How the BRICS bank plans to grow in Brazil

The New Development Bank (NDB) has ambitious plans for Brazil in the next two years, including US$3bn of financing for sectors such as infrastructure, sanitation and energy.

NDB, founded by the BRICS countries – Brazil, Russia, India, China and South Africa – became fully operational in 2016.

In this interview, Marcos Thadeu Abicalil, interim general director of NDB in Brazil, speaks with BNamericas about the plans for the Brazilian market and the bank’s regional expansion.

BNamericas: What are NDB's strategies for the operations in Brazil?

Abicalil: The NDB's mandate is to finance infrastructure associated with the concept of sustainability. Therefore, it encompasses a very broad scope in the infrastructure sector, which can include urban infrastructure, rural infrastructure, sanitation, energy, transport logistics and social areas. It’s a very broad context.

BNamericas: What is the bank's current portfolio in Brazil?

Abicalil: Of our portfolio of US$37bn in approved operations, Brazil accounts for about US$6bn.

These funds are allocated to sectors such as energy, sanitation, urban mobility, urban development and credit operations with other banks. This is an example of what we’re already doing.

BNamericas: What can we expect for the coming years?

Abicalil: We have a well-defined strategy for the bank’s 2022-26 period with very significant goals.

One of them is that 40% of our operations need to be climate-related, whether for mitigation initiatives or climate adaptation. Additionally, 30% of our disbursements, a target we have yet to reach, should involve non-sovereign operations, including those in the private sector.

In Brazil, about 15% of our operations are with the private sector, while we have already surpassed our targets for climate-related operations.

Another important point is the diversification of the bank’s financing currencies.

We can operate in euros, dollars, and now also in the Chinese currency and local currency in South Africa. In the future, we also hope to operate in Brazil with local currency.

So, there is a diversification of sources, different financing instruments, credit operations, sovereign and non-sovereign, project finance, corporate finance and guarantee structures.

We can conduct operations with financial intermediaries, through other banks and seek currency diversification in customized projects.

In the case of Brazil, in addition to the US$6bn already approved, we have a pipeline of an additional US$3bn in financing for the next two years.

BNamericas: So this amount of US$3bn will be allocated to the areas already mentioned?

Abicalil: We’re working to reach this goal of expanding our portfolio, growing sustainably in Brazil, always focusing on the bank's strategy by considering sustainability, climate issues and projects that have an impact – whether through positive environmental impact, significant social impact or increasing the country's productivity.

BNamericas: Are there specific sectors or projects that NDB aims to finance?

Abicalil: It’s a very diverse pipeline. We don’t set targets for each sector, but we focus on infrastructure in general.

We have operations in renewable energy, including new renewable generation plants or energy efficiency improvements in distribution companies.

We’re involved in urban transport expansion, implementing BRT systems in cities that don’t yet have them. We have projects aimed at electrifying urban transport fleets, both to reduce emissions and improve transportation quality. We’re working on highway projects to improve connectivity, for instance, in the Amazon region, which faces significant connectivity challenges. Integrated sanitation in cities is also a focus.

So, it’s a very broad portfolio that we try to shape around demand. Some cities have projects involving urbanization and education, while others focus on flood control combined with urbanization, sanitation and urban mobility. We always align with what our clients need, whether government or private sector.

BNamericas: Does NDB also plan to work on project structuring or expand its activities to other countries in the region?

Abicalil: No, we’re not yet involved in project structuring.

Regarding expansion to other countries, the regional office was created to serve the region, though Brazil is currently the only country in which we operate in the Americas.

As the bank expands to other countries, as it has with Egypt, Bangladesh, Algeria and the United Arab Emirates, the office may also serve other South American countries as they join the bank.

Uruguay has approved its entry into the bank. It’s now going through a legal formality to complete its access. It’s the first country in the Americas, outside Brazil, to start the process of joining the NDB.

However, completing the accession still depends on the Uruguayan congress’ approval, which will determine the country’s capital contribution to the bank. Once this is completed, Uruguay will be eligible for bank financing. The timeline for this depends entirely on the Uruguayan government.