Badesc: Economic and Social Development in Santa Catarina

Interview with Luis Antônio Ramos, Director of Operations of BADESC (Santa Catarina State Development Agency)

Which role does BADESC play in Santa Catarina?

Our Promotion Agency BADESC has the mission to promote the productive activity of the State of Santa Catarina. The company is over 40 years old and during that period of time it transformed itself from a development bank into a promotion agency. We finance the productive activity in Santa Catarina, that is a State with very defined regions in terms of economic profiles, and we are strategically present in all those regions.

Could you talk a little bit about the financing: the attributions by the local government, the ones to the productive sector and microcredit?

Nowadays we operate in those 3 sectors: the productive sector in general, the microcredit financing since 1999 (when a network of entities was created, we financed it) – this credit line is a success and, according to the BNDES (Banco Nacional de Desenvolvimento Económico e Social – National Bank for Economic and Social Development) we are a national reference.

Why are you a national reference?

We are a national reference because of the unique activities with the entities with social interests (UCIP) – it has allowed us to control the health of these entities. Each time there is a transfer of funds to these entities, we analyze its state and these UCIPs have a permanent control of their costs. A credit agent goes to the entrepreneur who wants to open a micro company but doesn’t have the necessary resources – and periodically we analyze these companies to evaluate their financial health. The modalities that exist in other parts of the country are different and the BNDES thinks that the model implanted in Santa Catarina is a model which is very close to the cooperativism that has huge success in our state.

What is the cooperativism?

Cooperativism is an activity where individuals come together to produce agricultural products. This production modality is very successful in Santa Catarina.

Does BNDES consider the microcredit a means of social inclusion?

BNDES has a specific area of social inclusion and it analyzes all the projects throughout the country and, in the social inclusion ranking, our model is one of the best. The mission of the company is to generate employment and new opportunities. The small resource we make available generates employment – sometimes, when we finance a big company which is much automated, it generates little employment and the small hairdresser or hotel generates more employment.

Which are some great examples of your investment in the production area?

I can tell you about 3 major examples that occurred in the last 2 decades in Santa Catarina.

The first example is the ceramics sector in the south of the state which is now one of the strongest in the country and it all began at the beginning of the 1980’s with financing made by our company. Nowadays, they are also exporting high quality ceramics.

Another sector is the clothing industry, namely in the city of Blumenau in the Itajaí valley. They are providing the national market and also exporting. Many of the companies operating in this sector began with resources made available by our company.

Another sector is the metal work one in the Joinville region with many companies working strongly for the national and the international market. When it all began, we were the ones that believed in this sector.

Can you name some of the companies in the metal work sector that beneficiated from your company financing?

Weg is one of them. There is also Marisol in the textile sector. These are big references, amongst others.

Can an international company use your resources here?

I would like to emphasize our state is very well defined in terms of productive chains: the south with its ceramics, the western region with its agribusiness, the Florianópolis region with tourism, the Itajaí valley region with its textile sector and Joinville/Jaraguá with its metal work.

Foreign companies that want to establish themselves in Brazil seek the places where the infrastructure is more adequate. Santa Catarina has very good harbors infrastructures and we have a satisfactory road system – because of these factors the state government and the Santa Catarina state has received several information requests. When a business plan is made, local financing is sought: that’s how we can help, by financing a part of the direct financing of the company. When the company needs more than we can provide, we pull in the banks and we make a big financing.

Are the projects and the financing capability on the rise?

Our goal is to double our financing capability. For that to happen we need to double our net assets in the next 2 to 3 years.

That means that the perspectives for companies that want to settle here are good.

Santa Catarina has characteristics that are important inside the federation. We have entrepreneurial people that are very disciplined in terms of technical preparation for their activities and our people is a very diversified one: Portuguese, Italian, Austrian, German people – all those cultures combined created a group of very hard working people. An investor that wishes to find disciplined people to work with him can find them in Santa Catarina. The governmental state infrastructure has been doing its part, but the world is made out of challenges: nothing is perfect.

What are the challenges that are going to appear later on?

In terms of our company – in the financial sector – we have a big challenge. The costs of interest rates have always been very high. These interest rates have to decrease. The short term challenge for the financial sector in Brazil is to cut on those costs that are higher. The strategy of the Brazilian financial market will be: to invest in technology to automate most of our internal procedures and to achieve values that are more close to international patterns.