AIIB support for Egypt

Doaa A. Moneim, Tuesday 17 Oct 2023

Doaa A. Moneim talks to Sir Danny Alexander, vice president for Policy and Strategy at the Asian Infrastructure Investment Bank, about the bank’s plans for Egypt

AIIB support for Egypt
Alexander

 

Founded in 2016 and headquartered in Beijing, the Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank (MDB) that aims to improve economic and social outcomes in Asia. It is the world’s second-largest multi-lateral development institution, and over recent years has made significant investments in Egypt.

The bank’s vice president for Policy and Strategy, Sir Danny Alexander, explained its policies in Egypt in an interview with Al-Ahram Weekly.

 

Which sectors does AIIB financing support in Egypt?

Since 2017, the AIIB has approved five projects worth around $1,270 million in Egypt, one in each of the transport, water, and energy sectors, one a multisectoral project involving on-lending for infrastructure, and one in support of Egypt’s pandemic recovery efforts through the Covid-19 Crisis Recovery Programme. Three of the projects are sovereign projects, and two are non-sovereign projects.

Recently, the AIIB Board approved the Egypt Sustainable Transport and Digital Infrastructure Guarantee project in its September 2023 meeting in Cairo. More information from the AIIB will be made available soon.

 

How does the AIIB as a financial institution support Egypt in enhancing the investment climate?

Egypt and the AIIB share a long-standing relationship, starting when Egypt joined as a non-regional founding member on 4 August 2016. Egypt, as an important partner for the bank, is at the crossroads between Asia and Africa and is ideally suited for a strategic partnership with the AIIB. Our bank can give its support in connecting two important continents by providing expertise and funding for building the infrastructure of the future.

We have successfully leveraged our partnership and jointly financed projects with Egypt in the energy and water sectors, and for the Covid-19 response, and these have made a positive impact on the lives of many Egyptian communities. To date, Egypt is the 10th largest client of the bank, and our board has approved $1,270 million in investment approvals.

Speaking broadly, global growth is slow. Many governments face high debts, fiscal deficits, and rising servicing costs, and private-sector investors need to adjust to the new interest-rate environment. All these have posed headwinds for infrastructure investments. However, it’s important to take a more medium-term look. Countries with prudent macroeconomic policies continue to have the capacity to invest.

The normalisation of monetary policies and interest rates can in fact reduce the more speculative types of investments and channel capital towards productive ones such as infrastructure. Well-structured infrastructure projects will remain resilient against inflation. The mission of the AIIB is to not only help address the cyclical gaps in infrastructure investments, but also to promote multilateralism and enhance international cooperation.

 

How is Egypt expected to benefit from the AIIB’s newly announced Climate Action Plan?

Egypt, like many of our members, is already suffering from the consequences of climate change. The UN considers Egypt to be vulnerable to projected increases in heat waves, dust storms, coastal storms, and extreme weather events.

The AIIB’s first Climate Action Plan (CAP) provides a statement of intent to our members, including Egypt, on how we will go beyond business-as-usual, creating a new operating manual for climate financing and deploying all our available tools to urgently accelerate climate action and work more effectively with our partners to do more and do better in the fight against climate change.

Under the CAP, the AIIB commits to tailoring climate solutions to individual member needs and circumstances, considering the varied impacts of climate change with a focus both on mitigating further climate change and enhancing adaption where the impacts are already being felt.  

The bank intends to leverage its resources and fresh balance sheet to bridge the climate financing gap, deploying an increasing share of financing to climate as it grows. Through diversified products and broadened partnerships, it aims to catalyse private capital and enhance green infrastructure as an asset class. We understand the importance of technological innovation for addressing climate challenges. The CAP will promote innovative, cost-effective technologies and facilitate their large-scale adoption.

 

What are the key outcomes from the AIIB’s annual meeting held in Sharm El-Sheikh in September?

As one of the founding members of the AIIB, we were delighted to gather in Egypt for our eighth Annual Meeting and our first in Africa. By holding our Annual Meeting in Egypt, we had the opportunity to directly engage with more of our members in the region and expand our partnerships in the area.

A priority at the Annual Meeting was the announcement of our first ever Climate Action Plan (CAP) and demonstrating to our members our commitment to being their climate partner. The plan sets out how we will go beyond business-as-usual, creating a new operating manual for climate financing and deploying all our available tools to urgently accelerate climate action.

We were also delighted to announce three new members, El Salvador, the Solomon Islands, and Tanzania, taking our total membership to 109. This makes the AIIB the second-largest MDB globally by membership size — something we are hugely proud of — and our members collectively account for 81 per cent of the world’s population and 65 per cent of global gross domestic product.

* A version of this article appears in print in the 19 October, 2023 edition of Al-Ahram Weekly

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