It came as a bit of a surprise to some that the Beijing-based Asian Infrastructure Investment Bank (AIIB) approved its first project in sub-Saharan African country a few weeks ago with a $100 million loan to Rwanda as part of the bank’s COVID-19 Crisis Recovery Facility that it set up last year.
Why is an Asian-focused infrastructure bank lending money to African borrowers? And why Rwanda?
In a column published today on the Asia-Pacific news website The Diplomat, Hannah Ryder, CEO of the independent international development consultancy Development Reimagined, explained that this actually isn’t the AIIB’s first engagement in Africa (they dealt with Egypt back in 2017) and there are tactical reasons why Rwanda was chosen ahead of other African countries:
- JOINT PROJECT WITH THE WORLD BANK: “Co-financing allows AIIB – which doesn’t have any country offices itself due to its “lean” structure – to take advantage of the World Bank’s country presence for aspects such as analysis of environmental and social risk and surveillance of implementation. It thus enables money to flow out of the door faster.”
- RWANDA HAS INSTITUTIONAL MOMENTUM: “The second reason why Rwanda may be ahead of others on the continent is that its institutions appear to be at the forefront of implementation. For example, the Rwandan Development Bank (RDB) is heavily involved in delivery of the loans to small and medium enterprises for the new project, building on its experience of delivering the Economic Recovery Fund (ERF), which was set up in June 2020 to help businesses manage the negative economic impacts of COVID-19.”
