It has been fifty years since the United Arab Emirates began its journey in the family of nations.
Today, the UAE sits at the crossroads of the world, a bridge between east and west, in which the Asian Infrastructure Investment Bank (AIIB) also plays a vital role. It was in April 2015 when the UAE became one of what is today more than 100 members of the AIIB, created to harness global capital, improve sustainable economic development, and create wealth and improve infrastructure connectivity across Asia.
Since then, the Beijing-headquartered international organisation, proposed by Chinese president Xi Jinping in 2013, has provided funds equivalent to billions of US dollars to countries from Azerbaijan to Vietnam and for projects as diverse as wind power, rural sanitation and Covid-19 emergency response. Its achievements and activities, particularly in support of economies badly hit by the pandemic, will be one of the highlights of the sixth Annual Meeting of the governors of AIIB to be hosted in the UAE from Tuesday until Thursday.
The meeting will be chaired by Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and the UAE’s governor on the AIIB board of governors. As the president of the bank, Jin Liqun, noted at the signing in July of the MOU to confirm the hosts of 2021 general meeting: “As one of the founding members of AIIB, the UAE has provided staunch support for the bank since its foundation and played a crucial role in shaping AIIB as it has grown and developed.” The sixth annual meeting will take as its theme “Investing Today, Transforming Tomorrow,” with a series of webinars that will examine how to exchange ideas and create opportunities to meet the challenge of climate change and better connect Asia and the world.
It is a vision of the future that matches much of the strategy of the UAE government as it transitions to a post-oil economy. Announced in September, the 10 “Principles of the 50” lay out the economic, political and developmental road map for the next five decades. The principles represent core guidelines for all of the UAE’s institutions to strengthen the union, build a sustainable economy, harness all resources to build a more prosperous society, foster positive regional and global relations to achieve national goals, and support peace and stability around the world. The principles also underpin the UAE’s jubilee celebrations represented by the “Projects of the 50”. The projects are a set of ambitious initiatives that will boost economic growth and set the UAE on a progressive course for the next 50 years.
The UAE has long used its foreign aid budget – one of the largest in the world – in support not only of humanitarian relief, but infrastructure projects that offer hope of a better life for millions, especially in the Middle East and North Africa (Mena). In the past year, much of that aid has been Covid-19 related – to 47 countries in total – a priority reflected in the work of the AIIB, which has approved more than a dozen loans to countries including India, Turkey and the Philippines for Covid response measures.
This year’s general meeting seeks to further define the goals of the AIIB. Its core message of “Infrastructure for Tomorrow” or “i4T”, will place, as the bank puts it, “green infrastructure with sustainability, innovation and connectivity at its core … by unlocking finance that brings this vision to fruition. As our clients succeed in building i4t, society shares in that success.” This means supporting sustainability by assessing projects on the basis of ecological impact, including biodiversity and climate change, as well as offering sound returns on investment with economic growth and increased productivity, and with a strong social element that gives access to people who previously have been excluded from access to infrastructure services.
By hosting its first general meeting in the Middle East, the AIIB seeks to engage with stakeholders in the region and beyond. Last year, it approved funding for its first renewables project in Oman, a $60 million loan for a solar energy project. The 500-megawatt greenfield solar photovoltaic power plant will be built in Ibri, with the aim of reducing Oman’s dependence on natural gas, currently used for almost all of its electricity generation. The objectives of both the AIIB and Oman in this kind of project tie in closely with those of the UAE, which has also made substantial investments both at home and overseas in alternative energy.
Masdar, the Abu Dhabi clean energy company that is wholly owned by Mubadala Investment Company, has a 20 per cent stake in the London Array, one of the world’s largest wind farms, which provides enough clean electricity to supply the equivalent of three million homes. In Morocco, Masdar is part of an international consortium that in 2019 was awarded a Dh2.8bn tender to build an 800-megawatt solar power plant in the Atlas Mountains that should be delivering electricity to the national grid next year. It is part of an ambitious plan to meet more than half of Morocco’s needs using renewable energy by 2030.
These projects, and many others, illustrate a common focus in both the policies and direction of the work of the AIIB and the government of the UAE. Its closeness is further demonstrated by the MOU signed last month between the bank and the United Nations’ International Renewable Energy Agency (Irena), in which both organisations will scale up their efforts to increase the use of renewable energy, especially in Asia, and to offer funding for low-carbon energy projects. Irena is located in Abu Dhabi, a result of a successful bid in 2009, which made it the first major international agency to be headquartered in the region.
The role that the AIIB can play in financing potentially transformative infrastructure projects will be further highlighted during the Annual Meeting. It will showcase another Oman project during the opening sessions, this time a broadband project, also supported by the AIIB, which aims to offer fibre broadband to over 80 per cent of urban areas by 2025.
A UAE session of the Annual Meeting tomorrow will look deeper into what has been called the “infrastructure spending gap” in the Middle East. It will take as its starting point the value shown in infrastructure as demonstrated by the response to the Covid-19 pandemic and will focus on the UAE, the GCC and the Middle East in general, looking at new financing and investment models for both public and private partnerships that can fully realise the economic potential of these countries. A second UAE seminar will look at the country’s support for what is known as climate resilient infrastructure – or how everything from buildings, transport, water, energy and sanitation can be decarbonised in the fight to contain climate change.
On the eve of the Cop26 UN climate change conference in Glasgow, which begins only two days after the AIIB general meeting, the seminar will offer examples of technologies and adaptation measures being deployed in the UAE, the new business opportunities they create, and how financing options for smart infrastructure projects that anticipate climate challenges might be financed. For its part, the AIIB has underlined its commitment and policies on investment and climate change, with Mr Liqun, the president and chair of the board of the bank, explicitly stating last year that he will not finance coal-powered power stations, or any projects related to coal. He was speaking as AIIB proposed a climate change investment framework jointly with the European asset manager Amundi that takes the three key objectives of the 2019 Paris Agreement – the predecessor of Cop26 – as guidance for funding that aligns with climate change mitigation, adaptation and low-carbon transition objectives.
Prior to Cop26, the UAE has this month already unveiled an investment of almost US$165bn for its own net-zero target for carbon emissions by 2050, making it the first country in the Gulf to do so, and described as “a historic announcement,” by the Cop26 president Alok Sharma. As the AIIB and the UAE look to the future in parallel, with both seeking to support investments that build a better quality of life, and protect the environment while raising economic growth and increased productivity, it is clear that this is a partnership with a bright future.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
