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AIIB, MCDF Partnership to Foster High-Quality Infrastructure Investments

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The Asian Infrastructure Investment Bank (AIIB) has become the first implementing partner of the Multilateral Cooperation Center for Development Finance (MCDF). The partnership seeks to leverage resources to support the preparation of high-quality connectivity infrastructure projects to facilitate resilient and inclusive economic growth.

This is AIIB’s second accreditation with a multilateral partnership facility after securing its first accreditation with the Global Infrastructure Facility in June 2021. The partnership enables AIIB to expand its resources to serve a broader range of members and further its role in financing Infrastructure for Tomorrow (i4t)—green infrastructure with sustainability, innovation and connectivity at its core. It is also in line with AIIB’s thematic priority of Connectivity and Regional Cooperation and principle of high governance standards as set out in the Bank’s Corporate Strategy.

AIIB has been serving as the Administrator of the MCDF since June 2020. “MCDF was set up to spread the reach of high standards in connectivity projects and promote cooperation and knowledge sharing among MDBs. As host of the MCDF, we will strive to support these goals and ensure the MCDF is administered according to the highest level of multilateral governance standards, in line with the commitment made by our Board of Directors,” said Sir Danny Alexander, AIIB Vice President for Policy and Strategy.

As an implementing partner, AIIB will have access to MCDF resources to support its members in preparing high-quality connectivity infrastructure projects, benefiting from the platform that drives synergies and enhances learning and knowledge sharing. It will also help encourage other investors and financial institutions to adopt such high project standards for connectivity infrastructure investments. The partnership will enable AIIB to enhance collaboration with other development partners to support major infrastructure projects by leveraging the Bank’s sectoral experience and expertise. AIIB will further contribute to the development of high-quality projects by providing capacity building to its members.

“Connectivity infrastructure projects are large and complex and require significant resources for preparation,” said AIIB Vice President, Investment Operations (Region 1) D.J. Pandian. “With MCDF as a partner, we will be able to bridge this gap for our clients to help them prepare and implement high-quality connectivity infrastructure projects.”

MCDF’s support will play a critical role in enhancing information sharing across implementing partners and clients, strengthening capacity building to enhance relevant know-how and institutional capacity of development economies and reinforcing project preparation for accelerated project-related assessment.

“Many of our members need to build their capacity to develop and deliver connectivity projects,” said AIIB Vice President, Investment Operations (Region 2) Konstantin Limitovskiy. “A value-addition of this partnership is that our clients will have access to the best practices and knowledge generated by MCDF. This will help to strengthen clients’ ability to design and implement high quality projects.”

MCDF CEO Zhongjing Wang said the partnership marks a pivotal time for the international community.

“By bridging gaps in financing and knowledge for high-quality infrastructure and connectivity investments, the partnership between the MCDF and AIIB will catalyze development momentum, promote quality standards and achieve sustainable impact at the global, regional and country level,” said Wang.

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Guterres Calls on Private Sector to Help Developing Countries with Post-Pandemic Recovery

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In a special address at the virtual World Economic Forum Davos Agenda 2022 on Monday, United Nations Secretary-General António Guterres outlined three urgent areas that need to be addressed for the world to emerge from the ongoing global economic and health crisis and to ensure the UN Sustainable Development Goals are achieved.

“Recovery remains fragile and uneven amid the lingering pandemic, persistent labour market challenges, ongoing supply chain disruptions, rising inflation and looming debt traps,” he said. “To chart a new course, we need all hands on deck, especially the global business community.”

The first area that needs immediate attention is confronting the COVID-19 pandemic with equity and fairness. Citing the World Health Organization’s global target to vaccinate 40% of people in all countries by the end of 2021 and 70% by the middle of 2022, Guterres said the world is nowhere near these targets. “If we fail to vaccinate every person, we give rise to new variants that spread across borders and bring daily life and economies to a grinding halt,” he said.

To ensure vaccine equity, he called on countries and manufacturers to prioritize vaccine supply to the global programme COVAX and to support the local production of tests, vaccines and treatments around the world. He also asked pharmaceutical companies to stand in solidarity with developing countries by sharing licences, know-how and technology to find a way out of the pandemic.

The second challenge is the need to reform the global financial system, especially as low-income countries are at a huge disadvantage and are experiencing their slowest growth in a generation. “The burdens of record inflation, shrinking fiscal space, high interest rates and soaring energy and food prices are hitting every corner of the world and blocking recovery, especially in these low- and middle-income countries,” Guterres said. This is stifling any hope of growth by making it even more difficult for governments to invest in the sustainable and resilient systems.

He urged business leaders to help shape a global financial system that works for all countries. This includes working to restructure the long-term debt architecture, addressing corruption and illicit financial flows, ensuring that tax systems are fair and designed in a way that reduce inequalities, and bringing together governments, businesses, the financial sector and international financial institutions to build up private investment in developing countries.

Supporting climate action in developing countries is the third area that needs immediate attention, especially as global emissions are set to increase by 14% by 2030.

“Even if all developed countries kept their promises to drastically reduce emissions by 2030, global emissions would still be too high to keep the 1.5 degree Celsius goal within reach. We need a 45% reduction in global emissions this decade,” Guterres stressed.

Climate shocks, including extreme weather events, forced 30 million people to flee their homes in 2020 alone – three times more than those displaced by war and violence. And 1 billion children are at an extremely high risk of the impacts of climate change. “Turning this ship around will take immense willpower and ingenuity from governments and businesses alike, in every major-emitting nation,” he said. “We see a clear role for businesses and investors in supporting our net-zero goal.”

This, he said, calls for the creation of coalitions of government, public and private financial institutions, investment funds and companies with the technological know-how to provide targeted financial and technical support for every country that needs assistance.

The World Economic Forum’s Climate Action Platform is helping businesses, governments and NGOs accelerate and scale ambition and partnerships needed to drive a sustainable and inclusive future, and its Alliance of CEO Climate Leaders is engaging policy-makers to help deliver the transition to a net-zero economy.

Guterres concluded by saying that many countries need the support, ideas, financing and voice of the global business community.

“If we fail to provide debt relief and financing to developing countries, we create a lopsided recovery that can send an interconnected global economy into a tailspin,” he said. “If we fail to reduce inequalities, we weigh down economic progress for all people in all countries.”

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Modi Urges All Countries to Embrace Sustainable Lifestyles

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Prime Minister Narendra Modi of India used his address to the Davos Agenda 2022 to call on all countries to shift from a throwaway culture towards more sustainable lifestyles. Modi emphasized that while India is home to 17% of the world’s population, it contributes only 5% of global emissions.

“It is very essential that we move away from today’s take-make-use-dispose economy and towards a circular economy,” he said. India, which co-launched the International Solar Alliance at COP26 to ensure universal access to affordable solar energy, today generates 40% of its energy from non-fossil sources. Modi underlined that the next phase of India’s growth will be “green, clean, sustainable and reliable”.

The prime minister questioned the ability of the world’s multilateral organizations to meet challenges that did not exist when they were created. He said that reforming these institutions is “the responsibility of every democratic country”. In a clear call for greater global cooperation, he said: “Today, more than ever before, countries need each other’s help – this is the only path to a better future.” He offered India’s vision of One Earth One Health as a means of responding to global challenges, from the COVID-19 pandemic to climate change.

India is an entrepreneurial powerhouse that has created 10,000 new start-ups in the past six months and over 40 unicorns in 2021, Modi said, propelling the country into the top three in the world for billion-dollar new ventures. Its digital infrastructure is developing rapidly, with over 4.4 billion transactions taking place on its United Payments interface in the past month alone. Over the period 2020-2021, India attracted $82 billion in foreign direct investment – a new record. Modi said India is committed to becoming a trusted partner for global supply chains.

In a bid to improve the ease of doing business, Modi outlined the measures his government is taking to reduce government intervention to the minimum. He has done away with over 25,000 tax compliances in the past year and deregulated most sectors for investment, except for defence, aerospace and telecoms. His government is investing $1.3 trillion on connectivity-related infrastructure through its GatiShakti National Master Plan, which includes connecting over 6,000 villages through optical fibre. The plan’s aim, he said, is to “give new impetus to seamless connectivity for movement of goods, people and services”. India is also investing $26 billion to boost manufacturing and resilient supply chains.

The Prime Minister also spoke to the importance of collective and synchronized action to face global challenges. He highlighted new technology as an important area for countries to act together, “Another example is cryptocurrency. Given the kind of technology it is associated with, the decisions taken by a single country will be insufficient to deal with its challenges.”

Modi said India enters 2022 “infused with self-confidence”. Its economic growth is projected to hit 8.5%. It has already administered 1.6 billion COVID-19 vaccines. And, he added: “Our multilingual, multicultural environment is a great strength [that] teaches us not just to think of ourselves in times of crisis but to work in the best interests of the world.”

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Xi Jinping Calls for Greater Global Cooperation to Tackle Common Challenges

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President Xi Jinping of China called for stronger international cooperation in overcoming shared global challenges including defeating COVID-19, revitalizing the economy and addressing climate change, in the opening session of the World Economic Forum’s virtual event, the Davos Agenda 2022.

Xi outlined that the international community is still locked in a tenacious battle against what he called “a once-in-a-century pandemic”. Calling for greater global cooperation, he said: “The fight against the pandemic is proving to be a protracted one. COVID-19 is resurging with different variants and spreading faster than before. He added that shifting blame will only cause delays in response.”

Speaking in a special address to business, government and civil society leaders taking part in the week-long virtual event, he laid out a three-pronged approach to safeguard people’s health. First, countries need to strengthen active cooperation on research and development of medicines. Second, leaders need to build multiple lines of defence against the coronavirus. Third, countries need to fully leverage vaccines by ensuring equitable distribution, boosting vaccination rates and closing the global immunization gap.

Xi said that China is doing its part, having already sent more than 2 billion doses of vaccines to more than 120 countries and international organizations, to be closely followed by at least another 1 billion doses.

As the world emerges from the depths of pandemic gloom, Xi cautioned that several risks threaten to derail economic recovery, including disruptions in global supply chains, tight energy supply and rising commodity prices. He said: “If major economies take a U-turn in their monetary policies, there would be serious negative spillovers which will challenge global economic and financial stability.”

To fully unleash the vitality of the world economy, he also called for less protectionism, especially on trade. Economic globalization is an unstoppable trend which will not veer off course, he said, despite counter-currents along the way: “We should remove barriers, not erect walls. We should open up, not close off. We should seek integration, not de-couple.”

Xi highlighted China’s reform path. He pointed out that China’s domestic growth in 2021 hovered around a healthy 8% annually, with the country achieving its dual target of high growth with low inflation. Nevertheless, he also said Chinese leaders are aware of the further work necessary to achieve prosperity that benefits all people. “We remain committed to reform and opening up,” he said. “A rising tide indeed lifts all boats.”

On climate change, the Chinese president said that China stands ready to help the international community realize the UN 2030 agenda for sustainable development and to achieve carbon neutrality in the long term. He outlined that China would honour its word to achieve carbon peaking by 2030 followed by specific industry plans towards carbon neutrality. Xi pointed out that China has the world’s biggest carbon market and clean energy capability.

Xi also cautioned that “weaponizing economic, scientific and technological issues will gravely undercut international efforts to tackle common challenges”. He said: “Developed countries should take the lead in honouring their emission reductions, deliver on their commitment to financial and technological support and create conditions for developing countries to address climate change,” he added.

Klaus Schwab, the World Economic Forum’s Founder and Executive Chairman, thanked China for taking an active part in collaborative global efforts to combat shared challenges. “The year 2022 will provide a unique opportunity for global leaders to work jointly towards a more inclusive, more sustainable and more prosperous world,” Schwab said. “We must unite despite the different views we hold; ultimately we belong to a single global humanity whose fate is increasingly interconnected.”

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