Is a storm brewing at the Asian Infrastructure Investment Bank? One former official thinks so.
“There’s a lot of rhetoric surrounding high social and environmental standards, but the practice and implementation is substandard and lacking, to say the least,” the former official tells Devex. “There hasn’t been a major scandal yet emerging from AIIB projects, but my analysis is that the risk of one coming out, and soon — in the next three to five years — is quite high because of the way that the bank carries out its environmental and social due diligence.”
Beyond U.S. concerns about Chinese influence at AIIB’s inception, Devex’s Jesse Chase-Lubitz writes that the bank also has a long list of critics who say that an overly minimalist structure prioritizing speed and efficiency undermines the workforce and resources needed for sufficient accountability.
Directors dial in from their home countries to consider new policies and projects, trimming costs, but others argue that cuts down on sufficient scrutiny too. Plus, unlike other banks, the AIIB president can approve any project unilaterally, provided an executive director does not file a concern.
Meanwhile, U.S. concerns that, by founding AIIB, China was attempting to build a parallel system to Western-founded institutions such as the World Bank may have proved unfounded, but there are still worries from the bigger, older institutions that feel AIIB could threaten their future.
“Some MDB officials told us that they can feel some countries distancing themselves from the World Bank since the AIIB was founded,” says Jing Qian, an assistant professor at New York University in Shanghai. This is because countries know that they can get funding much faster at AIIB and avoid long bureaucratic processes, he says — adding that something that could take over two years at the World Bank could take just a couple of months at AIIB.
“This really puts the World Bank in a dilemma,” says Qian. If the World Bank makes special arrangements to attract countries, it creates an incentive to challenge the global financial institution that could spur other countries to set up their own institutions.
Read: AIIB turns 10 — is there trouble ahead for the China-backed bank? (Pro)
Further reading: AIIB's 10th anniversary — where is the money going? (Pro)
+ This piece is part of our agenda for Devex Pro Week, which began yesterday. Today is MDBs day, and for the rest of the week, we have a lineup of events, insider articles, and in-depth reports looking at the impact of a turbulent 2025 on philanthropy, the United Nations, bilateral donors, and INGOs.
Not yet a Pro member? We’re offering $100 off an annual membership to enjoy our full Pro Week lineup as well as all our premium content for a whole year.
Test yourself
Which two countries received the most International Development Association funding in 2024 with $3.4 billion each?
How many of the Asian Development Bank’s 69 members hail from the Asian region?
Which sector receives by far the most money in approvals from AIIB?
Since 2020, African Development Bank approvals have roughly doubled — true or false?
The private sector makes up roughly what percentage of European Bank for Reconstruction and Development financing each year?
For the answers, check out our latest special report on MDBs, produced exclusively for Devex Pro members.
Among other topics, the report covers the roles and financing power of the world’s 10 largest multilateral development banks, plus their emerging strategies for coordination with governments, national development banks, and the private sector.
Download your copy: A deep dive into the world’s biggest MDBs
Season of change
Rounding out our focus on MDBs this week, Devex’s Adva Saldinger has this much-needed stocktake of the reform process at the World Bank.
A year ago, the bank was discussing global public goods and talking about raising money for a Livable Planet Fund to incentivize countries to borrow for projects that tackle global challenges. Now it has oriented itself around job creation while going noticeably quiet on climate.
Still, despite U.S. President Donald Trump’s return to the White House, Adva writes that the bank has pressed ahead with some reforms set in motion before the 2024 presidential election.
It lowered the equity-to-loan ratio to 18%. That was meant to help boost lending, but the results are still pending. The equity-to-loan ratio for fiscal year 2025 was 21.6%, up slightly from 2024.
Meanwhile, World Bank President Ajay Banga told Bloomberg last month that the bank is piloting a securitization deal with Goldman Sachs Group Inc. that will combine International Finance Corporation projects into a package to offer the market in the next four to five months.
Experts say that is welcome.
“Given how much talk there is around private capital mobilization, around engaging with the private sector, it really has felt for a while now that the IFC has sort of been given a little bit of a free pass on all of this reform work,” Clemence Landers, vice president at the Center for Global Development, tells Adva.
Read: In a changing world, where do World Bank reforms stand? (Pro)
+ Pro Week event happening tomorrow: Join us at 10 a.m. ET (4 p.m. CET) for a conversation to put forth answers to the questions: What is the future of official development assistance? Are there more important tools and efficient funding methods for development than ODA? And is it possible to persuade global north donors to increase aid spending? Save your spot now.
MCC lives on
After months of mixed messages from the Trump White House about its future, the Millennium Challenge Corporation’s board held its first meeting of the new administration last week.
The board terminated some programs, though it is unclear which ones. It also tapped Fiji and Tonga as new focus areas.
“Let's hope they don't come at the expense of MCC programs that advance our strategic interests in Africa and Southeast Asia,” Nancy Lee, a senior fellow at the Center for Global Development, tells Adva.
Read: MCC board approves projects, terminates others at much-anticipated meeting
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Devex also got a look last week at Trump’s priorities for next month’s U.N. General Assembly, among them: A “fundamental rethink” of the international humanitarian system.
“For decades, the United States has led the world in shouldering the burden of international humanitarian assistance,” read an email from the State Department, which was shared with U.S. embassies across the world — and obtained by Devex — on Wednesday. “It is imperative for other donors to step up.”
In the email, the U.S. outlines three central “policy priorities,” including peace, sovereignty, and liberty. It is those three themes that the country feels the U.N. should focus on, while pushing the institution’s member states to identify the system’s efficiencies, eliminate redundancies, and reduce staff costs “to better serve the core purposes for which the UN was founded.”
Exclusive: A first look at the Trump administration's UNGA priorities
What we’re reading
In the green trenches: the European Investment Bank’s quest to become the EU’s climate bank. [ResearchGate]
A Senate plan for the U.S. International Development Finance Corporation’s reauthorization that would expand its size, and possibly its oversight. [Devex]
African public lenders are accessing markets to diversify their funding. [Financial Times]
Watch: How the Netherlands is rethinking climate finance. [Devex]
About the author
Vince Chadwickvchadw
Vince Chadwick is a contributing reporter at Devex. A law graduate from Melbourne, Australia, he was social affairs reporter for The Age newspaper, before covering breaking news, the arts, and public policy across Europe, including as a reporter and editor at POLITICO Europe. He was long-listed for International Journalist of the Year at the 2023 One World Media Awards.
