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SA, Brazil in development finance pact

6 August 2009

South Africa's Industrial Development Corporation and the Brazilian Development Bank have signed an agreement on regular technical cooperation, joint product design and co-financing activities between the two development finance institutions.

Supporting industrial development

Cooperation between the IDC and Banco Nacional de Desenvolvimento Econômico e Social (BNDES) will focus on industrial strategy formulation, financial product and policy development, joint financing of projects on in Africa, and strengthening trade relations between South Africa and Brazil.

"The depth and breadth of BNDES' activities means that it gathers considerable information, experience and expertise," IDC chief economist Lumkile Mondi said in a statement this week.

"I think an exchange of ideas will be valuable to us in terms of improving the IDC’s evolution of risk management, [including] capital management and investment risk, sector strategies and information gathering and coordination activities between public and private sectors."

Project focus areas

The agreement is the culmination of a four-year informal information-sharing relationship between the two institutions. In terms of the agreement, the IDC and BNDES will exchange information on projects of potential common interest, with special focus on:

• automotive and components;
• alternative-fuelled vehicles;
• aeronautics and components;
• energy generation, particularly renewable energy and co-generation;
• food processing and other agro-industries;
• pharmaceuticals; and
• mineral resource beneficiation.

Information sharing

These are in line with the IDC's support of South Africa's industrial policies and strategies, which include developing new industries, supporting innovation in existing industries, creating more competitive industries, and accessing new markets.

"There are a number of structural similarities between the two economies, including distortive economic inequalities, which should mean information sharing and product development cooperation will be quite beneficial," said BNDES deputy international development director Maria Isable Aboim.

"Aside from the technical benefits of the relationship, the cooperation agreement is aimed at strengthening ties between the two institutions, and building business and economic links between South Africa and Brazil."

SAinfo reporter