JICA commits USD 1.5 billion to ADB's LEAP 2 fund for Asia-Pacific infrastructure boost
Dec 09, 2023
New Delhi [India], December 9 : The Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) have solidified their commitment to fostering resilient and sustainable infrastructure in Asia and the Pacific with the signing of an agreement to establish the Leading Asia's Private Infrastructure Fund 2 (LEAP 2).
According to ADB, JICA will infuse the fund with capital up to USD 1.5 billion, aiming to co-finance crucial infrastructure projects in the region.
LEAP 2 follows the success of its predecessor, LEAP, which initiated operations in March 2016 and concluded in August 2023. Designed to continue supporting ADB's private sector operations, LEAP 2 will provide both commercial and concessional finance for ADB projects, with ADB serving as the fund manager and administrator.
The fund aspires to contribute to ADB's overarching mission of poverty reduction in Asia and the Pacific, where annual infrastructure financing needs are estimated at approximately USD 1.7 trillion.
ADB President Masatsugu Asakawa emphasized the growing severity of climate change impacts and the pressing need for high-quality and sustainable infrastructure in the region.
Asakawa said, "Climate change impacts are becoming increasingly severe and the need for high-quality and sustainable infrastructure is greater than ever in Asia and the Pacific. LEAP 2 will help the region meet this challenge by filling financing gaps for urgently needed infrastructure projects through the mobilization of private sector capital. This new fund demonstrates the continued strong commitment of ADB and JICA to helping the region develop the robust infrastructure it needs to grow sustainably."
JICA President Akihiko Tanaka highlighted LEAP's past contributions to sustainable economic growth, citing its role in financing high-quality infrastructure in critical sectors such as energy, transport, and telecommunications.
Tanaka expressed JICA's commitment to working with ADB through LEAP 2 to address the region's infrastructure financing gap, tackling development challenges like climate change and food security.
"LEAP has contributed to the sustainable economic growth in Asia and the Pacific by helping to finance high-quality infrastructure in critical sectors including energy, transport, and telecommunications. Through Leap 2, JICA will work with ADB to further narrow the region's infrastructure financing gap, and help its countries address pressing development challenges including climate change and food security," said Tanaka.
LEAP, in its tenure, committed over USD 1 billion in co-financing across 35 projects in 14 ADB developing member countries.
The impact of these projects included 1.4 gigawatts of new electricity generation capacity, the creation of 7,285 jobs (2,794 for women), the avoidance of 6.2 million tonnes of carbon dioxide equivalent, and the facilitation of USD 13.8 billion in infrastructure investment, with USD 7.8 billion directed to the renewable energy sector.
LEAP 2 will operate under the same mandate and governance as its predecessor, with funded projects aiming to reduce carbon emissions, enhance energy efficiency, and provide accessible and affordable healthcare, education, and communication services.
While maintaining a focus on infrastructure, the fund's scope expands to include investments in agribusiness and education. However, it excludes gas refining, processing, transmission, and distribution.
Key markets for LEAP 2 are expected to include India, Indonesia, Uzbekistan, and Vietnam.
