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Africa Report


VOL.7 June 2015
Bank On It
AIIB attracts African members as developing countries seek an alternative source of funding
By Gitonga Njeru

With South Africa leading the way as the first African country to join the Asian Infrastructure Investment Bank (AIIB), other African nations are also keen to follow suit. Several have already applied for membership and there are predictions that nearly 75 percent of African countries would join the entity by the end of the year.

Dr. Harris Mule, a veteran economist in Nairobi, told ChinAfrica that Kenya, Uganda, Tanzania, South Sudan, Rwanda, Ghana, the Democratic Republic of the Congo (DRC), Cameroon, Nigeria and Côte d'Ivoire have confirmed through their foreign ministries their interest to join the AIIB.

"Discussions between China and [the countries interested to join the AIIB] are on course. The Asian economic giant is expected to heavily pour cash into the bank," said Mule.

According to him, Kenya has an obligation to join the AIIB. "In almost 10 years, China has done a lot for Kenya. [Chinese companies] have built us the best roads in the entire eastern African region. They have also invested in other sectors such as hospitals, schools and even stadiums."

Biggest beneficiary

Kenya's Cabinet Secretary for Foreign Affairs Amina Mohamed has said that Kenya is waiting for China to send an official invitation and is expected to join the AIIB before the bank's official launch in December. In recent years, Kenya has been one of the biggest beneficiaries of infrastructure projects funded or built by China.

Mohamed added that there are talks to set up a regional AIIB office in Kenya to serve the eastern African region plus central Africa.

Mule said much depends on the other countries' participation. So the coming months will be crucial for the AIIB's presence and activities in Africa.

The bank already has a market capitalization of about $100 billion. This is expected to grow as it expands. According to an Asian Development Bank estimate, Asia requires about $8 trillion investment to shore up the infrastructure in the region by 2020.

Global club

The United States, a major decision maker in the United Nations, opposed the AIIB, arguing that it does not represent the interests of development agendas globally. However, U.S. allies such as the United Kingdom, Germany and France are AIIB founding members.

"Kenya was expected to sign up by July but the plan was postponed," said Professor Makumi Mwagiru, Director of the Institute of Diplomacy and International Studies at the University of Nairobi. "Bilateral talks between Kenya and China look promising as Sino-African relations continue to improve. Western countries have never accomplished much in Africa. In fact, Western funds coming into Africa [decreased] by more than 52 percent over the last eight years as China continued to invest in the continent. The Chinese built road networks, for example, [and] have made African infrastructure [comparable] with that of the West."

The AIIB has 57 countries as its founding members while three more applications were under consideration. In Africa, while South Africa and Egypt are founding members, Togo, Algeria and Gabon have applied for membership.

"Many countries in Africa have economic policies to develop their infrastructure, such as roads and railways; so they have seen the urgent need for the bank," Mwagiru added. "As a future economic superpower, China is looking for partners to increase its growing global influence. [Chinese companies have] built good hospitals, schools, roads, airports and stadiums."

Economic potential

An official from the African Union secretariat in Nairobi, who did not want to be named, said that by the end of the year, more of the 54 African nations would become AIIB members.

"Africa wants more money and development from China. So expect 75 percent of African countries to be members by the year-end," the official said. "China has [undertaken] many projects, such as building roads, for them."
Mwagiru said since news about the bank emerged, applications have poured in from almost all parts of Asia and Europe.

"If you ask me whether the AIIB has a bright future, I will say yes," Mwagiru concluded. "But it has to play the right moves and convince the new members what it will be able to offer. Unlike Western countries, China does not demand much when giving out money and does not interfere with the political affairs of [other] countries."
Reports predict that China will overtake the United States by 2020 to become the world's largest economy.

"That is a major reason many countries want to associate with China," Mwagiru said.

(Reporting from Kenya)





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