Takehiko Nakao will be seeing more of Frankfurt soon. The head of the Asian Development Bank, the ADB, spoke with Handelsblatt while on a visit to prepare for the bank’s next annual meeting, to be held in Germany’s financial capital.
Mr. Nakao, an experienced policymaker, has worked in top positions for Japan’s finance ministry and also represented his home country at summits of the Group of Seven and Group of 20 nations. He took over as head of the ADB in 2013.
Development banks like Mr. Nakao’s face huge competition these days. In addition to the World Bank and International Fund, which have existed since the 1950s, this year saw the launch of two rival development banks to serve emerging-market countries, including the China-led Asian Infrastructure Investment Bank and the New Development Bank set up by Brazil, Russia, India, China and South Africa (the so-called BRICS nations).
In an interview with Handelsblatt, Mr. Nakao said he isn’t worried about the new rivals, noting there’s plenty of work to go around. Nor is he particularly concerned about another major development on the horizon – the U.S. Federal Reserve’s first increase in interest rates since the financial crisis.
Handelsblatt: Your bank is celebrating its 60th anniversary next year. It will be a year in which you gain new competition from the China-led Asian Infrastructure and Investment Bank, the AIIB, as well as a new development bank being set up by BRICS countries. Is the market for emerging-market development banks becoming a bit crowded?
Takehiko Nakao: There is a lot of support for these new initiatives because people know we need much more money to finance infrastructure needs, like power. Many countries are still lacking power to develop industry and make their life better. We also need more roads, railways and so on. Power is not just about industry but about how to make the gender issues better; we need a road to go to schools and to go to hospitals. We need more of all these things, and more financing. So, I don’t think it’s too crowded.
Is there enough funding for so many development banks? Or is it becoming tougher for you to gain access to financing?
We are increasing our financing capacities. There is a lot of funding, including for banks like AIIB. The question is more about how we can identify good projects, how we can prepare good projects and how we can implement these projects. The money is there, but how to manage good projects out of that money is a challenge.
There have been concerns about ecological standards and social standards as the new Asian Infrastructure Bank begins its work. Have those been set aside?