This image will be automatically disabled when it gets reported by several people.
African Development Bank targets new markets as crisis bites Turmoil in traditional Western markets means bank is starting to look into investments in Brazil, India and China
The African Development Bank (AfDB) is targeting new markets and sources of finance as the global economic downturn and the eurozone crisis reduces available capital, the bank's director of strategy said in an interview. The AfDB has 53 African member countries and invests in projects including infrastructure and renewable energy schemes. As a result of the economic turmoil in traditional Western markets, the bank is starting to target investments in Brazil, India and China - countries that have experienced rapid growth, mainly driven by abundant oil, gas and mineral resources. "In the next two months we will be finalising our [investment] strategy for the next 10 years ... We are trying to reinvent ourselves," Kapil Kapoor, the bank's director of strategy, told Reuters at the Rio+20 sustainable development summit in the Brazilian city of Rio de Janeiro. "A very important part of our long-term strategy is new sources of finance and recognising what is happening in the U.S. and the eurozone, for example," he said. This month, the AfDB agreed to collaborate with the Brazilian National Development Bank (BNDES) on sourcing and potentially financing clean energy and infrastructure projects in Africa. The AfDB is also among eight of the world's largest development banks which pledged $175 billion on Wednesday over 10 years to support low-emission transportation programs at the U.N. development summit in Rio. Last year, the bank approved financing that will result in 630 megawatts of clean energy generation in Africa. "The current resources we have - $4-6 billion a year - are not sufficient for Africa. We would like to multiply them 5, 7 or 10-fold," Kapoor said. The bank taps a U.N. carbon credit scheme, the Clean Development Mechanism (CDM), to finance renewable energy projects. Under the CDM, countries and companies buy credits to meet emissions caps agreed under the emissions-cutting pact known as the Kyoto Protocol, paying for cuts in developing country projects instead. However, prices for U.N. carbon credits have fallen as much as 75 per cent in the past year due to oversupply in the market and concerns about economic turmoil. When asked whether the price crash had affected the bank's strategy, Kapoor said uncertainty around future financial markets was having more of an impact. "I don't think [low carbon prices] is the real constraint. It's more about political risk and investors not knowing the environment they are getting into," Kapoor said. "That's why we are increasingly looking at a variety of instruments like guarantee and reinsurance mechanisms to leverage capital." Africa has posted strong economic growth rates in recent years, second only to Asia. The AfDB expects the continent's economy to grow 4.5 per cent this year and by 4.8 per cent in 2013, but the festering eurozone crisis could dent demand for African exports. Africa's natural resources are under great strain. Biodiversity has declined by 40 per cent in 40 years and increases in population and consumption are expected to double Africa's carbon footprint by 2040, according to conservation group WWF.