In Canberra, AIIB tries to ease governance, transparency concerns

The latest on China’s controversial Asian Infrastructure Investment Bank, India’s growing aid to Africa and Afghanistan, current issues in health aid, and rising opportunities around impact investing were among the major highlights on Day Two of the Australasian Aid Conference in Canberra.

A much anticipated plenary session on the AIIB kicked off with Zhou Qiangwu, a senior adviser to the Chinese government on AIIB and director of the Asia-Pacific Finance and Development Center in China, making a case for Australia to become a founding member of the bank.

China announced its plan to establish a new multilateral lender with a $50 billion starting capital during the 2013 APEC summit in Indonesia. On Oct. 21, countries signed on as founding members — Australia was not among them, but Prime Minister Tony Abbott has said the country would join if the AIIB had the same governance arrangements and transparency as the World Bank.

Zhou set about easing such concerns, saying: “Both [the World Bank and the Asian Development Bank] have three-layer governance structures … the board of governors, the board of directors and the management — AIIB would have [a] similar structure.”

He said AIIB would be a bank of high standards and openness; its policy design would “follow the international practice … and give highest attention to environmental impact and resettlement,” while also including safeguards and measures to tackle corruption.

Zhou pressed the point that Australia still had the chance to get founding member status by signing up before the new deadline in March. Speaking to Devex later, he said he was optimistic Australia would come on board, although the senior adviser did stress that he AIIB secretariat is actively lobbying countries in the region and elsewhere to join the bank. Zhou said Jordan’s move to sign on in early February had brought the total number of member countries to 27.

India’s growing aid portfolio

The rise of India as an aid donor was another hot topic on the final day of the two-day conference — put on by Australian National University’s Development Policy Center and The Asia Foundation.

India is focusing development assistance in Asia and Africa, becoming a significant player in Afghanistan, while also sinking an increasing amount of aid into African countries, according to Gulshan Sachdeva, a professor at Jawaharlal Nehru University’s School of International Studies. Sachdeva said India had so far pledged $2 billion worth of aid to help rebuild Afghanistan, and made clear to stakeholders it was in for the long haul by stating that it “doesn’t have an exit strategy.”

The professor noted however that it was difficult to get a comprehensive view of India’s aid policy and spending because the government kept the details hidden from public view.

“Since there’s no information available, you cannot evaluate it professionally,” he said. “You do not know if they’re really very useful or not [as a donor].”

Focus on health systems strengthening

Attendees also heard about how the focus on diseases had affected the strength of health systems in developing countries — a hot topic in development circles worldwide since the Ebola outbreak shone light on gaps and weaknesses in health aid.

“I think the way forward has got to be around the lessons learned from Ebola,” said Barbara McPake, director of the Nossal Institute for Global Health at the University of Melbourne. The health economist specializing in health policy said stakeholders should be pushing health system strengthening, arguing that “there will always be a strong lobby for infectious diseases control and we need to be smarter.”

Meanwhile, a timely example of how global health goals can have an impact on local health priorities was highlighted in a talk on donor involvement in health systems strengthening in Mongolia.

Anar Ulikpan presented research revealing significant “tension” between the Mongolian government’s priorities and where donor money had been spent on health in the country.

“Because of their commitment to [the Millennium Development Goals] they still tend to fund these vertical programs” to the detriment of broader health system strengthening interventions, the Queensland University doctoral candidate said.

Impact investing provides growth opportunities

Another session that sparked interest among attendees looked at the opportunities and challenges in impact investing. A hot topic in development of late, impact investing taps private investors to fund enterprises and projects with social or environmental benefits.

Globally the impact investment industry is currently worth around 20 billion Australian dollars ($15.4 billion), while Australia is forecast to hit AU$2 billion by 2016, according to Alwyn Chilver, GRM Futures Group’s director for growth, private sector and livelihoods. Chilver said donors could help accelerate the realization of synergies between aid and the impact investment sector with “more programs to help grow social enterprises.”

Impact investing and private sector development generally were seen as particularly relevant to Australian aid players, given the conservative coalition government’s recent moves to tie its development assistance more closely to trade. The government has integrated the Australian Agency for International Development into the Department of Foreign Affairs and Trade, while slashing some AU$11 billion from the aid budget since coming to power in 2013.

“I think there’s going to be a private sector development flavor to a lot of DFAT programming going forward if not a specific focus on private sector development,” Mark Pruden told Devex. The business unit manager for private contracting firm Cardno said it was important for contractors to understand private development in order to work in the sector and implement projects successfully. He also saw a role private managing contractors could play in “being that intersection between donors and the private sector.”

“It’s a very important space for us to understand and occupy,” he stressed.

Do you think AIIB was able to ease donor concerns on transparency and governance enough to convince holdouts such as Australia, South Korea and Japan to sign up to the bank? Have your say by leaving a comment below.

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