Broad reforms to modernize the state-owned National Bank for Economic and Social Development (BNDES) could help Brazil support productivity growth and job creation by making better use of investment capital, according to a new study by the World Bank Group, “Towards a More Effective BNDES.”
The study provides the Brazilian government with recommendations to establish BNDES as a more effective and better-focused development bank, making it less dependent on government funding and less vulnerable to interference by improving its decision-making processes and internal governance.
Written by five experts from the Finance & Markets (F&M) Global Practice of the World Bank Group, the study aims to contribute to the current debate in Brazil on improving BNDES operations and strengthening its medium- to long-term role in the Brazilian economy. By establishing BNDES with all the capabilities of a development bank – providing technical assistance as well as financing to its clients – Brazil can better direct investment capital to the most promising small and medium-sized enterprises (SMEs) that have the potential to create jobs, income, and wealth.
“Strengthening BNDES can help unlock the full potential of the country’s most promising high-growth companies,” said Martin Raiser, Country Director of the World Bank for Brazil. “Development banks in other countries have increasingly repositioned themselves from pure lending to leveraging commercial financing through guarantees and other instruments and combining financial assistance with technical support to foster innovation and job creation – experiences from which BNDES can benefit,” he added.