As a result of the global economic downturn, the Euro zone crises and reduction in available capital, African Development Bank (AfDB) is targeting new sources of finance and more stable new markets across the world. This was made known by Kapil Kappor, the bank’s director of strategy in an interview with Reuters at the Rio+20 sustainable energy summit in Rio de Janeiro, Brazil.
“In the next two months, AfDB will be finalizing our investment strategy for the next ten years … We are trying to invent ourselves,” he said.
The reinvention is necessary in order to strengthen the bank in the wake of the current global economic downturn. To achieve this, Kapil Kapoor mentioned new sources of finance as the bank’s long-term strategy.
In line with these, the bank has agreed to collaborate with Brazilian Development Bank (BNDES) on sourcing and financing infrastructure projects and clean energy for African states.
In 2011, the bank approved financing that will result in 630 megawatts of clean energy generation in Africa; the project was financed by tapping a United Nations’ carbon credit scheme.
However, the bank’s current resources are insufficient. According to the director, the bank currently has $4-6 billion dollars. But to functionally and maximally and achieve its set targets, AfDB will need an increment of 5, 7 or 10-fold.
“That’s why we are increasingly looking at a variety of instruments like guarantee and reinsurance mechanisms to leverage capital,” he concluded.
The AfDB has 53 African member countries and it invests in projects including infrastructure and renewable energy schemes.