The Portuguese Development Finance Institution, also known as Sociedade para o Financiamento do Desenvolvimento (SOFID), supports the economic development of emerging nations by financing Portuguese private and public businesses in their internationalization and aligning with the goals and policies of the Portuguese government in terms of trade, international collaboration, and public development assistance.
The main regions and sectors of SOFID’s operations
The organization primarily concentrates on supporting Portuguese small and medium-sized enterprises (SMEs), but it can also support large and public enterprises providing they are privately run.
SOFID assists projects in several sectors, with particular emphasis on the agro-industrial, infrastructure, tourism, energy (especially renewable), industry, and health sectors.
The institution primarily offers guarantees and loans. It is also responsible for managing a 12 million Euros line of credit for the European Investment Bank to encourage investment in Portuguese-speaking nations.
Its geographical concentration is primarily on Portuguese-speaking nations, although it also covers countries from Africa, including Angola, Algeria, Mozambique, South Africa, Morocco, and Tunisia; Asia, including China and India, and Latin America, including Brazil and Venezuela
Source: DFIs
Here are some examples of the indirect effects the programs supported by SOFID have had on the nations in which the organization operates:
Source: SOFID
Following its foundation in 2007, a year later SOFID joined the European Development Finance Institutions Association (EDFI).
In terms of organizational structure and ownership, SOFID is a Limited Liability Company (S.A.), with a share capital of 23,403,888 shares, with a nominal value of €0.80 each, being split between.:
- 80.54% – the Portuguese State
- 4.27% – Banco BPI
- 4.27% – Novo Banco
- 4.27% – Caixa Geral de Depósitos
- 4.27% – Millennium BCP
- 2.37% – Corporación Andina de Fomento.
The impact of SOFID initiatives on the UN Sustainable Development Goals
The organization’s goal is to support the long-term economic growth of nations that align with Portugal’s overall plan for international cooperation and ODA (Official Development Assistance). All SOFID projects contribute to the following SDGs:
Source: SOFID
The following can be identified as some of the major outcomes of SOFID-funded projects:
- As of the end of 2021, SOFID had financed 33 projects, worth 38.2 million Euros.
- New employment opportunities, with most jobs being filled locally and involving technology transfer, and training;
- Improvement of domestic production in areas with a strong potential for economic growth, an increase in exports, and a decrease in imports from investment destination nations;
- Assigning additional compensation and subsidies above the standards accepted in the nations where these are introduced;
- Better educational conditions created via schools construction, higher employee payments, and donations of furniture to schools;
- Encouraging improvements in health conditions by building new medical centers, providing analyses and expert care to workers and local communities, and donating medical protection equipment to hospitals.
SOFID investment portfolio in 2020-2021
Ivory Cost was one of the main destinations of the investments supported by SOFID in 2020-2021, with nearly one-third of the portfolio concentrated within its borders and almost 49 million euros being invested in the sanitation and waste management sector of the country.
In Mozambique, SOFID managed to attract and mobilize over 44 million Euros worth of investments. In this country, the sectors of interest for investors ranged from commerce to health and agriculture.
Another African country of major interest for SOFID-bolstered investments was Angola, with over 41.5 million Euros being invested in the agriculture, IT and communication and industrial sectors.
Overall, SOFID portfolio of investments reached 180 million Euros in 2020-2021.
Source: SOFID
SOFID partnerships
SOFID and FUNCEX strengthen ties between Portugal and Brazil
SOFID signed a Memorandum of Understanding (Memorando De Entendimento) with Fundação Centro de Estudos do Comércio Exterior (FUNCEX) which has the goal of enhancing business ties between Portugal and Brazil by exchanging information on business and investment prospects and organizing cooperative efforts to encourage the internationalization of Portuguese firms.
SOFID and EIB agreement to help SMEs in Portuguese-speaking countries
In 2019 EIB lent SOFID 12 million Euros in a credit line targeted to help SMEs in Africa and the Pacific that are underserved by the financial sector in their respective countries. The cooperation aimed to help private sector firms by offering long-term funding that is critical for driving economic development and creating productive jobs.
SOFID and IDB Invest to help several industries in Latin America and the Caribbean
In 2018 SOFID signed an agreement with IDB Invest, an independent private sector institution of the Inter-American Development Bank (IDB) Group, the goal of which was to encourage investments in Latin America and the Caribbean. The initiatives in focus were agribusiness, energy, tourism, and finance.
See also: DFI Files: PROPARCO – sustainable development and job creation in Africa
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