It is important to highlight the need for an instrument that contributes to the internationalization of the Portuguese economy (“hard internationalization”) and for the development of economies in transition, acting in conjunction with the main guidelines of a consistent cooperation and development aid policy.
The principles on which the intervening action of this instrument should be based should be: additionality (that is, it should only participate in projects in which, with its presence, it adds some value); consistency (i.e., commitment to solid projects); and efficiency (that is, implying the adequate management of available resources).
This instrument, in addition to being, desirably, linked to European funds, should be included in the EDFI’s network – European Development Finance Institutions.
In terms of target markets, it would make sense to prioritize the countries of the CPLP – Community of Portuguese Speaking Countries, in North Africa, some emerging countries where there is a significant Portuguese business community (linked to our “Diaspora”), the Latin American economies and some intermediate economies (“Intermediate Countries”).
The instrument in question could grant loans (which would imply having the nature of a credit institution), guarantee operations financed by local banks and participate in the capital of companies (risk capital operations), being, as mentioned, linked to EDFI’s and Investment Funds associated with Multilateral Financial Institutions or, even, financed by the European Commission.
The aforementioned cooperation policy instrument should also have the possibility of managing funds aimed at promoting the development of Portuguese-speaking countries.
The activity to be developed through the same instrument should be based on a Vision, namely, that the development of the private sector, in conjunction with various cooperation instruments, could contribute to the creation of jobs, as well as to the transfer of skills and the collection of taxable income in the transition economies themselves.
And, on the other hand, the values on which the activity of this instrument should be based would be the search for Ethics, for Mutual Help Solutions that are effective and of quality, not forgetting the indispensability of flexibility (in the sense of adapting to the needs of clients) and even a certain specialization (which could even imply financing “taylor-made” of specific projects in particularizing countries).
In order for an instrument with the exposed characteristics to be successful, it is, however, necessary that it is provided by the State with adequate funds, as well as operational credit lines, providing a “zone of decision-making autonomy”, avoiding its integration into institutions that have a focus different from that which characterizes a credit institution oriented towards cooperation and support for development.
The most curious thing is that this instrument exists, called SOFID – Society for Development Financing, but, with one or another exception, there was no political will to provide it with the necessary resources. Its size and the resources at its disposal were small, but in the course of a few years it made more than 250 million euros of investment projects viable. It would be regrettable if an attempt was not made to make SOFID viable, giving it the necessary resources, instead of promoting a merger with Banco de Fomento, which would constitute a major strategic error, running the risk of both institutions losing focus on the areas for which they should be best suited.
No more, no less…
Economist and university professor. Write without applying the new Spelling Agreement