Ruslan Dalenov at ADFIAP Annual Meetings: Food security can be ensured by global mega-projects
Almaty, 16 May 2023. The main goal in the area of food security is to fight the outcomes of climate change and develop transport and logistics infrastructure. Ruslan Dalenov, Vice Chairman of the Eurasian Development Bank’s (EDB) Management Board, stated this at the 46th Annual Meetings of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP). This year, the event is hosted by the EDB in Almaty, Kazakhstan.
One of the sessions discussed the most important issues related to transport and logistics, as well as the infrastructure needed to develop agriculture. Logistics plays an important role in economic development and is of key importance for agriculture. At the same time, agriculture faces serious problems with storage infrastructure, which have a negative impact in terms of food security and food supplies.
“How can we overcome these problems? One of the answers to this question is the three key investment mega-projects of the Eurasian Development Bank: the Eurasian Commodity Distribution System, the Central Asian Water and Energy Complex, and the Eurasian Transport Network. These projects are important in facilitating sustainable economic growth and have great influence,” Ruslan Dalenov said.
A special note should be made of the huge transit potential that needs to be realised. Promoting overland freight transportation and transport routes will ensure faster deliveries from Europe to Asia compared to the Suez Canal. The potential investments into the Eurasian logistics market are estimated to grow up to US $100 billion, of which the EDB plans to invest US $2.2 billion in the next five years.
“We have already completed several projects, including the construction of the Central Ring Road worth US $318 million. We continue to work on transport infrastructure projects. Particularly, there are plans to implement a number of rail projects,” Ruslan Dalenov noted.
A big challenge for Central Asia is the development of water and energy infrastructure. By 2030, the population is projected to grow by 17%, crop yields by 45%, and water intake by 10%. The demand for electricity can surge by 34% and greenhouse gas emissions should be reduced by 16%. In this connection, gas power stations become increasingly important.
In 2040, the load on the water system of Central Asian regions can increase 2.8-fold. Hydroelectric power stations and thermal power stations have significant potential – 77% and can half water consumption. They can also reduce water deficit by 40% when working in the irrigation mode.
The Eurasian Commodity Distribution System is the EDB’s key investment mega-project that responds to the challenge related to logistics infrastructure. The development of this infrastructure will necessitate the establishment of a common digital system that will improve the performance and transparency of the food market. Such a solution would allow producers and retailers to make deals and enter into smart contracts, use more sustainable logistics processes, and automate customs procedures, which, in turn, will ensure stable supplies and low prices.
Martin Naegele, a representative from the Office of the Vice President of the Asian Infrastructure Investment Bank (AIIB), raised issues of infrastructure and logistics.
AIIB is a multilateral development bank and has 106 members worldwide. The bank focuses on investment in infrastructure and related production sectors and supports green technology, infrastructure, and innovations.
Despite the COVID pandemic, the bank has been highly successful over the last three years, having developed a portfolio of 216 projects totalling US $31 billion. Special attention is paid to the development of ties and regional cooperation. The main goal is to look for opportunities to develop infrastructure in local markets and realise the regions’ economic potential. In 2020, the first strategy for Central Asia was adopted to support economic integration and clients in the region. For regional cooperation and integration, the bank prioritises projects related to infrastructure that provides for effective operations at both regional and international levels.
Over 30 projects have already been implemented in this area to the tune of over US $7 billion. Global-scale cooperation and a multilevel approach help solve important tasks, including the countries’ pollution control efforts and facilitation of the global economic growth.
“The work under cross-regional infrastructure projects involving innovations and support for economic development in the member countries is an important part of our operations. One such project involves China and deals with the construction of a joint logistics hub. During the pandemic, the international supply chain played an important role, and we understand that there is still a lot to be done in this area. We aim for further development of trade ties in Central Asia and closer integration of the supply chains between China, Central Asia, and Europe. Our goal is to make freight transportation, logistics operations and use of digital systems more effective,” Martine Naegele said.
Temuujin Lkhagvasuren, Director General of the Development Bank of Mongolia, spoke about the aspects of operating in Mongolia. In recent years, the Development Bank of Mongolia has been actively pursuing green strategies in transport and logistics. The bank has implemented projects aimed at connecting the cities of Mongolia with its capital. In addition, the bank deals with issues related to logistics and transport. Mongolia shares borders with several large countries and pays special attention to mining, agriculture, and construction.
Currently, the bank is engaged in several projects, including the new policy for the development of Mongolia till 2030. The policy’s main goal is the recovery of the nation’s economy and three-times GDP growth by 2030, as well as the improvement of the human development index. The policy is based on six main principles and depends on the development of ports, rural areas, and other factors.
The first project that the Development Bank of Mongolia currently works on is related to improving the capacity of international airports. Additionally, the bank focuses on developing ports in locations bordering China and Russia, which account for most of the commodity shipments. Work is underway to boost the capacity of ports and build freight terminals.
Improvements to the road network are a major aspect in the development of transport and logistics. Currently, there are projects underway that will result in the creation of the logistics and transport map of Mongolia.
“As it was mentioned before, the bank will be paying more attention to two sectors – mining and agriculture. The capital is home to half of the country’s population and has issues with road traffic. The bank provides subsidised loans to people living in rural areas to finance their projects,” Temuujin Lkhagvasuren said.
In addition, the industrial sector is an important part of the economy and accounts for 90% of exports. The development of logistics and transport projects will make it possible to expand commercial operations in this area and facilitate the extraction of minerals. Finally, the bank provides financing for agricultural projects, including cattle raising and cattle farm production.
Jerry V. Montejo, Chief Risk Officer at CARD SME Bank, Inc., noted that CARD SME Bank does not provide financing for large projects but instead focuses on small and medium-sized businesses. As an institution that deals with the agricultural sector, this bank not only provides loans but also helps its clients learn innovative solutions and technology.
“We work with internal and external institutions to create value chains in order to achieve inclusive sustainable growth and ensure food security. We believe that our bank can contribute to this area and help change the mindset of farmers by opening up innovative opportunities to them,” Jerry V. Montejo emphasised.
Oleg Kobiakov, Director of the UN Food and Agriculture Organisation (FAO) Liaison Office with the Russian Federation, shared his vision of the role of international organisations in supporting food producers and importers.
As part of its activities, FAO’s main goal is to develop recommendations and to actively engage counterparties in this work. Selling even high-quality products is not always easy, and FAO strives to provide maximum support to producers in marketing their products.
“For instance, FAO has declared 2023 the International Year of Millets. If you are not familiar with this crop species, there might be some problems. But FAO tries to promote this crop, even considering the fact that its production has dropped. In the Russian Federation, for instance, millet production has declined ten times since the collapse of the Soviet Union but it remains a popular and demanded product, especially among children. To support millet production, a national committee has been established to combine the efforts of all producers in this area,” Oleg Kobiakov noted.
According to FAO’s representative, achieving these goals necessitate the involvement of all stakeholders as well as the precise formulation of tasks. Each goal should be backed by specific success indicators, which will allow FAO to see improvements in the quality of production, increase in consumption, etc.
Additional Information:
The Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) was established in 1976. ADFIAP is a major international business association comprising 90 member institutions in 39 countries, including non-regional members such as Canada, Germany, and France. Its mission is to promote sustainable economic, environmental, and social development and growth in the region.
The EDB has been a member of ADFIAP since 2022. The Bank’s charter capital totals US $7 billion. The EDB’s portfolio mainly consists of projects with an integration effect in transport infrastructure, digitalisation, green energy, agriculture, industry, and machinery. Its operations are guided by the UN Sustainable Development Goals and ESG principles.
The forum has brought together 240 delegates from major banks, investment funds, and development institutions from China, Turkey, Japan, India, the Philippines, New Zealand, the European Union, the U.S., Latin America, and the Middle East. It is hosted by the Eurasian Development Bank (EDB).
The event’s global communications partner is the Anadolu Agency, with media partners including BNE IntelliNews, Cronos Asia, FINANCEkaz, Kapital.kz, Kazakhstan today, Kursiv.media, LSM.kz, Tazabek, TRT, Delovoy Kazakhstan, the MIR TV channel, and the Khabar 24 TV channel.