What do AIIB's procurements opportunities tell us about their development strategy?

It is nearing a year and a half since the Asian Infrastructure Investment Bank opened its doors for operations on Jan. 16, 2016. Since its foundation, the Chinese-led bank has been shrouded in controversy. There were concerns that the bank was a political power play for regional control. There were concerns that it did not have appropriate governance structures. And the AIIB was thought to be competition to the Asian Development Bank whose relevance has been questioned in recent years. But since operations began, the fears have subsided. There have been no large political power plays from the bank, and the ADB is still operational. Once-skeptical critics of the bank, such as the United States and Japan, have grown quieter. Analyzing tenders and grants that have been fully or partly funding by the AIIB, Devex has investigated the bank’s priorities to understand what makes them stand apart from other players in development finance. Based on the data from the first 18 months, it appears the development strategy for the AIIB has been to progress slowly and learn from the best. Collaborative efforts Despite being the new kid on the block in development financing, the AIIB has not chosen to go it alone when it comes to financing, funding and managing projects. More than three-quarter of opportunities for open tender have thus far been collaborative efforts, seeing the AIIB partner with one of seven partners — the ADB, European Bank of Reconstruction and Development, European Investment Bank, Global Environment Facility, United Nations System, World Bank and most recently First Initiative. The World Bank is their leading partner, co-funding 60 opportunities. The collaborations began early, with a July 2015 announcement of funding for a regional infrastructure development fund in Indonesian set to invest $406 million to finance infrastructure projects in the region. And the collaborations continues, most recently with 42 small- and medium-sized projects which will upgrade and resurface roads throughout India. The ADB has similarly been a partner since the early stages rather than the competitor it is externally perceived to be. So far, 10 tender opportunities have been co-financed by the AIIB and ADB, with the partnership beginning in September 2015 with a $273 million project to improve the national motorway in Pakistan. More recently, they have expanded this collaboration on a $453 million project supporting and improving the natural gas infrastructure in Bangladesh. Collaborative financing opportunities provide the AIIB with a range of opportunities to learn from established banks, but also to assist others with expanding the scope of existing or planned projects. For the AIIB, it has allowed them to quickly expand beyond their initially-stated geographic footprint — the Asia-Pacific region. Regional influence The procurement opportunities with the AIIB have included projects in 12 countries. The focal point for the AIIB has been India, in which 57 opportunities have a regional focus — more than half of all opportunities to date. China follows second with 13 opportunities, primarily focused on services required to establish the AIIB and build its capability, while Bangladesh has seen 10 AIIB projects providing support to the region. Projects have extended as far west as Azerbaijan, Kazakhstan and Georgia, and include the Trans-Anatolian Natural Gas Pipeline Project, a collaborative project open for tenders in association with the World Bank and European Investment Bank with $8.6 billion, which aims to triple Azerbaijan's gas exports and improve the energy security in Europe. The “Pacific” focus on the bank has so far seen tendering opportunities available for projects focusing on Indonesia, Myanmar and Philippines — covering a diverse range of services, goods and works and sectors. Missing from the tender opportunities has so far been Mongolia, one of China’s bordering neighbors, where almost a quarter of the population lives below the poverty line. The geographic footprint of the AIIB is similar to that of the ADB, which an analysis by Devex shows is also strongly focused on India but extends further into Southeast Asia and the Pacific. AIIB is expected to follow as similar geographic focus which is more regionally concentrated than the World Bank whose reach extends globally. Sectoral focus As the name suggests, infrastructure is the focus of the AIIB and a sector analysis shows this is a key target of 71 of their 102 tender opportunities. AIIB opportunities tend to be categorized as “works” requiring construction, over procurements for services or goods. But infrastructure is not their only focus. Urban development, institutional development and energy are sectors high on their priority list. A key program for the AIIB’s urban development initiative is the Amaravati Sustainable Capital City Development Project — a $715 million initiative in association with the World Bank that is focused on building basic infrastructure for the city of Amaravati in India, while also supporting the creation of jobs and upskilling of residents. Institutional development programs, such as the Madhya Pradesh Rural Connectivity Project in India, aims to improve asset management capacity, strengthen design capacity and build capacity for cost-effective and environmentally optimized designs. Energy projects are linked to natural gas, hydropower and transmission strengthening. And project management is a capability that is strongly sought, so far a key requirement for 50 projects. The sectoral focus of the AIIB allows it to distinguish itself from other development banks. The ADB has a strong push for projects focusing on transportation, energy and finance. The bulk of the World Bank’s opportunities lie in social, urban, rural and resilience global practice. A count of contracts awarded by the African Development Bank shows a strong need for support on agriculture projects as well as water and sanitation. Open for business So far the progress opportunities available from the AIIB suggest that they are aiming to go slow and steady. 48 projects have been categorized by the AIIB as small tender opportunities, while 30 are medium and 24 large. The large AIIB opportunities revealed so far extend into 10 different countries. If the trend continues, the AIIB will be spreading their money — and opportunities for tenderers — widely. And while the focus is infrastructure, there are opportunities for a range of projects for development partners to collaborate with the AIIB. The Metro Manila Flood Management project, in collaboration with the GEF and the World Bank, will provide $500 million to reduce flood risks to people and property in flood-prone areas of greater metropolitan Manila. The Dam Operation, Rehabilitation, and Safety Improvement Project aims to build resilience for agricultural communities by rehabilitating and upgrading water infrastructure, including dams through to increasing water security and agricultural production within Indonesia. The Duqm Port Commercial Terminal and Operational Zone Development Project will improve transport efficiency, strengthen logistic services and reduce costs time of imports and exports to Oman. But all of these projects are part of a development bank that is still in its infancy. The AIIB’s projects have so far been strategic, strengthening capacity through collaboration. It is still learning both its strengths and weaknesses. But when the AIIB grasps its unique value and how it can add to the work of various development players, its geographic footprint and sectoral focus should display a distinct focus that sets it apart from the ADBs and the World Banks of development finance. For more insight into AIIB tender and grant opportunities, interact with our Tableau data visualization.