Kazakhstan and the Asian Infrastructure Investment Bank (AIIB) Plan to Raise Finance to Address Infrastructure Deficit
Let's Talk Infrastructure: Stacking Cash for Asia's Game-Changing Projects
ASTANA - Private capital is the key to filling Asia's colossal infrastructure financing gap, according to experts from multilateral banks, investment firms, and government bodies. They discussed this topic at an invigorating panel discussion, hosted by the Asian Infrastructure Investment Bank (AIIB) and Kazakhstan's Ministry of National Economy, on April 29 at the Astana International Financial Centre (AIFC).
From left to right: Akzhol Urazalin, Evgeniya Bogdanova, Zamira Sundetova, Asim Rana, Nikoloz Gagua, Wang Xianming. Credits: Nagima Abuova / The Astana Times
Kazakhstan: Infrastructure Visionaries
Kicking off the event, Konstantin Limitovskiy, AIIB's chief investment officer, joined virtually to underline Kazakhstan's importance in their investment portfolio. He praised that, as a founding member, Kazakhstan has received over $2 billion in investments across seven significant public and private projects.
"These investments make possible roads that bring folks together, renewable energy that powers homes, and hospitals that provide essential care," said Limitovskiy, highlighting the AIIB's mission to promote global connectivity and support Kazakhstan's goal of achieving carbon neutrality by 2060.
He further elaborated on their focus on green energy initiatives, such as wind farm developments and the landmark financing of Kazakhstan's first hospital under its public-private partnership (PPP) law. Railway bypass projects and infrastructure initiatives designed to remove trade barriers, improve regional connectivity, and expand access to vital services were also discussed.
"Working together, we are channeling public and private funds into projects that are transformative and sustainable," he concluded, inviting stakeholders to the AIIB's 10th annual meeting in Beijing this June.
Government Priorities: Innovative Funding Sources and Diversification
Vice Minister of Transport Talgat Lastayev outlined government priorities, focusing on creating a cutting-edge transport network and prioritizing sustainable infrastructure development.
"A staggering 4,000 kilometers of roads are scheduled for reconstruction and construction at an estimated cost of over $15 billion," said Lastayev, stressing Kazakhstan's commitment to its national strategy for a cleaner, more modernized infrastructure.
He showcased priority transport corridor projects such as the Karagandy-Zhezkazgan and Aktobe-Karabutak-Ulgaisyn routes and shared updates on upcoming co-financing agreements with the World Bank and the European Bank for Reconstruction and Development (EBRD).
Expanding Investment Tools and Partnerships
Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), emphasized the role of private capital in fostering opportunity through the right regulatory frameworks, risk mitigation tools, and market-based incentives that reward sustainability.
She stated that AFSA seeks to further expand the financial environment for sustainable products and environmental, social, and governance (ESG) instruments to mobilize capital more effectively.
"The interplay between public and private entities is vital, with multilateral banks like AIIB bridging the gap between public development needs and private-sector execution," Bogdanova said.
Attracting Private Capital: One Strategy at a Time
Asim Rana, AIIB's manager for financial institutions and funds clients, explained the bank's strategies to mobilize private capital, identifying it as a key strategic priority. Beyond direct investments in roads and solar farms, Rana underlined their partnerships with financial intermediaries, such as banks and asset managers, to scale impact.
Rana elaborated on how AIIB supports on-lending facilities, in which capital is funneled through local banks to fund various infrastructure projects under stringent environmental and social standards. He also mentioned the creation of Bayfront, a collateralized loan obligation (CLO) vehicle launched in Singapore, and similar initiatives in Hong Kong focusing on bundling infrastructure loans into tradable securities.
"We established a market for securities that is difficult to set up in Asia," Rana proudly revealed, attributing these innovations' success in recycling capital and increasing liquidity in the sector.
Rana also highlighted the necessity of making infrastructure projects financially attractive to institutional investors, stating, "Infrastructure is a long-dated asset class. It needs patience, but it also requires returns."
Mobilizing private capital for long-term infrastructure projects involves thorough assessments of environmental, social, and credit factors to ensure the project's viability and sustainability.
Kazakhstan's Development Agenda and Challenges
Akzhol Urazalin, a deputy director of the International Economic Cooperation Department at the Ministry of National Economy, provided a broader economic overview for Kazakhstan. He noted that the country has experienced steady growth of 4.8% in 2024, driven by sectors like agriculture, transportation, and manufacturing.
He further shed light on Kazakhstan's national infrastructure plan, spanning 2029, with a value of around $80 billion and over 200 projects in energy, transport, digital, and sanitation sectors, with nearly 90% of the funding expected from off-budget sources.
Challenges still remain in long-term financing for the private sector and building robust legal mechanisms for PPPs, as Urazalin mentioned, while emphasizing ongoing reforms to enhance transparency, tax policy, and institutional frameworks.
Investment Philosophy: Lean, Green, and Clean
Zamira Sundetova, SkyBridge Invest CEO, represents the private sector's perspective on facilitating complex infrastructure transactions that contribute to long-term development.
She shared her commitment to the Kazakh government's goal of achieving carbon neutrality by 2060 and highlighted growing interest in renewable energy and digital infrastructure, particularly fiber optics and 5G, fueled by national priorities and rising regional demand.
"Sustainability, financial resilience, and environmental impact are among the most crucial criteria when selecting a project for the long haul," Sundetova revealed to The Astana Times.
She encouraged Kazakhstan to ponder establishing a joint infrastructure investment fund, drawing inspiration from the Three Seas Initiative in Europe.
Commercial Banks: Dynamic Ecosystem Builders
Wang Xianming, a senior executive officer at China Construction Bank's (CCB) Astana branch, underlined the bank's $1 billion investment in Kazakhstan since its 2019 inception, with a focus on gas, solar, and wind infrastructure.
Wang described how commercial banks can work in three primary roles: financing supporters, risk managers, and ecosystem builders. This includes syndicated loans, green finance structures, and cross-border cost reduction mechanisms, emphasizing the necessity for greater collaboration among banks, asset managers, insurers, and government entities for diversified financing systems.
"This collaborative approach not only leverages our project evaluation expertise but also integrates the abilities of various financial institutions," Wang concluded.
- The Asian Infrastructure Investment Bank (AIIB) has invested over $2 billion in Kazakhstan, with projects focusing on roads, renewable energy, hospitals, and green energy initiatives like wind farm developments and the financing of Kazakhstan's first hospital under its public-private partnership (PPP) law.
- Evgeniya Bogdanova, CEO of the Astana Financial Services Authority (AFSA), stated that AFSA seeks to expand the financial environment for sustainable products and environmental, social, and governance (ESG) instruments to mobilize capital effectively, bridging the gap between public development needs and private-sector execution.
- Asim Rana, AIIB's manager for financial institutions and funds clients, mentioned the creation of Bayfront, a collateralized loan obligation (CLO) vehicle launched in Singapore, as an example of the bank's strategies to mobilize private capital, recycling capital and increasing liquidity in the sector.
