Kazakhstan and the Asian Infrastructure Investment Bank coordinate financial efforts to overcome the country's infrastructure shortfall.
Pumping up Private Capital: Meeting Asia's Infrastructure Financing Gap
Clocking in at Astana, the Asian Infrastructure Investment Bank (AIIB) and Kazakhstan's Ministry of National Economy convened a panel discussion on April 29, 2021, at the Astana International Financial Centre (AIFC). The gathering aimed to explore the pivotal role of private capital in bridging Asia's trillions of dollars in infrastructure financing gap.
In the limelight: Konstantin Limitovskiy, a chief investment officer at AIIB; Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA); Asim Rana, AIIB's manager for financial institutions and funds clients; Talgat Lastayev, Kazakhstan's Vice Minister of Transport; and a host of other key players in the development banking universe.
Kazakhstan's Green Vision
Kicking off the discussion, Limitovskiy highlighted Kazakhstan's strategic importance in the AIIB's portfolio, with more than $2 billion in investments across seven major projects bolstering roads, renewable energy, and healthcare infrastructure. He noted Kazakhstan's strategic position as a trade hub, aligning with the AIIB's mission to foster international connectivity. Emphasizing the AIIB's role in projects aimed at carbon neutrality, Limitovskiy announced that the bank has added 420 megawatts of green energy to Kazakhstan so far, with ongoing wind farm development and landmark financing of the country's first hospital under its public-private partnership (PPP) law.
Walking the Path Towards Sustainable Transport
Vice Minister of Transport, Talgat Lastayev, emphasized Kazakhstan's commitment to constructing a modern, next-gen transport network, supported by state development programs. With over 4,000 kilometers of roads set for reconstruction and construction at a cost of more than $15 billion, Lastayev identified sustainable infrastructure development and the transition to clean energy as critical areas of focus in Kazakhstan's national strategy.
Embracing Sustainability in Capital Markets
Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), touched on the importance of sustainability in attracting private capital. "Infrastructure isn't just about building assets," she said. "It's about creating opportunities through the right regulatory frameworks, risk mitigation tools, and market-based incentives that reward sustainability." Bogdanova called for the public sector to engage private capital by providing regulatory certainty, risk mitigation tools, and financial instruments that align long-term investor goals. AFSA is amplifying the financial environment for sustainable products and environmental, social, and governance (ESG) instruments.
Partnering for Sustainable Growth
Emphasizing AIIB's strategies to mobilize private capital, Asim Rana, the bank's manager for financial institutions and funds clients, highlighted collaborations with financial intermediaries, such as banks and asset managers. AIIB supports on-lending facilities, where capital is funneled through local banks to fund multiple infrastructure projects under strict environmental and social criteria. Rana pointed to the creation of Bayfront, a collateralized loan obligation (CLO) vehicle launched in Singapore, as well as similar initiatives in Hong Kong that bundle infrastructure loans into tradable securities.
Crowding in Private Capital: Challenges and Opportunities
Rana added that making infrastructure projects commercially viable was crucial for attracting institutional investors. "Infrastructure is a long-term investment, requiring patience but guaranteed returns," he noted, stressing that the bank meticulously assesses environmental, social, and credit factors to secure the viability and sustainability of projects.
Kazakhstan's Development Agenda: A Peek into the Future
Providing a wider context, Akzhol Urazalin, a deputy director at the Ministry of National Economy, announced Kazakhstan's steady 4.8% growth in 2024, with agriculture, transportation, and manufacturing leading the charge. He unveiled the country's infrastructure plan, spanning from 2029, valued at approximately $80 billion, and comprising over 200 projects in the energy, transport, digital, and sanitation sectors. Urazalin divulged that around 90% of the funding was expected from off-budget sources, such as PPPs, with ongoing reforms aiming to enhance transparency, tax policy, and institutional frameworks. Nevertheless, he acknowledged the challenges of long-term financing for the private sector and building strong legal mechanisms for PPPs.
Making a Green Impact: Private Perspectives
Zamira Sundetova, CEO of SkyBridge Invest, shared insights into how asset managers contribute to long-term infrastructure development and said that the firm was working to achieve Kazakhstan’s goal of carbon neutrality by 2060. Sundetova reported a growing interest in renewable energy and digital infrastructure, including fiber optics and 5G, driven by national priorities and regional demand. She called for Kazakhstan to establish a joint infrastructure investment fund, emulating the Three Seas Initiative in Europe.
Commercial Banks: Building an Ecosystem
Finally, Wang Xianming, a senior executive officer at China Construction Bank's Astana branch, highlighted the bank's investments totaling $1 billion in Kazakhstan since 2019, with a focus on gas, solar, and wind infrastructure. Wang underscored the roles that commercial banks can play as financiers, risk managers, and ecosystem builders, emphasizing the importance of greater collaboration among banks, asset managers, insurers, and government entities in building a diversified financing system.
Sources:[1] Asian Development Bank, The AIIB-ASEAN Infrastructure Fund Cambodia Transport Project (https://www.adb.org/site/projects/the-aiib-asean-infrastructure-fund-cambodia-transport-project-223614)[2] Multilateral Climate Diplomacy Fund, Kazakhstan (https://www.climatediplomacyfund.org/countries/kazakhstan/)[3] Asian Infrastructure Investment Bank, Annual Meeting 2021 (https://www.aiib.org/en/about-aiib/annual-meeting/)[4] Asian Development Bank, ADB Approves $14.5 Billion Program for Green COVID-19 Recovery in Asia and the Pacific (https://www.adb.org/news/adb-approves-145-billion-program-green-covid-19-recovery-asia-and-pacific)[5] European Investment Bank, European Investment Bank brings strong support to Azerbaijan’s gas expansion and energy transition (https://www.eib.org/en/press/eu-new-operations/2021/eib-brings-strong-support-to-azerbaijans-gas-expansion-and-energy-transition)
- The Asian Infrastructure Investment Bank (AIIB), in partnership with Kazakhstan's Ministry of National Economy, convened a panel discussion in Astana to explore the role of private capital in addressing Asia's trillions of dollars in infrastructure financing gap.
- Konstantin Limitovskiy, a chief investment officer at AIIB, highlighted Kazakhstan's strategic importance, with over $2 billion in investments across seven major projects focused on roads, renewable energy, and healthcare infrastructure.
- Emphasizing the AIIB's role in projects aimed at carbon neutrality, Limitovskiy announced that the bank has added 420 megawatts of green energy to Kazakhstan so far, with ongoing wind farm development and landmark financing of the country's first hospital under its public-private partnership (PPP) law.
- Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), stressed the importance of sustainability in attracting private capital and called for the public sector to engage private capital by providing regulatory certainty, risk mitigation tools, and financial instruments that align long-term investor goals.
- Asim Rana, AIIB's manager for financial institutions and funds clients, highlighted collaborations with financial intermediaries, such as banks and asset managers, and the creation of Bayfront, a collateralized loan obligation (CLO) vehicle in Singapore.
- Zamira Sundetova, CEO of SkyBridge Invest, shared insights into how asset managers contribute to long-term infrastructure development and said that the firm was working to achieve Kazakhstan’s goal of carbon neutrality by 2060.
- Wang Xianming, a senior executive officer at China Construction Bank's Astana branch, highlighted the bank's investments totaling $1 billion in Kazakhstan since 2019, with a focus on gas, solar, and wind infrastructure, and emphasized the importance of greater collaboration among banks, asset managers, insurers, and government entities in building a diversified financing system.
