Covid-19: AIIB to scale up financing for investment in water, sanitation

The bank will target public health infra in developing countries where a lack of clean water makes even hand washing impossible as a preventive measure.

The coronavirus pandemic highlights the importance of sustainable and resilient infrastructure, the Asian Infrastructure Investment Bank said in a recent report, and it will be working on scaling up investment in “critical sustainable infrastructure”.

See all Infrastructure Investor’s coverage of coronavirus and its impact here.

The priority will be on what the firm terms public health infrastructure, which includes clean water and sanitation, and will announce several financing options for those sectors in the coming days and weeks, according to a statement.

A country’s preparedness to cope with epidemics is correlated with its quality of infrastructure, the bank said in its report.

“While each country’s specific situation will no doubt differ, it is still important to recognise that infrastructure development is key to preventing or mitigating future outbreaks,” Jang Ping Thia, a manager within AIIB’s economics unit, told Infrastructure Investor.

“More than 700 million people in the world do not have access to clean water, [so] even basic prevention like hand washing is not possible. We need to take in the long-term lessons from this outbreak. Infrastructure like clean water, sanitation, will have to be strengthened in developing economies experiencing population growth, urbanisation, and with increased connectivity to the rest of the world.”

Priorities will also shift towards healthcare and information and communications technology, Thia noted.

According to the report, investment in information and communication technology or digital infrastructure is needed as it improves efficiency in healthcare delivery and epidemic control. It cited the Ebola crisis of 2014 as an example, when text messaging was used to warn communities in remote locations and provide advice on prevention. Software technologies such as real-time monitoring systems were also used for contact tracing.

“All these examples require investments in digital connectivity infrastructure (eg use of satellite technology to connect remote locations), as well as investments in utility infrastructure (eg access to power and electricity),” AIIB said in the report.

To enhance ICT infrastructure for health security in developing economies, AIIB has approved financing for satellite ICT infrastructure to provide connectivity to remote areas in Indonesia. Also, AIIB-funded water, sanitation and drainage infrastructure projects in Pakistan, Bangladesh, India and Egypt are on track to provide the communities there with access to clean water and sanitation.

The bank also noted the important role the telecoms and digital infrastructure sectors can play in supporting supply chains, making more use of automation, e-commerce and other tech-based solutions to ensure that production and trade can continue. They are also critical in allowing people to work from home and children to study from home with measures such as these having been widely implemented during the current outbreak.

While AIIB expects infrastructure investment to be “highly subdued” in the first half of 2020, it expects demand for infrastructure development to be strong post-crisis, especially in developing countries. Once the immediate task to contain covid-19 is over, the focus will shift from crisis management to assisting developing economies invest in infrastructure, as well as to prevent the impact of future outbreaks.

“Generally, developing economies already face infrastructure gaps going into this outbreak,” Thia said. “Once the pandemic is contained, we need to work with the international community, private sector, and governments to redouble efforts to catalyze more resources towards infrastructure (to at least 6 percent of GDP).”