Kazakhstan and AIIB Unite to Close Infrastructure Financing Gap
$Trillions in Asia’s Infrastructure Funding Gap Demands Private Capital Mobilization
ASTANA — In a pivotal panel discussion on April 29, held at the Astana International Financial Centre (AIFC), experts from development banks, investment firms, and government agencies convened to address the pressing need for mobilizing private capital to bridge Asia’s significant infrastructure financing gap. Hosted by the Asian Infrastructure Investment Bank (AIIB) and Kazakhstan’s Ministry of National Economy, the dialogue underscored the integral role of private investment in infrastructure development.
Kazakhstan’s Strategic Importance
Konstantin Limitovskiy, Chief Investment Officer at AIIB, highlighted Kazakhstan’s critical position in the bank’s strategic portfolio. Being a founding member of AIIB, Kazakhstan has attracted over $2 billion in investments across seven major projects, spanning public and private sectors. Limitovskiy pointed out that the nation has made substantial strides in infrastructure, ranging from road connectivity to renewable energy and healthcare access.
“These are roads that bring communities closer, renewable energy that lights up homes, and hospitals that provide critical care,” he remarked, linking the country’s initiatives to AIIB’s mission of fostering international connectivity.
He also emphasized Kazakhstan’s ambitious goal of achieving carbon neutrality by 2060, noting efforts to expand green energy investments.
Commitment to Infrastructure Development
Vice Minister of Transport Talgat Lastayev shared the government’s commitment to modernizing its transport network through state development programs extending through 2030. He detailed plans to reconstruct over 4,000 kilometers of roads at an estimated cost of more than $15 billion.
“Transitioning to clean energy and sustainable infrastructure are key areas of Kazakhstan’s national strategy,” Lastayev stated, elaborating on priority transport corridor projects and upcoming co-financing agreements with international financial institutions.
Emphasizing Sustainability
Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), was adamant about the imperative need to integrate sustainable practices in capital markets. She asserted that engaging private capital effectively requires supportive regulatory frameworks and risk mitigation tools.
“Infrastructure is not simply about building assets – it is about enabling opportunity,” she noted, emphasizing the limitations of public funding in addressing the infrastructure gap.
Bogdanova highlighted AFSA’s initiatives to enhance the financial environment for sustainable products and their role in connecting development needs with private execution.
Innovative Financing Strategies
Asim Rana, AIIB’s manager for financial institutions, discussed the bank’s strategies to mobilize private capital, emphasizing partnerships with financial intermediaries. Initiatives like on-lending facilities and the creation of a collateralized loan obligation (CLO) vehicle in Singapore exemplify AIIB’s commitment to facilitate liquidity and investment in infrastructure.
“Making infrastructure projects commercially viable is vital to attracting institutional investors,” Rana observed, pointing out the importance of demonstrating sustainability and viability through rigorous checks.
Broader Economic Context
Akzhol Urazalin from the Ministry of National Economy presented a broader economic overview, referencing a projected growth rate of 4.8% for 2024, largely supported by agriculture and transportation. He revealed that Kazakhstan’s national infrastructure plan, valued at $80 billion, targets over 200 projects spanned across various sectors, with 90% of the funding expected from off-budget sources.
Urazalin recognized ongoing challenges, particularly in long-term financing and the establishment of robust public-private partnership frameworks. He emphasized the importance of developing flexible risk-sharing models to promote green financial instruments.
A Focused Investment Philosophy
Zamira Sundetova, CEO of SkyBridge Invest, shed light on the role of asset managers in long-term infrastructure development. Emphasizing sustainability and resilience, she advocated for Kazakhstan to consider establishing a joint infrastructure investment fund, inspired by successful international initiatives.
Wang Xianming, senior executive at China Construction Bank’s Astana branch, articulated the essential roles commercial banks play, from financing support to ecosystem building, reaffirming the need for innovative collaboration among various financial stakeholders.
Conclusion
The discussions at the AIFC highlighted Kazakhstan’s proactive approach to attracting private capital for sustainable infrastructure development. As the nation embarks on extensive projects to bolster its infrastructure, the insights shared by various stakeholders reaffirmed the critical need for public-private collaborations in tackling the infrastructure funding gap in Asia. The path forward necessitates a concerted effort among government, industry, and financial institutions to inspire confidence and mobilize the investment required for future growth.
