BNDES (Brazil’s Development Bank) Expands its Presence in Africa in Order to Increase Exports

Portuguese Translation of the Week

Brazil's National Bank for Economic and Social Development (BNDES) has intensified its activities abroad. The current focus is to increase its presence in African countries where, in the words of the superintendent of the international branch of the bank, Sergio Foldes, "there are many business opportunities." "We have opportunities in Angola, Nigeria and Ghana," he observed. An example of this objective is demonstrated in the opening of a headquarters/office of the Bank in Johannesburg, South Africa, last Friday.

O Banco Nacional de Desenvolvimento Econômico e Social (BNDES) tem intensificado sua atuação no exterior. O foco atual é aumentar a presença em países africanos, onde, nas palavras do superintendente da área internacional do banco, Sérgio Foldes, "há muitas oportunidades de negócios". "Nós temos oportunidades em Angola, Nigéria, Gana", observa. Um exemplo desse objetivo foi a inauguração de escritório em Johannesburgo, na África do Sul na última sexta-feira.

This article has been translated from Portuguese. Click here to read the original version on Suinocultura Industrial.

According to the president of the Association of Foreign Trade of Brazil (AEB), José Augusto de Castro, trying to increase BNDES' presence in Africa is correlated with the public sector as well as with the private sector, which is striving to increase its exports. "In Africa we have greater opportunities to export our manufactured goods," he explained. "In London, where BNDES already has a subsidiary, demand is greater for inputs," added the expert.

Castro explains that, through BNDES loans, companies are better able to enter the African infrastructure market and compete with China, which holds 40% of this market. "Brazil has only 3%," he says. "Therefore, I believe BNDES is on the right path. Right now, African countries should be the focus," he added.

The President of AEB says that engineering services are the most sought after by African countries, and if acquired from Brazilians, can also allow for the import of capital and manufactured goods from the country.

Foldes informed DCI (newspaper) that the Development Bank's budget for loans in foreign trade is approximately US$ 10 billion per year. For Africa, it is around US$500 million, with an expected increase in the near future. "Our objective is to create relationships with local institutions, offering to clients (who request loans) competitive options (lower interest rates), in accordance with international practices and greater knowledge about the region."

BNDES reported that since 2007, US$ 2.9 billion were disbursed for operations in Africa, in countries like Angola, Mozambique, Ghana, South Africa and Equatorial Guinea. In these operations, the bank finances solely the portions of investments relating to exports of Brazilian goods and services.

With regards to foreign trade, the trade balance between Brazil and South Africa, for example, grew 24% between January and October of this year compared to the same period in 2012, moving the surplus (more Brazilian exports than imports) from US$ 764.056 million to US$ 954.574 million.  "The problem is that BNDES' money comes from the Treasury. With the need to increase the flow of cash to BNDES, the Treasury must issue more bonds, which increases the foreign debt, that is already high, approximating 65% of the GDP," he stated.

According to BNDES, the office in Johannesburg will provide information about financing options for exports of Brazilian goods and services and about support mechanisms for internationalization. The office will not be operational in nature. When actions result in a possible support operation/role from BNDES, the work of framing, analysis, approval, contracting and monitoring of projects will be conducted by the headquarters of BNDES in Rio de Janeiro.

Article translated by Anna Cardenas, Staff Intern for the Brazil Institute at the Wilson Center.

Photo attributed to Adam Green of Beyond BRICS.