Ethiopia joins major Asian Bank

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Ethiopia has joined the newly established multilateral financial organization, Asian Infrastructure Investment Bank (AIIB). It is the second African member after Egypt, which recently received an approval for a renewable energy project loan, by taking a voting power of 0.2562 percent.
The bank formed a couple of years ago though the initiative of China. It accepted Ethiopia with 12 other countries in March. There are 57 inaugural members.
Ethiopia bought USD 45.8 million worth of shares in AIIB and officially joined the bank in May, according to a document that Capital obtained from the Ministry of Finance and Economic Cooperation (MoFEC).
In the middle of June Ethiopia attended the bank’s annual board of governors meeting in Jeju, South Korea, for the first time.
According to the bank’s official website, Ethiopia purchased USD 45.8 million worth of shares in AIIB.
Haji Ibsa, Public Relations Head of MoFEC, told Capital that the country settled 20 percent of the total share amount.
The initial paid up capital is the first 20 percent, while the balance will be settled within five months.
“Since it has been approved by the executive it does not need the approval from the parliament,” Haji said.
The government has joined the bank with the goal of expanding external financial sources.
AIIB was established by Asian countries, now several non Asian countries with big economies including many in Europe have joined the bank. It is considered a huge international financial institution with more than USD 100 billion in capital.
Regional states, Asia and Oceania, and non regional states have joined the bank in the past and this year and some others states are expected to join the bank. Ethiopia is the third country from Africa after South Africa, which is a member of the BRICS group, which includes China, Brazil Russia and India, and Egypt. Sudan is also expected to join in the near future.
However, South Africa and Brazil, who are the founding members of the bank, have a one year extension to join since they were unable to pay the initial share amount because of their current economic situation.
China, which initiated the formation of the bank, is the major shareholder with USD 29.78 billion and 27.5186 percent voting power, while the other regional members India and Russia are followed by USD 8.36 billion and USD 6.53 billion investments respectively.
From non members Germany and France invested the most at USD 4.48 billion and USD and USD 3.37 billion respectively.
Recently, in his interview with Capital, Ahmed Shide, Minister of Transport said that the delegation led by Prime Minister Hailemariam Dessalegn met with the management of AIIB during its visit to China to attend the Belt and Road Forum.
“With regards to economic growth we have to diversify the financial sources in addition to our usual partners; World Bank, African Development Bank, European Investment Bank and other international financial sources that we want to continue to work strongly with,” Ahmed said.
The young bank has also approved several loan requests for infrastructural projects mainly for Asian countries.
Early this month Egypt, who bought 650.5 million worth of shares from AIIB, became the first African country to access a loan.
On September 4 the board of AIIB approved finance for a solar energy project in southern Egypt. This is the first time a non-regional country has been approved for a loan.