The main objective of the protocol is to create lines of credit to attend to the requests and projects submitted to the Banco da Cultura for financing. The institution’s president, António Carlos Horta, explains that this is the third protocol the Banco da Cultura has signed with commercial banks – the first two were with Ecobank and with Novo Banco – but that, even so, it is in need of more partners. “The Banco da Cultura has more than 600 projects and a volume of financing requests above 700 million escudos. But we’re not capitalized yet, which is something we hope will happen soon, through the Ministry of Finances. In the meantime, we’re working to mobilize outside resources. In 2013 we were financed by Lux Development and buy a number of domestic partners,” explains Horta.
It was with these resources that the Banco da Cultura managed to finance projects and promote culture to the tune of 85 million escudos. Carlos Horta cites the sponsorship of the National Handicraft Forum (Fonarte), the Carnaval Forum, the Atlantic Music Expo (AME) and theater festivals throughout the country as examples, stressing that all of these activities took place thanks to the intervention of the Banco da Cultura: “The signing of these protocols allows us to mobilize means to finance culture. We’re talking about funding in the form of grants. In this first phase, we’ve given priority to the promotion of culture, but to the detriment of individual projects. But we have paid for travel and domestic exchanges for artists to participate in events in the country, such as with the Grito Rock festival. We’re also going to support an event to take place in the near future on the island of Fogo. This is the Banco da Cultura’s role.”
The actual amounts to be involved in the protocol will depend on the Banco da Cultura’s resource mobilization capacity. Carlos Horta says that the main innovation is that this particular line of credit has an interest rate of 2%. “In order for the Central Bank to make money available to the Interatlântico, we have to pay an interest rate. We can’t finance any project below this amount. In this case, the 2% differential is converted into tax-deductible sponsorship. Millions of escudos will be financed in this way – it’s a resource mobilization strategy,” he explains.
The Banco Interatlântico is also satisfied with the protocol. According to Executive Commission chairman Pedro Soares, the Ministry of Culture has created a concept aimed at granting donations to entities. However, it has noted that some of these have the capacity to generate resources that would allow them to reimburse the donations. As such, the need was felt to increase the amounts available for financing, while encouraging the artistic community to look at its activity as a business. “The minister proposed that, instead of grants, resources could be made available in the form of loans. Those able to generate revenues can pay back the loan. For those who cannot, the Banco da Cultura takes on the risk rather than the Interatlântico,” he says.
In order to make the process operational, however, the Ministry of Culture must rely on banks - the only entities that Grant loans. “The minister proposed that we serve as financial agents of the Banco da Cultura’s autonomous fund. We’re going to loan the money, which the fund itself will place in our bank. The beneficiaries will be chosen by the Banco da Cultura. If they are unable to pay back their loans, the Banco da Cultura will answer to Banco Interatlântico. With this operation, we’ll be working as a financial agent, granting and managing loans, without any credit risk,” he explains.
The Banco Interatlântico will not charge any commissions, nor will it practice the interest rates normally paid by the market. “We’re going to charge 2% interest on the loans, which is the same rate we pay Banco da Cultura for the money it deposits in the Interatlântico. Our payment is the publicity that will come with this partnership. We’ll also be gaining with all of the clients associated with the project, as well as with other business that revolves around the cultural initiatives and that we can take advantage of as a bank.”