Ah, Samarkand, city of (amongst others) Timur (Tamerlane) … Xuan Zang loved the place when he visited in 630 as did ibn Battuta in 1333, less so Genghis Khan in 1220 and Konstantin von Kaufman in 1868. James Elroy Flecker may not have visited at all in 1913.
More recently, in a country characterized as 2/3 desert and 1/3 cotton, Uzbekistan’s rowers came a creditable 15th at this year’s Paris Olympics (the 13 medals all came in boxing, martial arts, etc.) The rowers had been able to train at the 2.2 km rowing lake which slices through Silk Road Samarkand, a huge conferencing facility on the edge of the city. And it was at Silk Road Samarkand that the Asian Infrastructure Investment Bank held its 9th annual meeting this week. 2,000 delegates from 100 countries attended by air or by Afrosiyob train from Tashkent (recommended), the theme “building resilient infrastructure for all”.
The board of Logie Group joined them, safely in a minority of private sector finance, en route as they were along the Silk Road from Istanbul via the likes of the Sultanhani caravanserai in Anatolia last week and back to base in HK next month.
As usual, the week was marked by significant milestones, the conclusion of several new partnerships and knowledge sharing sessions to showcase the work of AIIB and its clients in addressing global challenges, facilitating access to finance and supporting the needs of AIIB members. The bank’s President Jin Liqun put it thus.
The AIIB runs as a hub located in Beijing (but not beholden to Chinese policy such as Belt & Road) without the spokes that fellow Multilateral Development Banks such as the ADB and IFC have; but it stresses that, being younger, it collaborates, not competes, with them. Indeed, US$396 million of loans last year to Masdar to build three solar plants in Uzbekistan with aggregate capacity of 897 MW also featured EIB, EBRD and ADB with Dutch FMO and ILX as B loan lenders.
Whilst club deals such as this are, of course, welcome, like this MDBs will quickly run out of capital so they need to crowd in commercial banks from the private sector. In order to do this, MDBs and / or host governments (Korea has been a good example) need to recognise that infrastructure projects generate benefits not necessarily captured by the project proponent so it is OK to offer support so as to close the gap between the risk profiles sought by the wall of money allocated by financial institutions to infrastructure and the risk profiles presented by projects when viewed on a stand – alone basis. Such support could include taking some first loss positions. After all, markets don’t need MDBs to behave as just another commercial bank which is broadly what their A loan / B loan structures achieve; and MDBs are in a stronger position to recoup any losses from a sovereign government than are private sector players.
Nonetheless, the AIIB is growing nicely and the world is a better place for that.
Uzbekistan was an appropriate venue to deliver this good news. Building on local traditions such as mahallah, $30 billion of PPP projects are planned as part of President Shavkat Mirziyoyev’s modernization plan. He opened the conference. Andrew, when interviewed by local TV station Uzbekistan24, confirmed that his message had gone down well.
Now to visit the rest of the country, starting with Samarkand’s own iconic Registan square.
