Funding streams
Financial support is vital to sustainably promote infrastructure construction under the Belt and Road Initiative. A report by the Asian Development Bank (ADB) released in late February predicted that it required an investment of $26 trillion on infrastructure from 2016 to 2030 to maintain the current economic growth rate among Asian emerging economies. Breaking it down to annual investment, the figure stands at $1.7 trillion. However, the current actual annual investment in this area in the region is only around $800 billion.
Though there are many platforms providing financial support including ADB, Asian Infrastructure Investment Bank, the Silk Road Fund and BRICS Development Bank, the funding gap is still large. Filling this gap calls for active participation of private funding.
Yang Guangpu, researcher with the Development Research Center of the State Council, suggests public-private partnerships (PPP) should play an active role in mobilizing resources to enhance connectivity under the Belt and Road Initiative. “As an innovative approach of supplying public goods and services, PPP helps alleviate government’s financial pressure and enhance investment efficiency,” said Yang.
The involvement of Chinese private funding was first seen on the African continent. In January 2017, the Silkroad International Bank launched its services in Djibouti. Funded by Chinese enterprises such as IZP Group, the bank is the first Chinese-funded enterprise obtaining a banking license in Africa. It offers various financial services in Djibouti including issuing bank cards, providing cross-border payments and international bank cards collection as well as supporting Chinese enterprises’ projects in Africa.
“The opening of the bank was the latest example of China’s long-term support for infrastructure development in the nation,” said Ilyas Moussa Dawaleh, Djibouti’s Minister of Economy and Finance.
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