Banco Nacional de Desenvolvimento Econômico e Social
This article will give you a introduction to BNDES and their role in development of the Brazilian society. The article also give you an idea about what is required in order to obtain financing from BNDES.
BNDES, Banco Nacional de Desenvolvimento Econômico e Social (National Bank for Economic and Social Development) is an organization linked to the Departament of Development, Industry and Foreign Trade that aims to support ventures that contribute to the development of the country. In theory, this initiative results on the improvement of Brazilian economic competitiveness and enhances life quality of the population.
Background
Since its foundation in 1952, BNDES has funded major industrial and infrastructure enterprises, significantly supporting investments in agriculture, commerce, services, micro enterprises, midsize companies and small business. It also has supported social investments, focusing on education, healthcare, family farming, basic sanitation, environment and public transportation.
Its support services contemplate long-term debt and competitive costs to the development of investment projects and to the commercialization of machines and new equipment manufactured in the country, as well as to the increase of Brazilian exports. It also contributes to the strengthening of private enterprises capital structure and to the development of capital markets.
Operations
The BNDES finances projects based on criteria that prioritize development with social inclusion, creating jobs and income. The Bank’s operations cover most economic activity sectors. Below are the types of projects supported by the BNDES, per segment:
- Cattle-Raising and Agriculture: Beef cattle production, establishing or recovering pastures, costs and cultivation treatment until the first harvest, among others, are some of the projects that are eligible for funding.
- Trade, Services and Tourism: Special financing conditions are offered to projects focused on modernizing the infrastructure or undertakings in education, health, social, welfare and tourism.
- Culture: Application of non-reimbursable funds in artistic/cultural collections and projects for the preservation of Brazilian historical heritage.
- Social Urban Development: Funding of projects that directly improve the standard of living of the Brazilian population.
- Industry: Investment projects that aim at expanding the Brazilian industrial sector are heavily promoted, such as the expansion of industry's production capacity, exports increase and advancing innovation capacity.
- Infrastructure: Solutions that promote access to basic services, such as electricity, communications, urban public transportation and sanitation.
- Innovation: Projects associated with building skills and innovative environments, so that Brazilian companies can achieve a better competitive position.
- The Environment: Improvement of the environmental analysis criteria of projects that require credit, as well as to offer financial support to companies that could bring benefits to sustainable development.
- Capital Market: BNDES operates as an underwriter of bonds and securities, including internationalization and restructuring operations in competitive companies, mergers and incorporation.
- Exports and International Positioning: Attention to international trade, through financing mechanisms for exports of Brazilian products and services.
Programs
The BNDES has three integral subsidiaries: FINAME, BNDESPAR and BNDES Limited. Together, the three companies comprise the BNDES System.
FINAME’s resources are earmarked for financing purchase and sales operations and exports of Brazilian machinery and equipment, as well as imports of goods of the same nature produced overseas. Its activities are developed in conjunction with the collaboration of the BNDES, which in turn is responsible for FINAME. However, the management of this agency is responsibility of its Administrative Board.
BNDESPAR is a business corporation, which has been established as an integral subsidiary of the BNDES. It carries out capitalization operations of undertakings controlled by private groups, while abiding by the BNDES’ plans and policies.
The BNDES Limited aims to increase the Bank’s visibility in the international financial community and effectively support Brazilian companies undergoing the internationalization process or those searching for opportunities in the international market.
BNDES Limited is the bridge between international investors and the great investment opportunities offered by Brazil, which is largely investing in infrastructure, the sophisticated industrial sector and agribusiness with incomparable competitiveness in global terms.
Among the other goals, the subsidiary is responsible for contributing to the strengthening of Brazil’s capital market by expanding the offer of securities and democratizing the ownership of company capital.
Funding
BNDES finances investments for implementing, expanding, modernizing, increasing and recovering companies’ production capacity, including the acquisition of new Brazilian-produced machinery and equipment, accredited by the BNDES, and the working capital associated to an investment project.
It does not support banking/financing activities, arms trading, motels, saunas and clinics for adult entertainment; gambling and the likes. It also does not finance the acquisition of land and real estate, nor does it swap assets.
The services offered are directed to private companies of any size, with headquarters and administration set up in Brazil, and individual businesspersons. Public Administration and individuals are also financed, in specific cases.
BNDES also finances foreign companies with headquarters and administration set up in Brazil. Brazilian companies with controlling capital in the country or abroad may be financed by the BNDES.
Besides these requirements, the companies also must:
- Be up to date with the tax and social contributions
- Present satisfactory record
- Have ability to make repayments
- Have sufficient guarantees to cover the operation risk
- The company must not be under credit recovery regime
- Comply with the legislation related to imports, in the case of financing to import machinery and equipment
- Comply with environmental legislation
It is also important to highlight that the purchase of machinery and equipments that have less than 60% produced by Brazilian companies will only receive funding for the Brazilian percentage, while if the machinery or the equipments are 100% Brazilian, BNDES will fund up to 80% of the entire value.
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