Islamic Development Bank and Asian Infrastructure Investment Bank Join Hands in African Projects

FROM EIR DAILY ALERT

Islamic Development Bank and Asian Infrastructure Investment Bank Join Hands in African Projects

Feb. 20, 2018 (EIRNS)—The largest development-financing organization in the Muslim world, the Islamic Development Bank (IDB) based in Jeddah, Saudi Arabia, is set to form a partnership with the China-led Asian Infrastructure Investment Bank to overcome the giant infrastructure gap in African and other developing countries. “We will partner with the AIIB,” IDB President Bandar Hajjar told the Financial Times.

“We will co-finance many projects [with AIIB] in the future in Africa. Africa needs ... about $150 billion a year to finance infrastructure and there are about 650 million people in Africa without access to electricity.”

Co-operation between the AIIB and the IDB, which are capitalized at $100 billion, and $150 billion, respectively, is set to create a new force in development finance for a swath of developing countries. Many of the IDB’s 57 member countries overlap with the AIIB’s approved membership of some 80 nations. Such co-operation would assist the AIIB in finding projects to broaden its loan portfolio.

In an indication of the IDB’s intent to broaden its financing activities, the bank is planning to “soon” launch its largest single bond—a sukuk (no interest) issue of $2.5 billion—to support infrastructure, education, health, and other projects within the bank’s 57 member nations, Hajjar said. (Sukuk, or Islamic bonds are structured in order to generate returns to investors without infringing Islamic law, which prohibits interest.) The move would follow a $1.25 billion sukuk bond issued late last year. The IDB has already approved $3.1 billion for Sub-Saharan African countries.