The International Finance Corporation, the private sector arm of the World Bank Group, is supporting Construtora Norberto Odebrecht – a leading international engineering and construction company based in Brazil – as the company provides funding and training to help its suppliers and subcontractors find export markets.
In April 2004, IFC provided US$25mn to Odebrecht to finance small and medium enterprise suppliers and subcontractors. As Brazil’s largest exporter of services, Odebrecht has a substantial international network, and it has historically brought along smaller companies in its supply chain into such export markets as Angola, Mozambique, and Botswana.
As part of its financing to Odebrecht, IFC has helped the company design a programme to upgrade the managerial and technical capacity of its suppliers and subcontractors, with emphasis on those that have strong potential to become competitive in markets beyond Brazil.
These capacity building efforts will now be bolstered by a broader partnership. Today Odebrecht is signing an agreement with Banco do Brasil and Sebrae, the Brazilian agency that supports small businesses, to implement a pilot program with selected SMEs in the company’s supply chain. The pilot will start in the state of Rio de Janeiro and expand into other Brazilian states where Odebrecht has strong supplier networks. The capacity building and training will be implemented by Sebrae, and Banco do Brasil will contribute to training modules on how to access credit for exports.
Atul Mehta, IFC’s director for Latin America and the Caribbean, says: “This project shows IFC’s comprehensive approach to supporting its clients in the private sector in emerging markets. We are helping them not only achieve their business goals but doing it with a vision for development through technical assistance.”
Laurence Carter, IFC’s director for small and medium enterprises, adds: “IFC is providing both funding and technical assistance to Odebrecht as a sign of continued support to its strong sustainable business practices and its commitment to developing the capacity of its network of SME suppliers.”
Carlos Fadigas, chief financial officer for Odebrecht, says: “We appreciate IFC’s long-term partnership and its support for building the capacity of our supply chain. This agreement will definitely help improve our small and medium suppliers “ability to become more competitive in the global market.”
As of June 30 2004, IFC’s portfolio in Brazil was US$1.48bn, including US$410mn from participating banks in syndications. IFC’s strategy in Brazil aims to enhance the prospects for competitiveness and growth, and improve social equity through voluntary actions by the private sector. The first objective entails supporting growth-generating firms with a wide network of stakeholders, export-enhancing activities including infrastructure and logistics, and activities improving access to long-term financing.
Under the second objective, IFC is supporting the growing momentum towards socially responsible activities within the Brazilian private sector. This will involve support for firms committed to environmental and social sustainability, improving corporate governance practices, micro-finance and socially-oriented entrepreneurship.