AIIB to Invest $1 Billion in African Projects

The Asian Infrastructure Investment Bank (AIIB) has unveiled plans to allocate $1 billion to projects across Africa aimed at enhancing connectivity and stimulating growth.

Despite the AIIB’s global emergence as a challenger to established institutions like the World Bank, its investment in Africa remains modest, accounting for only about 4% of the $52 billion it has disbursed since its inception approximately eight years ago, as revealed by AIIB President Jin Liqun.

Africa faces a substantial infrastructure funding gap estimated at around $700 billion, according to Liqun. This deficit presents a dilemma for many of the continent’s heavily indebted nations, forcing them to choose between servicing costly debts and addressing the basic needs of their populations, relegating infrastructure development to a secondary concern.

The AIIB has identified a pipeline of seven projects across Africa, including ventures in green energy in Egypt and Madagascar, as well as water provision in Morocco. Additionally, the multilateral lender is collaborating with Ivory Coast to establish a multi-year lending program for various projects.

Senegal, Tanzania, and Mauritania are in the final stages of joining the AIIB, which already counts 16 African members. Liqun emphasised that Kenya, Ivory Coast, and Nigeria will play pivotal roles in expanding the bank’s portfolio on the continent in the coming years.

Interest has been expressed by African members in issuing Panda and Samurai bonds, following Egypt’s successful issuance of 3.5 billion yuan in China’s markets with AIIB guarantees. Liqun expressed the institution’s willingness to support further bond transactions.

While acknowledging debt pressures faced by many African countries, Liqun asserted that the AIIB’s non-concessional lending offers relatively cheaper rates compared to commercial lenders and capital markets.

According to Liqun, the primary challenge in project implementation lies not in funding costs but in protracted project timelines. Delays often occur due to interdependent project components, such as power plants awaiting completion of transmission lines or vice versa.