This is the presentation made under our series on webinars on China-Africa relations.

1. Presentation by
Nattabi Patricia
Kirumira
Made on 18th March
2021
Email:
patriciaknattabi@gma
il.com

2. What is the Asian
Infrastructure
Investment Bank
(AIIB)?
A regional based (Asia
and Oceania)
international, multilateral
development bank.
Proposed in 2013 by
President Xi Jing Ping
of the People’s
Republic of China.
21 countries were
signatories to the
initial agreement to
establish the bank in
2014
The Bank was
established under its
founding Articles of
Agreement in June
2015.
At the time of its
launch, it had 51
founding members,
currently there are 102
members across the
globe.
Its headquarters are in
Beijing China but with
offices around the
world.
Official languages are
English and Chinese,
but the working
language is English.

3. Legal
framework
The AIIB Articles of Agreement
The AIIB By-Laws
Environmental and Social Frameworks
Risk Management Framework
Directives
See https://www.aiib.org/en/index.html

4. Purpose,
functions &
objectives
of the AIIB
Purpose
Under Article 1 of the Bank’s Article of Agreement, its purpose includes;
1. To foster sustainable economic development, wealth creation and
improve infrastructure connectivity in Asia through Investment mainly
in infrastructure
2. To promote regional cooperation and partnership in addressing
challenges of development
Functions
Under Article 2 of the Articles, its functions include;
1. Promotion of investment for public and private capital in infrastructure
mainly in infrastructure
2. Distribution of resources for harmonious economic growth
3. Mobilize and encourage private investment and supplement it in case its
lacking.
Objectives
From policy statements, its operating documents and scholarly articles we can gleam
that some of the objectives for the creation of the bank included;
1. Complementing the existing International Financial and Multilateral
Development Finance systems like the International Bank for
Reconstruction and Development, the Asian Development Bank, African
Development Bank etc., through partnerships and cooperation.
2. Providing alternative finance to its member states.

5. Purpose,
functions &
objectives of
the AIIB
cont.…
• Focusing especially on infrastructure development and connectivity
between economies and region to promote faster integration and remove
barriers of trade.
• Mobilizing of resources to do away with financing bottlenecks.
For China’s foreign policy
• Concern that the traditional IFI system was not evolving fast enough to
accommodate the present changing nature of the global economy, the
demands of the developing world for more resources and increased
participation in the governance system.
• It is an outlet for China’s internal overcapacity in construction through
engaging in infrastructure projects abroad.
• To encourage foreign enterprise and expansion for domestic companies
with new lending sources in the long run enabling access to new markets
and increasing global competitiveness thus raising up the value chain.
• To find investment opportunities for China’s large foreign exchange
reserves through multilateral means thereby sharing risks of investment
and lending but engaging in the decision making process of how the
monies are used.
• Internationalization of the RMB
• China is a point where its internal economic strategy is transitioning from
investment led growth to consumption led growth. Reformation of the
financial sector will help encourage its companies reach for external
opportunities to support this

6. Composition,
Membership
& Governance
Structure
• According to Article 3 of the Articles of Agreement, the
membership to the Bank is open to all sovereigns, particularly
mentioned are members of the IBRD and the ADB.
• At the time of signing, depositing and ratification of the Articles
of Agreement, on December 31 2015, the Bank had 51 members.
• Membership is determined by signing the articles, subscription to
shares and payment of subscription as laid out in the Articles of
Agreement. Membership is divided into Four major categories;
1. Regional Members, who are in Asia and Oceania. Top
five share holders in this category include China with
297,804 shares (30.89 % shares and 26.65% voting
power), India with 83,673 shares, Russia with 65,362,
Korea with 37,388, Australia with 36,912.
2. Non-Regional Members. The top five share holders
include Germany with 44,842 shares, France with
33,756 shares, Brazil with 31,810 shares and the UK
with 30,546 shares
3. Founding Members who at the time the Articles of
Agreement had come into force had signed the
documents and complied with the conditions set out.
These members have special voting rights under the
articles. (Article 28)
4. Prospective Members (18)

7. Governance
Structure
• Article 21 of the Articles of Agreement
1. Board of Governors each representing a member
state.
2. Board of Directors to whom the Board of
Governors can delegate, composing 12 Directors, 9
regional and 3 non-regional.
3. A President elected by a super-majority of the
BOGs (5 year tenure) (Currently its Mr. Jin Liqin
who has been elected twice)
4. Vice President elected by the Board of Directors
5. Senior Management Team with a Chief Risk
Officer, Chief Finance Officer and General
Counsel.
6. International Advisory Panel (has Dr. Ngozi
Okonjo Iweala, former Finance Minister Nigeria,
Former Managing Director of the World Bank)

8. The AIIB and
the Belt &
Road Initiative
(BRI)
The objectives and motives of the AIIB align and intersect
with those of the BRI especially integration of the financial
system, and making finance available to infrastructure
projects along the Belt and Road.
However, the AIIB and the BRI despite being both China-
led are independent of each other. Additionally the AIIB is
increasingly taking on a more international character in its
governance system. However, on still should not forget that
China is the largest stakeholder in both initiatives.
According to Mr. Jin Liqin the President of the AIIB, many of the
BRI projects are proposed to the bank for financing, however they
also need to pass the standards of the Bank to access funds.

9. AIIB relationship with International
Law, International Financial System
& the Bretton Woods System
• The Bank’s international law character is placed within its Articles of Agreement, signed by sovereign
states, therefore governed by public international law and established rules, practices and norms of
the international financial systems.
• Under Article 45, the Bank has full legal personality to contract, acquire and dispose of property, to
engage in legal proceedings.
• Therefore, the Bank has entered into several cooperation agreements with sovereign states,
international organizations and MDBs
• According to it’s Rule of Law document, the Bank entered into a Headquarters Agreement with
China “to define the legal status, privileges and immunities for AIIB’s operation and functioning in China.”
• The Articles of Agreement and the Headquarters Agreement are both registered at the UN
Secretariat in accordance with Article 102 of the UN Charter.
• The AIIB has observer status under United Nations General Assembly under (UNGA Resolution
A/RES/73/216.

10. Cont….
Article 31 of the Articles of Agreement
stipulate that the Bank stands by the principle
of non-interference in the internal affairs of
member states, that it maintains its
independence in decision-making and that
economic considerations are the only criteria
for financing projects.
Article 35 allows the Bank to
engage in cooperation with
member states and international
organizations through
arrangements approved by the
Board of Directors.

11. Africa and the
AIIB
• Egypt and South Africa are founding members of the AIIB.
• Currently there are 18 members ( 5 actual, and 13 prospective members)
Morocco, Algeria, Tunisia, Libya, Egypt, Sudan, Ethiopia, Djibouti, Kenya,
Rwanda, Benin, Togo, Ghana, Cote d’Ivoire, Guinea, Madagascar, Senegal,
South Africa.
• As many African countries are part of the BRI and are active financing and
investment destinations for China, the African continent has many reasons
to seek out partnership in the Bank.
• Only three projects in Africa have been approved by the AIIB, all in Egypt,
i.e.;
• The 2017 Egypt Round II Solar PV Feed-in Tariffs Program (partly
financed by the AIIB, the International Financial Corporation and
private companies)
• The 2018 Sustainable Rural Sanitation Services Program (Partnership
with the World Bank)
• The 2019 National Bank of Egypt On-Lending Facility for
Infrastructure.
• The AIIB also entered into a partnership agreement with the AfDB and the
Islamic Development Bank.

12. Opportunities
for African
countries
• Eligibility to borrow under the Articles of the AIIB includes
members or an agent, instrumentality, political subdivision of the
member, an entity or enterprise operating in the territory of a
member or to international organizations and entities. Non-member
can receive financing if an application is approved by the Board of
Governors. (Art. 11)
• The AIIB provides the opportunity of a competitive alternative to
member states for development finance, at negotiable prices and
interest rates without threat of unnecessary conditionality that
hinders progress and meaningful growth.
• Additionally, through cooperation and partnership with other
organizations the Bank not only diversifies and increases sources of
capital, it encourages productive distribution of these resources to a
focused area of investment, i.e., infrastructure.
• Encouraging more investment in infrastructure from newer sources
of capital ensures that developing countries especially can access
necessary funds to solve their development needs while accessing
monies elsewhere for other needs.
• Having African members in such an international financial
organization, increases chances for participation in governance, and
thereby integrates smaller economies into the global economic
landscape, providing a sense of stability to the international
financial system.

13. AIIB loans
and project
finance
• Easier accessibility to funding
• Market-based Loans rather than policy
• The AIIB’s narrower mandate allows it to have more flexibility, make
quicker decisions and reduce time between disbursement of funds and
implementation of project thereby reducing operation costs.
• Because it has an international membership lending risks are spread
out, this encourages creditors to take risks even in countries with low
credit ratings.
• Because it is new, the AIIB is responsive and reactionary to the
changing global needs and can adapt through innovation and
encourage the use of these resources for those purposes, i.e. its
Infrastructure for Tomorrow initiative is about supporting green
investment, innovation and connectivity.
• Its “Lean, Clean and Green” principles will hopefully have a positive
impact on the projects that are finance and the companies that are
supported by encouraging them to adopt higher ESG standards in their
operations.

14. References
• Articles of Agreement of the AIIB.
https://www.aiib.org/en/about-aiib/basic-documents/articles-of-
agreement/index.html
• Safiye Ergun, Chinese engagement in Africa through the Asian
Infrastructure Investment Bank, Cappodocia Journal of Area
Studies. December 2019.
• Lean, Clean and Green: A new model of multilateral development
bank for building infrastructure in Asia and beyond – An interview
with AIIB President Jin Liqun, Journal of Infrastructure, Policy
and Development (2018) Volume 2 Issue 1.
• China’s emerging institutional statecraft: The Asian Infrastructure
Investment Bank and the prospects for counter-hegemony. Project
on International Order and Strategy at BROOKINGS.
• The Rule of Law at the Asian Infrastructure Investment Bank.
aiib.org/law