Portuguese business association launches financial literacy campaign

The Portuguese Industrial Association (AIP) has launched a financial literacy awareness campaign to make SMEs more aware of the importance of diversifying sources of financing.

The initiative launched on Wednesday, targets 1,000 SMEs with the central message that “Portuguese companies are highly under capitalised and this ends up constraining their growth and undermining their competitiveness”, says the AIP-CCI’s Director of Economy, Financing and Innovation, Paulo Caldas.

Paulo Caldas told business daily Negócios that almost 30% of SMEs have negative own capital and don’t have the means to invest.

In this context AIP has launched the programme on the back of Portugal 2030 – an initiative that promises to involve 1,000 SMEs over the next “two to three years”, to “strengthen the financial literacy of companies” with regard to alternative financing instruments other than those offered by the banking sector.

“Today, when companies need capital, they almost always resort to self-financing or banks. But this often carries significant risk premiums for them,” says Paulo Caldas.

Caldas adds that they are often unaware of the existence of other instruments, such as financing with public risk sharing, quasi-capital solutions, bonds, shares, and the capital market.

The AIP is organising bootcamps and webinars to raise managers’ awareness of these alternative financing options and how to effectively leverage and harness them.

“We are aware that it is a process of ‘evangelisation’,” he says. Especially because it is not a given that most decision makers are open to alternative financing options”.

“There are the challenges of business culture, but more and more companies have qualified human resources who look at this type of instruments in a more positive way,” concludes Paulo Caldas, who admits that in recent years the professionalisation of SME management has grown.