With four billion people globally still
unconnected, the Asian Infrastructure Investment Bank (AIIB) is seeking to
address the growing digital divide.
In Asia only 26 per cent of the rural population has access to broadband and
women are 10 percent less likely to own a mobile, with this gap growing to 28
per cent in South Asia.
According to AIIB research, investing in digital infrastructure can increase
the competitiveness of its members’ economies, improve the efficiency and
sustainability of traditional infrastructure sectors through the adoption of
new technologies, and attract more private capital investment to the sector.
“So far, many countries have focused on gradually improving their traditional
infrastructure for transport, communication and energy,” said AIIB Vice
President for Policy and Strategy Joachim von Amsberg. “What is now needed is a
shift to investing in tomorrow’s infrastructure. As a 21st century development
bank, AIIB is well positioned to take on this challenge and support its
members’ pursuit of their vision for an interconnected digital ecosystem. We
hope this can serve as a basis for new business models that benefit a country’s
citizens and boost sustainable development of the economy.”
The International Telecommunications Union last year highlighted the positive
knock-on effects improved digital infrastructure has on economic productivity,
noting that in developing countries, a 10-percent increase in broadband
coverage results in 1.4 percent of GDP growth.
Meanwhile, McKinsey estimates that transforming operations and systems of infrastructure
projects with digital technologies can reduce operating expenses by up to 25
percent, with performance gains of 20 to 40 percent in areas including safety,
reliability, customer satisfaction, and regulatory compliance.
Von Amsberg added that while the growth of the sector has mostly been financed
by private capital, the rapid pace of development has outstripped current
private investments. In parallel, there has also been a slowing down of
multilateral development banks’ financing directed to information technology
communications, with less than one percent of their resources directed towards
it.
“Because private-sector resources have fallen short of digital infrastructure
needs, AIIB can leverage its balance sheet to provide significant resources
with longer maturities and appropriate financing instruments,” he said.
Given AIIB’s current knowledge and expertise, it is expected that the Bank will
be in a position to invest in ‘hard’ digital infrastructure, like fibers,
towers, data centers and other physical connectivity and data infrastructure
from the start of the strategy. Investing in ‘soft’ digital infrastructure,
like terminals, services and applications, will require a more gradual
approach, with AIIB initially focusing its financing efforts on helping to make
the adoption of technology and innovation become mainstream in traditional
infrastructure sectors such as transport, energy, water and cities. This would
provide a potential ‘supply-side’ solution to reducing the infrastructure
financing gap and improving infrastructure quality.
To help strengthen its key focus areas, AIIB is calling for public
consultations on its draft Digital Infrastructure Strategy, which sets out
the institution’s broad vision and strategic response to Asia’s rapidly
evolving digital landscape.
