The Asian Infrastructure Investment Bank (AIIB) is one of the most recently established (2015) multilateral development banks that is on a mission to foster sustainable economic development, create wealth, and improve infrastructure connectivity in Asia. Over the last seven years, the AIIB has mobilized over US$35 billion to fund over 182 projects across eight major sectors. Green infrastructure, regional cooperation, and technology-enabled development are the key directions cemented in the Bank’s latest corporate strategy.
DevelopmentAid, as the leading provider of business intelligence and recruitment solutions in the development sector, invited Ludger Schuknecht (Vice President and Corporate Secretary at AIIB), Yunlong Liu (Senior Procurement Specialist at AIIB), and Ignatius Santoso (Team Leader of the Operational Procurement Team at AIIB) to introduce the Bank and its mission, discuss its procurement policy/guidelines, and share a set of useful tips on how to succeed in landing projects funded by the AIIB.
An overview of AIIB’s Investment Portfolio
Despite its regional focus, the AIIB is a global bank comprising 105 approved members (51 regional, 54 non-regional) that represent 81% of the global population and 65% of the global GDP. It has a strong credit reputation confirmed by its AAA rating. Over the last seven years, the AIIB has disbursed over US$35 billion (as of August 11, 2022) to finance 182 projects across eight major sectors.
Fig.1. The share of approved funding by the type of financing instruments (2015-2022, % out of a total of US$35 billion)
Source: AIIB – Financing Operations.
AIIB’s Corporate Strategy for 2021-2030 prioritizes investments in (1) Green Infrastructure, (2) Connectivity and Regional Cooperation, (3) Technology-enabled Infrastructure, and (4) Private Capital Mobilization. It is important to mention that the AIIB aims to have about 50% (or about US$50 billion) of its financing directed toward green infrastructure by 2030 and plans to expand ongoing efforts to mobilize private capital for funding projects that concern the improvement of social infrastructure. By July 2023, all investments made by the Bank will be compatible with the climate change mitigation and resilience objectives set out in the Paris Agreement on climate change.
India is the largest recipient of the AIIB’s funding with an overall amount of over US$8.7 billion, followed by Turkey and China with about US$3.4 billion each. Egypt, Uzbekistan, and the Philippines are the countries with the least funding from the AIIB with US$1 billion and US$1,5 billion (UZB and PHL) respectively.
Fig.2. AIIB’s major recipients of funding (US$ billion, 2015-2022)
Source: Ludger Schuknecht, AIIB Business outreach webinar with DevelopmentAid (1 September 2022).
The dynamics of the AIIB’s lending activities or the rate of cumulative approvals show a clear upward trend with a steep increase observed between 2019 Q3 and 2022 Q2. Ludger Schuknecht expects the AIIB to further extend its lending operations and continue the positive trends. Moreover, he expects a noticeable increase in financing for private sector projects which will add another dimension of interest for those seeking to initiate business collaborations with the bank.
Fig.3. The evolution of AIIB cumulative approvals (2016-2022, quarterly – yearly, US$ billion)
Source: Ludger Schuknecht, AIIB Business outreach webinar with DevelopmentAid (1 September 2022).
AIIB Project Procurement Policy
The AIIB’s procurement policy states that any financing provided, guaranteed, or participated in by the Bank is used only for the purposes for which it was granted and that the economic and efficiency requirements are met. The Bank is also required to ensure that no restriction is placed upon the procurement of goods and services from any country. It is important to mention that the contractual and regulatory clauses stated in the AIIB’s procurement documents (AIIB’s Procurement Policy and Procurement Instructions for Recipients) apply to all stages of the procurement cycle for operational procurement irrespective of the mechanism of financing.
Lending agreements between the Bank and the recipient stipulate that the latter is responsible for implementing the project, including all aspects of the procurement process from strategic planning through to the award and management of contracts. At the same time, the Bank will apply various oversight modalities to confirm that all aspects of the procurement processes are carried out in accordance with the provisions of the Procurement Policy, the Procurement Instructions for Recipient, and legal agreement(s).
Fig.4. The roles and responsibilities of the AIIB and the recipient/borrower
Source: Yunlong Liu, AIIB Business outreach webinar with DevelopmentAid (1 September 2022).
Eligibility
The AIIB allows firms and individuals from all countries to offer goods, works, and services for Bank-financed projects regardless of whether the country is a member of the Bank or not. Nevertheless, the parties have to fulfill the eligibility conditions that are essential to ensure the firm or individual’s capability to fulfill the contract in question.
The following actors are excluded from any business opportunities:
- Firms or individuals debarred by the AIIB or cross debarred by five MDBs under the Agreement for Mutual Enforcement of Debarment Decisions as per the AIIB Policy on Prohibited Practices;
- Countries, (legal) persons, or entities that are under UN sanctions;
- Parties that are prohibited from having any commercial relations with the recipient country;
- Parties that are direct or indirect affiliates of a recipient (conflicts of interest);
- State-owned enterprises.
AIIB Procurement Opportunities
The AIIB’s procurement opportunities can be pursued along two main dimensions:
- Operational Procurement (Public Sector Operations) – refers to the contracts that involve the procurement of goods, works, and consulting services for infrastructure projects or other development projects and programs.
- Corporate Procurement – refers to the procurement (including the selection of suppliers and negotiation of terms and conditions of contracts and the entering into modification, management, administration and supervision of such contracts) of goods, works and services necessary to support the Bank’s operations. This includes contracts financed out of the Bank’s corporate budget and consulting services (individuals or firms).
The list of the AIIB’s financed ongoing (approved) and proposed (pipeline) projects is available on the AIIB opportunity database. In this context, DevelopmentAid’s Funding tab can be viewed as an efficient tool to identify past/current/future funding opportunities by the AIIB including the list of awarded/shortlisted contractors.
Here are some useful links:
AIIB Corporate Strategy
AIIB’s Procurement Policy (January 2016)
Procurement Instructions for Recipients (June 2, 2016)
AIIB Corporate Procurement Policy
List of AIIB projects
List of past, current, and future AIIB tenders on DevelopmentAid
For those who did not have the opportunity to join us for this online event, a link to the recorded version can be found here. The presentation materials used during this webinar can be requested at e.rata@developmentaid.org.
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