The year 2022 was fraught with challenges: rising interest rates in major economies, the continued disruption of global production chains, as well as the lingering effects of the coronavirus (COVID-19) pandemic, geopolitical complications, and the ever-increasing havoc wrought by climate change, to name just a few. All these challenges have posed formidable challenges for our Members, clients, beneficiaries, communities and the Asian Infrastructure Investment Bank’s (AIIB or the Bank) own operations.
These myriad challenges have tested and reaffirmed the integrity of AIIB’s clear strategic vision. Our Corporate Strategy, adopted in 2020 upon the approval by the Board of Directors, provides a framework for guiding and carrying out the delivery of our mission to finance infrastructure for tomorrow. Two years into the implementation of this strategy, the management and the staff have consistently demonstrated their deep understanding of AIIB’s thematic priorities1 and effective delivery on the ground in an effort to translate the strategy into tangible development results for our client Members. Guided by our Board of Directors, we at AIIB have continued to work with our client Members to tackle development challenges through the five strategic pillars that guide our actions.
In 2022, we ramped up our efforts to realise our Corporate Strategy targets of 50% of overall approved financing for climate mitigation and adaptation by 2025, 50% share of private sector financing by 2030, and 25% to 30% cross- border connectivity financing by 2030. In 2022, we made great strides toward achieving full Paris Alignment of our new financing operations and, in fact, realized this commitment on July 1, 2023.
AIIB’s climate financing in 2022 amounted to USD2.39 billion, or 56% of total approved regular financing2, up from 48% in the previous year and surpassing our 2025 target. Of the total climate financing, climate mitigation projects account for 81%, with the remaining 19% being adaptation finance3. Despite adaptation ranging between 15-20% annually, we have increased total adaptation from USD557.6 million in 2017 to a cumulative USD3.3 billion in 2022. As an infrastructure bank, the imperative to provide finance that strengthens the resilience and adaption of infrastructure presents opportunities to develop new dedicated financial structures, which will bolster AIIB’s climate adaptation agenda.
We have taken the necessary and significant efforts needed for the full operationalization of our commitment to realize Paris Alignment. This is a valuable opportunity to focus our Bank’s limited resources on areas that add value to our Members’ domestic and international climate pledges. We are working closely with our peer multilateral development banks (MDBs) to develop the joint MDB approach for Paris Alignment assessment and finalize the joint approach for indirect lending operations (including those through financial intermediaries).
Due to a volatile external operating environment in 2022 that affected project approval timetables, AIIB’s financing for cross-border connectivity projects declined 20% from the previous year. Cross-border connectivity financing amounted to USD550 million, or 13% of total approved regular financing volume. The transport sector received the largest share of cross-border connectivity project financing. At the same time, digital infrastructure and the energy sector also registered an increase, with some funded through financial intermediary instruments.
The Bank’s private sector financing in 2022 amounted to USD1.69 billion, or 39% of total approved regular financing, a substantial increase from 26% in the previous year. The Bank has been actively originating the private sector pipeline, executing high-quality transactions, while implementing a distinctive, efficient client experience.
The year 2022 holds many accomplishments of which we are proud, including the expansion of our membership and the provision of financing to new client Members. AIIB’s total project portfolio at the end of 2022 numbered 202 projects. Of the 42 projects approved this year, there was an even split between sovereign and non-sovereign lending. Our membership grew to 106 as we welcomed Mauritania as a prospective Member, while four others also completed the membership process and became full Members of AIIB. We have invested in 33 of our 106 Members, 16 of them in 2022, and approved projects in Côte d’Ivoire and Brazil for the first time.
Our Corporate Strategy requires that all of the Bank’s investments across infrastructure and other productive sectors must add value through one or more of the four thematic priorities. In 2022, of the total number of regular financing projects, 90% were aligned with our Green Infrastructure thematic priority, while 48% were aligned with the Technology-enabled Infrastructure, 29% were aligned with the Connectivity and Regional Cooperation, and 45% were aligned with the Private Capital Mobilization.
In particular, I would like to highlight the sterling achievements of AIIB staff in mobilizing private capital for infrastructure. By leveraging AIIB’s own balance sheet and our strong network of institutional investors and development partners, promising advances have been made in promoting infrastructure as an asset class. In 2022, we reported a total of USD2.4 billion in private capital mobilization4, up from USD1.3 billion in 2021, through private equity fund investments, loans and intermediary financing projects.
Many of our Members were affected by various crisis in 2022 and we have done our best to support them in their moment of greatest need. Early in February 2022, we extended our COVID-19 Crisis Recovery Facility until end- 2023, with a more focused approach and scope of financing, to sustain the Bank’s support to our Members in their efforts to overcome their most pressing pandemic and recovery challenges. The extension comes with an increase in its financing volume, bringing our total Facility financing to USD20 billion, up from USD13 billion. There were 11 projects financed under the Facility in 2022, four of which were vaccine financing projects for Cambodia, Côte d’Ivoire, India and Türkiye.
We have been working diligently to meet our clients’ short-term needs while holding true to the goals of our Corporate Strategy. We have added new tools to our toolbox to better support our Members, including a newly introduced Results- Based Financing modality approved by the Board in September 2022. These new instruments allow more synergies with our MDB partners at times when the multiple crises affecting many of our Members are also stretching the capacity of the MDB system to respond.
Our effort to introduce a Special Fund Window, created in May 2020, that assists lower income by with loan interest buy downs is bearing fruit. As of Dec. 31, 2022, two vaccine financing projects, in Cambodia and Côte d’Ivoire respectively, benefited from USD9.95 million of special fund resources. In light of the clear additional value of the Special Fund Window to serve the needs of less developed Members in the region, the Board approved the extension of the SFW-Facility as a regular instrument for AIIB’s financing to low-income Members in March 2022.
As we pursue our growth phase, we will continue to make strategic choices as a project finance bank with a business model based on multilateralism, partnerships and mobilization. The newly established Operational Partnership Department and the first overseas hub under our Global Presence approach will, over time, increase the breadth and depth of our partnerships, helping us stretch the impact of limited resources further.
Gender equality constitutes an integral component of the Bank’s development mandate. The Corporate Strategy elaborates on the Bank’s intent to improve gender equality outcomes in Asia by translating gender considerations into actual implementation within the projects financed by the Bank. To better operationalize our gender equality approach, we took stock of the extent to which gender considerations were integrated into AIIB’s policies and portfolio, with the intent of aligning squarely with the Bank’s peer institutions and other development partners to showcase our firm commitment to gender equality in both our policies and our practice. The gender review was presented to the Board in June 2022 and identified areas for further progress in effectively achieving gender equality, including the need to build up staff capacity and develop an operational approach for gender.
In addressing the challenges of 2022, the Management put a premium on maintaining regular and direct interaction with our Members, clients and stakeholders for enhanced mutual understanding. Now that the Covid-19 pandemic is behind us and travel restrictions have lifted, we are enjoying greatly increased opportunities for in-person communication with all of our stakeholders in various forms, bringing us closer together for essential exchange.
I am very proud of our staff who remain steadfastly focused on delivering the Bank’s services with integrity and a high sense of responsibility. Being part of AIIB requires commitment and dedication, and staff exceeded the expectations placed on them. AIIB’s achievements in 2022 would also not have been possible without the guidance of our Board of Directors, whose strategic oversight and direction to the Bank’s Management team are most invaluable. The Board’s efficiency and effectiveness, and their unqualified support for the Management team, are vitally important for AIIB’s governance and is the foundation of our ambition to be an MDB for the 21st century.
In 2023, we will focus on supporting our Members’ sustainable recovery, building strong client relationships, strengthening the quality of our investment operations, bolstering our financial sustainability and strengthening the institution and the AIIB Way.
The 2022 Annual Report is an opportunity for us to share our vision and provide our perspective on the Bank’s performance and progress toward its Corporate Strategy goals. I would like to share our story with you and invite you to join us as we continue to grow and finance Infrastructure for Tomorrow.
Jin Liqun
President and Chair of the Board of Directors
