The writer is chief financial officer of the Asian Infrastructure Investment Bank. 

Back in September, representatives from the Asian Infrastructure Investment Bank’s (AIIB) 110 members gathered in the ancient Silk Road city of Samarkand, Uzbekistan for our ninth annual meeting. It’s the first time we’ve met in Central Asia and comes at a time when the region — along with the nearby Caucasus — is gaining prominence for its unique geographical position at the junction between Asia, Europe and the Middle East.

This positioning makes the area fertile ground to showcase a new path forward in fostering interregional connectivity by expanding its role as a transportation and logistics hub. The region’s wind and solar resources create promising potential to advance in clean energy production and sustainable development.  

It’s for these reasons that AIIB is committed to investing in Central Asia and the Caucasus, confident of the enhanced role they will play in the global economy of tomorrow.

A boom, with challenges 

Central Asia is currently experiencing an economic boom, with the region’s gross domestic product growth forecast to reach 5.9% in 2024, up from 5.7% last year. Data from fDi Markets shows that the number of announced FDI projects for Central Asia and the Caucasus hit a 15-year high in 2023 and is on track for another strong year in 2024. 

For all this progress, the regions still present investment hurdles. They need to update or expand critical infrastructure, including roads, railways and water systems, and to improve cross-border connectivity to take advantage of their advantageous geographical location. They must also invest in projects designed to mitigate the effects of climate change and transition to more sources of renewable energy.

Confident of their potential, the AIIB has a longstanding investment portfolio in both the Caucasus — totalling $1bn-worth of projects today — and Central Asia with $4.5bn-worth of projects. 

Uzbekistan has been a major recipient, thanks in part to an agreement signed early this year which will see AIIB support sovereign-backed projects worth more than $2.6bn. Examples of financing already committed include $385m towards a water and sewerage improvement project in Bukhara, which will provide access to clean water for 100% of the residents of this ancient city. In 2023, AIIB also provided $145m in financing for Masdar’s 897 megawatt (MW) solar portfolio being developed across the country. This is the largest solar development programme in Central Asia, with the capacity to serve more than one million households once fully operational. 

Meanwhile in Kazakhstan, AIIB is providing $46.7m in financing for the Zhanatas wind farm in the country’s south. With a generation capacity of 100MW and annual output of some 320 million kWh, the Zhanatas project will help cut around 250,000 tons of carbon dioxide emissions annually. In September, the bank signed a joint declaration with Kazakhstan with the intent of developing a three-year investment plan to promote green infrastructure, connectivity and regional co-operation. 

Op-eds you may have missed:

• Women, workforce, and the next White House
• Don't treat SEZs as a magic bullet
• Five traits of sustainable SEZs

COP centre stage

COP29 is being held this month in Baku, Azerbaijan, marking the first time the climate conference will take place in the Central Asia or Caucasus regions. The AIIB is committed to supporting the conference’s objectives and has already reached its target of having half of its approved financing focused on climate-related projects by 2025. These include renewable energy, clean transportation, and climate change mitigation and adaptation. Cross-border connectivity projects that can help improve trade and logistics links between our members are also a priority. 

Central Asia has ambitious plans to embark on a journey of sustainable economic development and, with energy demand expected to grow exponentially in the coming years, there is an important opportunity to harness its vast potential for more renewable energy projects. Similarly, as the nations of Central Asia and the Caucasus work to update their infrastructure, there is an opportunity to encourage interregional connectivity that takes advantage of their position along the corridor between Europe and Asia, and in a way that fosters economic development for local communities along the way.

The AIIB is focused on projects that will be beneficial and relevant to our members for decades to come. The natural strengths of Central Asia and the Caucusus, therefore, make them a perfect place to be focusing our attention.

Do you want more FDI stories delivered directly to your inbox? Subscribe to our newsletters.