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Danny Alexander:Multilateral Development Banks should support and finance the infrastructure projects of smart cities

July 24 , 2023 07:13 PM by Danny Alexander
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Sir. Danny Alexander, Vice President of Asian Infrastructure Investment Bank (AIIB)

Good morning!

I am delighted to be here at this high level seminar on smart cities and regional integration representing the Asian Infrastructure Investment Bank (AIIB).

The topic for today is an incredibly important one, because the world is urbanizing very rapidly. The global population living in cities as a share of population doubled from 25% in 1950 to about 50% in 2020, and it's expected to increase further to around 60% over the next 50 years, where by 2050 over 5 billion people in the world will be living in cities. This trend towards more urbanization is, of course, faster in lower income countries, where it is expected that the number of people moving to cities will increase by 76% between 2020 and 2070. While the number of megacities will continue to grow, small cities will represent about 45% of city land globally. This question poses unique challenges in terms of planning, infrastructure construction, service delivery, and, of course, particularly in terms of climate change and sustainability to ensure that urban sprawl and human proximity do not result in an unsustainable future. Old cities, we know, face unique challenges having to retrofit their basic existing infrastructure to meet the sustainability, environmentally friendly and climate resilient challenges, while new cities create more pressure on land than on natural ecosystems, but have the opportunity of being able to build in the best technology, the best sustainability from the very start.

Another challenge is that rapid geographic aggregation can bring economic and social opportunities for people. That's fundamentally why we choose to live in cities.

It can also result in aging and under capacity infrastructure to deliver critical services and can create social divisions also. Ever since Charles Dickens wrote A Tale of Two Cities, this notion of cities as being a place where inequality can be both evident and ever greater has captivated people, and it continues to be a problem today. We believe that technology is absolutely critical to solving these problems. Infratech helps to increase the efficiency and productivity of old and new infrastructure. It uses existing urban developments and is at the core of development of new cities. For example, infrastructure can help better align power generation to power demand, which reduces greenhouse gas emissions. It can increase water distribution network efficiency, reduce transport congestion through smart traffic management.

Smart urban infrastructure brings service delivery closer to the real need for the possibility of reducing our footprint. Digital connectivity increases the resilience of our cities and fosters human connections. Its rise has led urban planners to make it an essential tool for planning right sizing for better infrastructure management and for efficiency. But more is needed. Technology alone is not enough to address the immediate needs of climate change, livability and social equity in cities.

The role of multilateral development banks like the AIIB is critical in addressing the challenges that the digital infrastructure sector faces. MDBs need to play an important part in stimulating resource mobilization for smart city development, not only by financing projects, but also by using the right financing tools,mitigating risks, sharing knowledge, and forming partnerships. AIIB was set up in 2016 with a mission to finance infrastructure for tomorrow. That means the infrastructure that our members are going to need for the next few decades of their development: infrastructure that is green, that mobilizes private capital, that is enabled by technology and promotes regional connectivity and cooperation.

In 2020, we created a dedicated Infrastructure Digital Infrastructure Sector strategy, which sets out our broad ambitions to play a role catalyzing the development of digital infrastructure, including smart cities. We work with our clients and partners to finance across the range of infrastructure needs to develop smart cities, including hard infrastructure that enables connectivity; sensors that capture data from various touch points across the city's infrastructure; data centers that provide the capacity to store and process data; the data platforms that actually structure and manipulate the data; and the smart city applications that enable the countless new digitized and automated services and operations. Especially in current times, it is crucial to have a look at intra and interregional integration and what infrastructure is needed to strengthen integration.

AIIB has also been leading global thinking in this space. Just last month, AIIB supported the G20 Infrastructure Working Group and the Indian G20 Presidency to organize a high level seminar on creating sustainable and livable cities. And this built on the work on digital technology that we did last year under the Indonesian G20 Presidency. We are keen to continue building partnerships from across the wide range of stakeholders that need to collaborate in order to develop these smart cities.

Therefore, I am really delighted to be present at this event, albeit virtually, and I very much look forward to building partnerships with many of you, to sharing ideas and to build the infrastructure of tomorrow. The world is going to need smart, sustainable cities and doing so together.

Thank you.