Finance mobilization by Kazakhstan and AIIB to close infrastructure deficit
Rewritten Article:
In the bustling city of Astana, the conversation revolved around bridging the monumental infrastructure financing gap in Asia. This focus was the centerpiece of a panel discussion hosted by the Asian Infrastructure Investment Bank (AIIB) and Kazakhstan's Ministry of National Economy on April 29, within the confines of the Astana International Financial Centre (AIFC). The lively discussion brought together reps from development banks, investment firms, and government agencies.
Kicking off the event was Konstantin Limitovskiy, a high-ranking official at AIIB. He emphasized Kazakhstan's crucial role in AIIB's portfolio—with the country receiving an impressive $2 billion in investments across seven key projects since joining the bank. The funds have been directed towards vital projects such as roads that knit communities together, renewable energy illuminating homes, and hospitals providing critical care. Limitovskiy highlighted AIIB's role in Kazakhstan's quest for carbon neutrality by 2060, having contributed 420 megawatts of green energy thus far. This includes ongoing wind farm developments and financing for Kazakhstan's first hospital under its Public-Private Partnership (PPP) law.
Talgat Lastayev, Vice Minister of Transport, underlined Kazakhstan's determined effort towards creating a contemporary and technologically advanced transport network. As part of the state's development programs extending up to 2030, over 4,000 kilometers of roads are set for reconstruction and construction, with a price tag of more than $15 billion. Lastayev pinpointed the Karagandy-Zhezkazgan and Aktobe-Karabutak-Ulgaisyn routes as priority transport corridor projects, while sharing updates on upcoming co-financing agreements with the World Bank and the European Bank for Reconstruction and Development (EBRD).
The dialogue expanded with Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), emphasizing sustainability as the driving force behind capital markets. According to her, infrastructure is more than just building assets; it's about empowering opportunities through fitting regulatory frameworks, risk mitigation tools, and market-based incentives that reward sustainability. She pointed out that the public sector alone can't bridge the infrastructure gap and stressed the importance of engaging private capital with regulatory certainty, risk mitigation tools, and financial instruments that align with long-term investor goals. She also underscored AFSA's efforts in expanding the financial environment for sustainable products and environmental, social, and governance (ESG) instruments.
Asim Rana, an AIIB manager, detailed AIIB's strategies to mobilize private capital—a key strategic priority. Beyond investing directly in roads or solar farms, AIIB partners with financial intermediaries, like banks and asset managers, to amplify impact through on-lending facilities, where capital is funneled through local banks to finance various infrastructure projects under strict environmental and social standards. Rana highlighted various innovative initiatives, such as a collateralized loan obligation (CLO) vehicle launched in Singapore and similar initiatives in Hong Kong, which bundle infrastructure loans into tradable securities. These innovations facilitate capital recycling and increase liquidity in the sector.
In addition to providing insights into AIIB's strategies, Rana emphasized that making infrastructure projects profitable is paramount to attracting institutional investors. "Patience and returns are vital for infrastructure investments," he explained, adding that ensuring projects are viable and sustainable involves rigorous checks on environmental, social, and credit factors.
Outlining Kazakhstan's broader economic context, Akzhol Urazalin, a deputy director at the Ministry of National Economy, shared that the country had witnessed steady growth of 4.8% in 2024, fueled by agriculture, transportation, and manufacturing. He unveiled Kazakhstan's national infrastructure plan, slated for 2029, with a whopping estimated price tag of approximately $80 billion and over 200 projects across energy, transport, digital, and sanitation sectors. Urazalin revealed that around 90% of the funding for this ambitious plan is expected to come from off-budget sources. He also underscored the importance of Public-Private Partnerships, citing ongoing reforms to promote transparency and strong legal mechanisms for PPPs, while acknowledging persisting challenges in long-term financing for the private sector and the need for innovative risk-sharing models.
Offering a private-sector viewpoint, Zamira Sundetova, the CEO of SkyBridge Invest, explained how asset managers contribute to long-term infrastructure development. She stated that SkyBridge Invest not only acts on behalf of their clients but also aids in complex infrastructure transactions. Sundetova highlighted the growing interest in renewable energy and digital infrastructure, sparked by national priorities and rising regional demand. She called for Kazakhstan to consider creating a joint infrastructure investment fund, inspired by the Three Seas Initiative in Europe.
Finally, Wang Xianming, a senior executive officer at China Construction Bank's (CCB) Astana branch, spoke about the bank's $1 billion investment in Kazakhstan since entering the market in 2019, with a focus on gas, solar, and wind infrastructure. Wang emphasized that commercial banks can play three vital roles in supporting infrastructure development: financing supporter, risk manager, and ecosystem builder. He detailed how CCB has developed green finance structures, reduced financing costs through cross-border cooperation, and syndicated loans in partnership with multilateral banks. Wang emphasized the necessity of sustained collaboration among banks, asset managers, insurers, and government entities to establish diversified financing systems.
The panel discussion underscored strategies aimed at mobilizing private capital through structured risk-sharing, sustainability-driven incentives, and multi-stakeholder collaboration to address Asia's substantial infrastructure financing gap. These strategies revolve around the use of Public-Private Partnerships, innovation in green financing, risk management, and ecosystem building, along with cross-institutional collaboration.
Enrichment Data:- This panel's focus centered on strategies for mobilizing private capital to address Asia's $trillion infrastructure financing gap. Strategies discussed included Public-Private Partnerships (PPP), Green Finance Innovation, Risk Management, and Cross-Institutional Collaboration.
- Public-Private Partnerships (PPP): Kazakhstan's use of PPP frameworks was highlighted, such as the first hospital project under PPP law funded by the AIIB.
- Green Finance Structures: The China Construction Bank (CCB) detailed cost reduction measures via cross-border green bonds and collaborations with multilateral banks. AIIB emphasized supporting renewable energy projects like Kazakhstan's 420 MW wind farms.
- Risk Management & Ecosystem Building: Commercial banks were urged to serve as risk managers by developing blended finance tools and syndicated loan structures with multilateral institutions to mitigate project risks.
- Cross-Border & Institutional Collaboration: Advocacy for joint efforts among banks, insurers, and governments to create diversified financing systems. This includes Multi-Donor Trust Fund (MDTF)-supported initiatives and AIIB-ASEAN transport projects.
- The Asian Infrastructure Investment Bank (AIIB) and Kazakhstan's Ministry of National Economy, during their discussion in Astana, stressed the importance of Public-Private Partnerships (PPP) in bridging Asia's trillion-dollar infrastructure financing gap.
- AIIB has contributed significantly to Kazakhstan's green energy initiatives, funding 420 megawatts of renewable energy and aiding in the development of wind farms.
- China Construction Bank (CCB) has reduced financing costs through cross-border cooperative green bonds and syndicated loans partnerships with multilateral banks, demonstrating an innovative approach to risk management and ecosystem building.
- The panel emphasized the significance of cross-institutional collaboration in addressing Asia's infrastructure financing gap, advocating for joint efforts among banks, insurers, and governments to establish diversified financing systems, similar to the Multi-Donor Trust Fund (MDTF)-supported initiatives and AIIB-ASEAN transport projects.
