The tenth annual meeting of the board of directors of the Asian Infrastructure Investment Bank (AIIB) has been making headlines this week.
The reason is that the Chinese-led bank has been heavily involved in projects across the region. Experts in Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan are watching the new deals signed with their governments to try to forecast the future of economic developments.
There have been several meetings recently with the representatives of the Bank that also sparked interest. Notably, on 29 April, the AIIB organised a panel discussion with Kazakhstan’s Ministry of National Economy at the Astana International Financial Centre (AIFC).
Representatives from development banks, investment firms, and government agencies agreed that mobilising private capital is essential to closing an Asian infrastructure financing gap worth trillions of dollars.
The session opened with remarks by Konstantin Limitovskiy, a chief investment officer at AIIB, who joined virtually to reaffirm Kazakhstan’s strategic importance to the bank’s portfolio.
He noted that Kazakhstan, a founding member of the AIIB, has received more than $2 billion in investments across seven major public and private sector projects.
“These are roads that bring communities closer, renewable energy that lights up homes, and hospitals that provide critical care. Kazakhstan’s strategic position as a major dispersion and trade hub aligns with our mission to foster international connectivity,” said Limitovskiy at the time.
He emphasised the AIIB’s role in projects aligned with Kazakhstan’s goal of achieving carbon neutrality by 2060.
“We are supporting Kazakhstan by adding 420 megawatts of green energy so far,” he said, highlighting ongoing wind farm developments and the landmark financing of the country’s first hospital under its public-private partnership (PPP) law.
The Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and the energy ministries of Uzbekistan, Kazakhstan and Azerbaijan also signed a memorandum of understanding on 5 April to support the feasibility study for the Caspian Green Energy Corridor project.
“The Caspian Green Energy Corridor initiative is a strategic priority for the three countries, as well as for ADB, as it directly contributes to our core mission of facilitating cross-border cooperation on clean energy infrastructure while addressing multiple regional challenges,” said ADB Director General for Central and West Asia Evgeny Zhukov.
What does the AIIB’s portfolio reveal about the region?
Across the world, and predominantly in Asia, the bank has committed or approved over $100bn. About half of the development projects relate to energy, transport, and rural transformation.
In the list of the Bank’s projects, one can see that the five countries of Central Asia have attracted about $7.5bn worth of loans.
Indeed, according to the global financial institutions, the average growth of the region over the past 20 years was 6.1%, with its economy projected to be rising at about the same rate this year as well. The EBRD projects a steady growth rate over the next several years.
The region also experiences an average annual population growth of 1.1%, adding further strain to its infrastructure — much of which, particularly at the regional level, was built in the 1950s and 1960s during the Soviet era.
The highest number of projects funded by the bank was in Uzbekistan and the nature of the projects signals growth and rural development effort by the government.
After initial loans in 2020 aimed at mitigating economic effects of Covid 19 pandemic, also extended to Kazakhstan, most of the projects in Uzbekistan found on the AIIB’s list concern energy and rural development.
These projects include large-scale initiatives exceeding $500 million, aimed at strengthening overall economic resilience, improving infrastructure, and supporting the transition to a green economy. There are also more targeted efforts, such as the (re)construction of water supply systems for towns in the Bukhara region, with two projects worth $248 million and $165mn, respectively.
Other examples include the $108mn electrification of the railway between the rapidly growing tourist cities of Bukhara and Khiva, as well as a $100mn urban development project focused on small cities.
There are also a number of energy projects, all renewable, hydro power, solar and wind. All but one were non-sovereign projects (not government, but private or public enterprise debt) funding the construction of wind farms and solar parks.
These are all in line with Uzbekistan President Mirzyoyev’s plan, “New Uzbekistan 2030”, which prioritises the green transition and reduction of carbon emissions.
In Kazakhstan, the projects are fewer but used for bigger, strategic projects that are higher in value.
One example of this is the proposed half a billion dollar project reconstructing the highway from Aktobe to Ulgaysin or the highway between Zhezkazgan and Karagandy — worth $650mn. This is part of the Middle Corridor project, Kazakstan’s strategic attempt to remain the key transit route for transport between East and West.
During the April meeting with AIIB in Astana, Vice Minister of Transport Talgat Lastayev emphasised Kazakhstan’s commitment to creating a modern and highly developed transport network, supported by state development programmes extending through 2030.
“More than 4,000 kilometres of roads are subject to reconstruction and construction, costing more than $15bn,” he said. “Sustainable infrastructure development and the transition to clean energy are key areas of Kazakhstan’s national strategy.”
In Kyrgistan, there is a road project and a relatively small, $50mn loan for green and sustainable transition — an initiative crucial for a region with more and more people and dwindling water – climate resilience. The fact that this and other mentioned projects are co-financed with the World Bank is indicative of the AIIB’s standing.
From the part of portfolio about Tajikistan one can see that energy sustainability poses a challenge for the country and that there is an effort to resolve it.
Two main projects are hydro dams, reconstruction of the Rogun HPP, a major project in the country, funded from the AIIB loan with $270mn and revitalisation of the Nurek HPP — worth $60mn.
No projects are listed in Turkmenistan.
All in all, the Bank’s investment portfolio reflects a region whose initial loans in the early 2020s were aimed at COVID-19 recovery, followed by emergency funding to support liquidity and market reforms. In more recent years, however, the focus has shifted toward targeted growth-oriented and development projects.