BNDES financing for innovation advances 130% – 02/08/2024 – Market

BNDES closed 2023 with the approval of R$5.3 billion for innovation projects, an increase of 130% compared to the previous year. The majority, R$3.9 billion, involves direct operations by the public bank, and another R$1.4 billion is part of indirect operations with partner banks.

36 projects from companies of all sizes will benefit, in the areas of pharmaceuticals, mobility, telecom, semiconductors and agribusiness, to name a few examples.

“The BNDES once again supported the innovation agenda, which is strategic for increasing the competitiveness of companies within the current economic context in the world”, says director of Productive Development, Innovation and Foreign Trade at BNDES, José Luiz Gordon,

“There is a window for Brazil, especially within the energy transition, decarbonization, bioeconomy. The country can not only enter into the generation of green hydrogen, for example, but also into the production of machines and equipment for green hydrogen. We don’t just want produce ethanol if we can also do SAF [sigla em inglês para combustível sustentável de aviação]. The industry can push this green agenda.”

Gordon recalls that the national potential is so great that there are already Brazilian companies receiving subsidies from the American government to install a pilot SAF production plant in the United States.

“We have the ethanol technology, but the American government is taking our companies there with subsidies.”

Support for innovation occurs within the BNDES Mais Inovação program. The majority of financing, R$3.5 billion, is indexed by the TR (Reference Rate), with interest of up to 2% per year, that is, with a subsidy.

The use of TR is controversial and criticized by those who fear the reissue of the policy of previous PT governments, which exaggerated the use of subsidies. The risk of returning to the past is refuted by the bank’s current management.

The source of resources is the FAT (Worker Support Fund), which is remunerated by the TLP (Long Term Rate). The use of TR was approved by Congress within law no. 14,592, sanctioned in May last year, and regulated in August by the CMN (National Monetary Council).

The rule limits the application of the TR to up to 1.5% of the FAT stock, which under current conditions totals around R$5 billion per year. The program also has financial support from funds such as Funttel (Fund for the Technological Development of Telecommunications) and Inovagro (Incentive Program for Technological Innovation in Agricultural Production).

“Innovation, in itself, has risk, which is what you can quantify, and uncertainty, which you cannot quantify. Projects may or may not work out, which is why you need different money”, says the BNDES director.

“We have a very robust project approval process. We go to the company to learn about the project, if necessary, and we monitor its development step by step. The money is not released all at once, but in installments, as it evolves .

According to Gordon, it is not yet possible to disclose the names of the companies that took the credit, because the procedures for signing the contracts have not been completed.

Investments in innovation declined in the first years of Jair Bolsonaro’s (PL) government, especially during the Covid-19 pandemic. From 2019 to 2021, BNDES innovation financing was below R$2 billion. Last year they rose to R$2.3 billion.

The resumption of BNDES financing in the first year of the government of Luiz Inácio Lula da Silva (PT) is part of a larger project. It also includes the participation of Finep (Financier of Studies and Projects), a public company of MCTI (Ministry of Science, Technology and Innovations). The joint goal is to mobilize R$60 billion by 2026 to promote innovation in the country.