Portugal: Stymied by domestic stagnation
Portugal’s economy is heavily dependent on SMEs. The minority that are exporters are still borrowing at favourable rates; the remainder are deterred by the weak domestic economy.
The European Commission’s most recent analysis of SME financing in Portugal makes unsettling reading. Access to finance is "much more difficult for Portuguese firms than for most of their peers in other EU countries," says the 2012 SBA (Small Business Act) fact sheet. "What is worse," this adds, "is that this happened in the face of a drastically improved credit climate in the EU overall."
One reason for this is that Portugal has an unusually large but relatively unproductive SME sector by eurozone standards. Miguel Magalhães Duarte, director of marketing for companies at BCP Millennium in Lisbon, says that of the 350,000 companies in Portugal, about 305,000 have fewer than 10 employees. The result, according to the EC, is that micro companies’ share of the Portuguese corporate universe is two percentage points higher than the EU average.
This relative fragmentation inevitably complicates access to funding. Eduardo Costa, vice-chairman at Banco Finantia in Lisbon, says that perhaps one way of alleviating the funding conundrum among SMEs in Portugal would be a wave of consolidation, creating larger, more bankable companies.
The more immediate problem, however, is the ball and chain of Portugal’s macroeconomic climate. "A large part of the banking sector in Portugal is debilitated," says Costa.