houses, and I think this might be of interest to Bluet of houses that produce more energy than they consume, houses with solar panels on the roof.
What that does is that provides a secondary income stream to the homeowners and to the developers and now you are back to an IRR which is actually commercially viable of almost 18%, still not at 20%, but still doable.
And so I built a few of these houses.
This is in India that I built.
This is in the Philippines where I work now.
I build these houses.
People are actually living in them and they love these houses for the fact that they can actually reduce your energy bills, they can pay your mortgages, and the developer can actually make more money than a conventional home.
I decided to take a few of the houses that I had built and I said, Let's now do a large community of these homes.
I needed that 70% project financing that I had mentioned to you to build this community.
And I went back to the Biopsy Bank and said, Okay, let's fund this project.
They said, Prasu, it's a great project.
You're doing great work for humanity.
You should continue working.
But please tell us how have you covered the innovation risk? Banks will never give you money if you're doing anything new, anything which is palette, they need to be very well secured.
Ladies and gentlemen, that's why we remain in housing crisis and it doesn't get solved.
Thank you so much.
I Thank you so much.
Thank you very soon.
Just some quick words just to say thank you all, first of all, for bearing with the weather and making it here.
We do appreciate it and thanks to all our panelists from today.
It really was such a tone setter for what set to be an incredible week of discussions here in Baku.
If you are inspired and want to know more about the importance and the role that the private sector is trying to do and trying to play and already playing in helping address the housing crisis, this conversation will be continuing on Wednesday at the Business Roundtable and throughout the week at the Business and innovation hub, which is inside the Urban Expo.
But for now from us, it's thank you and get home safe.
Thank you.