The Asian Infrastructure Investment Bank followed up on a promise to move quickly in approving its first infrastructure projects, announcing the initial tranche during its inaugural annual meeting in Beijing, China, this weekend.
The first four projects are worth $509 million, and three are co-financing agreements with other development banks including the World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. A $165 million power supply project in Bangladesh will be the AIIB’s first standalone project.
“The bank is off to a very strong start,” AIIB President Jin Liqun said in his report to the bank’s board of governors during the annual meeting. “In just six months, we have together put the fundamentals of a large, modern multilateral financial institution in place, and have made significant progress.”
A “special fund” focused on project preparation assistance to AIIB’s current 57 member countries — with 24 additional member countries expected to join by early next year — was also announced during event in the Chinese capital.
Working with other multilateral banks will be crucial to the bank’s initial success, attendees and bank officials told Devex.
The AIIB’s speed in moving “from the vision to reality” remains impressive, WooChong Um, secretary of ADB, told Devex. But he also emphasized AIIB’s unique position of having “the benefit of help from existing organizations” complemented by “Mr. Jin's approach of learning and adapting from other more experienced banks” as crucial elements in its quick start.
Managing expectations from all stakeholders within and beyond the bank is also key, particularly in the early phases of operations, according to a senior AIIB official.
“We are still at the very beginning of creating AIIB,” Joachim von Amsberg, AIIB’s vice president for policy and strategy, told Devex in an exclusive interview. “We want to present to our shareholders a picture that the bank is now open for business but still at a very early stage where we are really building the institution.”
Von Amsberg, who joined AIIB two months ago after two and a half decades at the World Bank, said this does not mean compromising on high standards and operational procedures that the bank and all its shareholders set out when the Beijing-based institution was established.
“[It’s] very important to make sure that there’s full alignment between management and shareholders between what's this bank can and should achieve and how it should go about that,” he said.
Pace of progress
Despite the scope of its initial projects and overarching objectives, AIIB remains — at least currently — a “startup” institution, as von Amsberg put it. That will require stakeholders to calibrate their expectations accordingly.
“[AIIB] is a startup of 50 people, so [it is] different from a large organization like the one I've left, the World Bank, which [employs] 15,000 staff. It’s a very different world,” he said. “We have a similar mandate and similar governance and structure, but the corporate culture is something totally different.”
In September last year, for instance, civil society representatives questioned the conduct of the consultations of the bank’s environmental and social safeguards. The criticisms ranged from the lack of language diversity of the documents that limited the processes’ inclusivity to the short timeframe with which comments and suggestions could be made.
Von Amsberg said the lack of manpower at the bank has significantly affected these proceedings.
“Our capacity to engage as much as we want to is like a fraction of that of other existing banks,” he told Devex. “I think it's really important not to have the expectation that a bank of 50 staff is capable of engaging like a bank of 15,000 staff.”
Co-financing partnership agreements with other the multilateral institutions will help bridge some of the gaps, he said. Cooperation will see shared resources, staff, expertise and procedures, allowing projects to maintain a high standard in project design and implementation.
“This phase, co-financing projects where another MDB takes the lead, is a fantastic opportunity for us to build our systems, bring new staff on board, and train staff in a way that does not create inappropriate risks … that we would incur if we didn't have that partnership,” von Amsberg said.
“It's a very helpful way of allowing us to build the institution, and it's showing how much the international community values the creation of AIIB and values the constructive relationships with the other MDBs,” he added.
Jin, who served as the first Chinese vice president at ADB from 2003 to 2008, has spoken repeatedly about the importance of growing a strong corporate culture at AIIB. He emphasized that message again during the meetings in Beijing.
“A sound corporate culture is taking shape [at the bank],” the AIIB chief said, adding that the bank is focused on “exemplary organizational performance and corporate governance” to deliver infrastructure projects that remain “mindful of the need to protect the natural and human environment.”
With just six months of operational experience, many senior officials and staff at the bank are finding their way and still settling into their positions, after joining months (or weeks) ago. Hamid Sharif, who joined AIIB in April as director general of its compliance, effectiveness and integrity unit, told Devex about the changes he sees so far in the working environment at the new bank.
“The energy in the bank is good and exciting,” said Sharif, a former ADB country director for China before joining AIIB. “Since [the bank is] new, there’s more room to move and create new things.”
“We’re still getting to know each other,” von Amsberg said. “Of course, we talk much more now every day because we're so few people,” he said. “We have a lot of decisions to take about how to write our procedures, how to work together, what kind of culture to form [and] how to take decisions.”
He added that it’s “very different to work in this environment where every day in a sense determines the path of the organization, which is quite different working in an established institution where most of the basics and the direction have been set long before.”
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