Asian Infrastructure Investment Bank (AIIB)

Image: Moneybestpal.com

A multilateral development bank and international financial organization, the Asian Infrastructure Investment Bank (AIIB) seeks to advance social and economic conditions throughout Asia. It has a capitalization of USD 100 billion, making it the second-largest multilateral development agency in the world, and it has a Triple-A credit rating from the three main rating agencies.

China first suggested the AIIB in 2013 as a means of addressing Asia's enormous infrastructure gap, which is expected to require USD 26 trillion in investment by 2030. With 21 founding members, the bank was formally established in October 2014 and started operating in January 2016. It now has 106 certified members from all over the world, including 42 from Asia, 26 from Europe, 21 from Africa, 8 from Oceania, 8 from South America, and 1 from North America. Since that time, it has expanded.

The goal of the AIIB is to provide funding for the inclusive, sustainable, and creative infrastructure of tomorrow. The bank supports initiatives that complement the Sustainable Development Goals of the UN, the Paris Agreement on Climate Change, and the requirements and objectives of its members. Also, the bank encourages connectivity and regional collaboration, particularly amongst nations that are a part of the Belt and Road Initiative.

The AIIB operates according to the principles of lean, clean, and green. Having a lean organizational structure and decision-making process implies the bank is effective and responsive to the needs of its customers. In order to be considered clean, a bank must uphold strict rules for governance, accountability, and transparency, as well as a zero-tolerance approach to corruption. Green denotes a bank's dedication to social and environmental sustainability. It also indicates that the bank has set an aggressive goal of allocating 50% of its approved financing to climate finance by 2025.

The AIIB had authorized 231 projects in 34 nations as of September 2023, totaling USD 44.37 billion in investments. The initiatives span a range of industries, including transportation, energy, water, urban planning, health, and education, as well as digital infrastructure and financial service providers. Some of the notable projects include:

• The Turkish Antalya Airport Extension Project will improve the airport's capacity to accommodate 50 million people annually while lowering greenhouse gas emissions by utilizing renewable energy sources. For this initiative, the AIIB contributed $150 million.
• A 300 Megawatt solar project by Enel Green in Rajasthan, India, will produce clean electricity for roughly 425,000 homes and prevent about 600,000 tons of CO2 emissions annually. For this initiative, the AIIB contributed $75 million.
• The Asia Infrastructure Securitization Program II in Singapore will issue asset-backed securities backed by loans from the AIIB and other development partners in order to raise private finance for infrastructure projects in Asia. For this program, the AIIB contributed USD 150 million.
• A new bridge over the Brahmaputra River will be built as part of the Mymensingh Kewatkhali Bridge Project in Bangladesh, which would also increase road safety and connectivity for the region's 20 million residents. For this initiative, the AIIB contributed $200 million.

The AIIB is open to working with different development partners, including bilateral organizations, private sector companies, civil society groups, and academic institutions. The bank also provides a variety of ways to collaborate with it, including employee hiring, project finance applications, and options for project and company procurement.

Jin Liqun, who was chosen for a second five-year term in January 2021, serves as the president and chair of the board of directors of the AIIB. The Board of Governors is the highest governing body of the bank, and it is made up of one governor and one alternate governor chosen by each member nation. In accordance with the Board of Governors' directives, the Board of Directors is responsible for directing the management and operation of the bank. A global advisory board for the bank also counsels the president on important strategic matters.

The AIIB is a key actor in the world's development scene, particularly in Asia where there is a huge and pressing need for infrastructure. The bank provides a fresh supply of capital and know-how for environmentally friendly infrastructure initiatives that might help millions of people and advance societal and economic advancement.