Africa is under-represented in the new AIIB, but that doesn’t necessarily mean it will be neglected.
From developed economies such as the UK, to former Soviet states such as Kazakhstan and Kyrgyzstan, the Asian Infrastructure Investment Bank (AIIB) has attracted diverse members. But among the 57 founding members announced in April, only two are from Africa. With just South Africa and Egypt being named as members of what’s been touted as China’s rival to the World Bank, there are fears that Africa could be overlooked in China’s latest push for multilateral influence.
“I think African governments and the private sector should be raising the flag and saying ‘how nice that Asia is getting this, but how will we benefit?’” says Professor Stephany Griffith-Jones, Financial Markets Program Director at Columbia University’s Initiative for Policy Dialogue. “Africa needs to say ‘don’t forget about us, because we have the biggest needs and also a lot of opportunities.’”
The AIIB will have initial capital of $50bn and authorised capital of $100bn. The Asian Development Bank estimates that the region needs to plug an $8 trillion infrastructure gap from 2010 to 2020. Meanwhile, the World Bank estimates that Africa has similarly towering needs of $93 billion annually until 2020.
With such fierce competition for funds, a solely Asia-focused bank might be expected to divert attention away from Africa’s infrastructure concerns and the existing institutions that serve them. However, Hongying Wang, senior fellow at the Centre for International Governance Innovation (CIGI), says that the founding of the AIIB is more likely to be a spur for greater infrastructure investment among rival banks than a source of competition.
“In a way I don’t think it’s a zero sum game, that if it is going to the AIIB, it’s not going to other banks,” she says. “It’s very possible that these banks, if structured and governed well, will attract money that may not have gone to infrastructure at all.”
Wang says that despite an initial focus on Asia, China is likely to expand the bank’s remit – a move that could benefit Africa.
“I think it’s been clear from the beginning that the Chinese government really want to make this as multilateral and multi-continental as possible. In the long run, this could be China’s effort to have a kind of global reach. I don’t see this as anything that would come at the expense of China’s relationship
That is certainly the hope of African Development Bank president Donald Kaberuka, who told Reuters that he hoped the bank would take a “broader view of funding infrastructure in Africa” and would expand its mandate to other parts of the world.
After a global rush to membership that took both Beijing and its rivals by surprise earlier this year, Kaberuka was joined by World Bank president Jim Yong Kim in offering a cautious hand of friendship to the new institution. Kim pledged to work with the AIIB to improve governance and environmental standards – a pointed reference to US criticisms that the bank will lack the safeguards of Bretton Woods institutions.
As well as altering China’s relationship with the existing Western-backed development institutions, it remains to be seen how the AIIB will work alongside Chinese-backed institutions such as the New Development Bank – commonly known as the BRICS Bank – an institution which features a prominent role for South Africa. As well as matching the initial $10bn investment of the other four members, South Africa will host the New Development Bank’s African regional centre.
“I think all the enthusiasm and focus is on the AIIB, but I think they will run in parallel,” says Griffith-Jones. “Because it’s in the long-term interests of China, Brazil and India, I would have thought that they would find a mechanism either through the AIIB or more clearly the BRICS bank to leverage funding for Africa. But there may be a bit of a delay in terms of policymakers’ attention.”
CIGI’s Wang believes that the two institutions could work hand-in-hand too, with the AIIB focusing on China’s Silk Road ambitions in Asia and the New Development Bank working primarily in the Global South.
Given its role in both institutions and the absence of fellow sub-Saharan African nations, South Africa may be expected by some to assume the mantle of ‘voice of the continent’.
Mamphela Ramphele, a former managing director of the World Bank, thinks that the country would be better off re-evaluating its own motivations for joining, and says that African countries need to re-think their role in international forums – whether Western-backed or Chinese.
“South Africa has done the right thing I guess by joining, but did they ask themselves what is it we want to get out of this programme? Because it seems to me well, China is setting up this, we want to be friends with China therefore we join. If that’s the reason then we’re in trouble. But if they’ve gotten into the AIIB with a strategic approach to development that this bank will add to, then we have a different ball game”.
For Ramphele, regardless of China’s intentions, Africa will need to engage with the AIIB with far more strategic purpose than it has with development institutions to date – starting with sending the most competent people as the continent’s representatives. “We need to sit down and decide for ourselves what it is we’d like to accomplish by being part of international development aid finance or the IMF or whatever entity – right now we are only there because those institutions are there,” she says.
Want to continue reading? Subscribe today.
You've read all your free articles for this month! Subscribe now to enjoy full access to our content.
£8.00 / month
Receive full unlimited access to our articles, opinions, podcasts and more.
£70.00 / year
Our best value offer - save £26 and gain access to all of our digital content for an entire year!