The conversation is led by Marcin Wandałowski, editor of the publication of the Civic Congress.
How does the activity of the Polish improvement Fund fit into the strategy of safety and resilience of the state? What function can PFR play in this context?
The function of PFR is multidimensional – from a state position we are an institution that effectively combines many functions. This is reflected in our fresh strategical directions, published earlier this year. We identify 5 main areas of action, each making an crucial contribution to building systemic resilience.
The first is an energy transformation – a huge, nonsubjective challenge for the Polish economy. Our safety and resilience are straight dependent on how and how efficiently we will conduct this process. In this area, PFR engages in both large projects, strategical for Poland and even the region. An example is the construction of the T5 installation terminal for offshore wind farms – via the Istrana peculiar intent company. We besides operate locally – e.g. in the form of a public-private partnership we have implemented a modern thermal waste conversion installation in Olsztyn.
The second direction is the improvement of an innovation ecosystem. In this area, the function of institutions specified as the PFR is peculiarly important, including the request to guarantee the predictability of the fund marketplace and the availability of capital. In Poland we inactive have comparatively fewer local organization investors and the rate of growth of available capital remains low. This is the consequence of both our past and the specificity of capital accumulation in fresh decades – frequently in hard economical conditions.
What does it do?
Although the improvement of pension funds and another financial institutions is systematically progressing, we are inactive at a phase where they do not supply adequate resources to funds private equity is venture capital.
In general, the participation of improvement institutions – specified as the PFR, the European Bank for Reconstruction and improvement or the planet Bank – in financing specified funds is very advanced and reaches up to 40-60%. This is much higher than in developed economies. Insufficient engagement of private capital is simply a real challenge, and 1 of the key tasks of the PFR is to mitigate this deficit.
PFR is the largest organization investor in Poland, and in our part of Europe. PFR Ventures from the PFR Capital Group presently has over 85 funds in its portfolio, which have made over 900 investments. We have late launched the Deep Tech PFR programme, which will finance respective twelve high-tech projects. We cooperate with global accelerators DIANA and IDA. We conduct actions aimed at improving the digital competence of companies and implementing artificial intelligence solutions in various sectors of the economy.
Insufficient engagement of private capital in Poland is simply a real challenge. PFR seeks to mitigate this deficit as the largest organization investor in Poland and this part of Europe.
What are the 3 another areas on which the PFR focuses and which can be linked to the building of systemic resilience?
The 3rd strategical goal is to grow abroad companies – it may not be straight related to safety per sebut indirectly supports the resilience of the economy. It is crucial for us to support the activity of Polish companies in the reconstruction of Ukraine. At the beginning of this year, Euvic and I purchased shares and consolidated 5 IT companies in Ukraine (through the abroad Expansion Fund managed by PFR TFI).
The 4th area is the improvement of the financial market, especially the capital market. Here besides we face organization challenges: the stock market's capitalisation against GDP is inactive low and the usage of debt instruments, specified as bonds, is limited compared to bank financing. This means that this marketplace has inactive large improvement potential.
In the fresh strategical directions, PFR identified 5 main areas of activity: energy transformation, innovation ecosystem, abroad expansion of Polish companies, improvement of the financial marketplace (especially capital) and resilience and security.
The 5th nonsubjective is straight about resilience – we have it written straight as part of our strategy. The PFR supports defence-related initiatives and business segments that respond to the needs of State security. In this way, we besides strengthen long-term systemic resilience. I mentioned any of these earlier due to the fact that they are straight linked to stimulating the innovation of the economy. But we besides operate through direct investments – PFR is simply a crucial shareholder of WB Electronics, 1 of the leading European drone manufacturers and military communications systems and a key technology exporter to Ukraine.
The COVID-19 pandemic was a minute of trial for many institutions. From today's perspective, can it be said that the experience of implementing the financial shield – by gathering know-how and developing fresh competences among PFR staff and another public institutions – has allowed to increase the state's capacity to respond to crises?
The PFR was at the time of the pandemic an institution liable for implementing 1 of the key state initiatives to mitigate the effects of COVID-19. Of course, it is about launching crisis shields – for both tiny and medium-sized companies and for large enterprises. These instruments started in 2020 and are mostly inactive in our portfolio, although any of them are already ending – for example, the bonds issued by the PFR are being redeemed by the Treasury due to the fact that they were all guaranteed by it. The program was so temporary and gradually extinguished.
It is hard to measure clearly whether this experience has translated into developing the state's capacity to respond to crises – it is simply a very complex issue. Let me put it another way: many countries have implemented akin mechanisms, but the PFR has done this highly efficiently. Let me remind you that the full program was worth PLN 74 billion – this is simply a immense amount, especially compared to the basic investment balance of PFR. They managed to prepare the right tools very rapidly and make algorithms that attributed aid to circumstantial entrepreneurs.
It is mostly accepted that these measures were of fundamental importance for marketplace stabilisation. Thanks to them, the Polish economy went through this period comparatively intact, and companies – thanks to these measures – were able to survive. We don't know, of course, what would happen if this program wasn't there, due to the fact that we only know this 1 scenario. But from the position of 2020, it was a time of exceptional uncertainty, which required the usage of unparalleled, fast actions.
To be honest, it is besides worth mentioning the side effects. any companies treated the funds received as so-called. cash hoarding, i.e. it retained it as a reserve, which affected even higher liquidity in the banking system. The full situation was so of a multifaceted nature. Overall, however, it can be considered that crisis shields have helped Poland to get through this crisis.
In the context of building long-term financial resilience, the component of strengthening pension security, but besides a form of diversification of the sources of financing of the economy are the worker Capital Plans. Can it be said that they are besides crucial for the systemic resilience of Poland?
Yes – due to the fact that PPK is simply a fresh saving formula, and the Polish economy inactive has a comparatively low savings and investment rate. Leaving aside on the side of considering to what degree 1 rate is transformed into another, it is mostly assumed that it would be desirable for Poland to rise both indicators.
PPK is primarily in the savings direction – they are much needed as a origin of pension capital, especially in the context of demographic challenges and shrinking public pension resources. I believe that, with the increase in the size of the funds collected and invested by PPK, the home financial marketplace will be better equipped with capital, which in turn will enable various investment initiatives to be implemented.
In the context of the increasing threats and the request for investment in safety – including military ones – there were signals in the public debate that the PFR could besides participate in the financing of defence projects in the future. How do you see the function of strategical funds in national safety investments?
This is simply a very up-to-date and crucial subject – especially since Poland plans to allocate very large amounts of resources to defence purposes: up to 5% of GDP. These are nominally comparable to the arms spending of many developed countries. We are so dealing with a completely fresh quality and a fresh phase in the perception of safety policy.
The launch of the Polish PKP is crucial for the long-term stableness of the Polish economy, which has mostly been based on structural funds and transfers from the European Union over the last 2 decades. In the current realities, the search for alternate sources of backing is crucial and the PPK is 1 of the foundations in this regard.
The PFR is already playing an crucial function in financing defence projects. I already mentioned our capital commitment to WB Electronics. It is the largest private company in the Polish arms sector.
You mentioned the Deep Tech programme – it concerns projects based on dual-use technologies, so-called. dual-use. Why is PFR entering this area?
We realize that the improvement of advanced technologies may be 1 of the drivers of economical growth. For the PFR this area is not completely new, we know how to decision in it. We are an investor in the NATO Innovation Fund – a technology specialist dual-use. The experience gained there helped us to plan the late announced DeepTech national programme, which will be implemented in the expression of the fund.
We must usage our alliances with the EU and the US to build our own digital security. At the same time, it is crucial to actively affect Polish entities – so that they are not only recipients of technology, but full participants of the value chain, having a real impact on the improvement of solutions.
The programme is aimed primarily at Polish backing teams, which will invest in advanced technologies – specified as artificial intelligence, cybersecurity, robotics and space technologies – and thus in areas of importance for both innovation and security. We presume the creation of 5 to 8 funds investing in Polish deep-tech companies. The full value of the programme is expected to be at least PLN 600 million, of which PFR will contribute about half – as a number investor in each fund.
This programme is the consequence of extended cooperation with the Polish administration – including the Ministry of Finance, which donated funds for its implementation, as well as the Ministry of State Acts and the Ministry of National Defence. MON will supply advisory services in the selection of technologies for financing. I stress that this area is strategical for the PFR – we know well about investment and defence technologies are 1 of the key investment topics in Europe today.
The issue of digital sovereignty and technological safety is increasingly the subject of public debate. What are the key elements of the state's digital resilience from your perspective, and what function can the public sector play in this?
This is simply a very applicable question – especially in the current geopolitical context. In the case of medium-sized countries specified as Poland, the issue of digital sovereignty is peculiarly common. On the 1 hand, we are a associate of the European Union, which involves certain economical and regulatory conditions, and on the other, we keep a close strategical alliance with the United States, which is the supplier of many key technologies in the area of cybersecurity.
This requires us to usage both of these alliances skillfully in specified a way as to strengthen our own digital safety – especially in the context of the ongoing war in Ukraine and its dangers. However, it is crucial to actively affect Polish entities in this process – so that they are not just recipients of solutions, but real participants in the value chain, which influence the improvement and form of these technologies.
Are there concrete initiatives in which the PFR engages in strengthening Polish technological and digital sovereignty?
Yeah, we're working on a couple of these. 1 of them is the Operator of the National Cloud – a company that we co-owner together with PKO BP. This is simply a very interesting initiative: it offers both Google and Microsoft cloud technology solutions and the alleged sovereign cloud service – dedicated solutions for companies and institutions that require more control over their processing due to the sensitivity of data.
It is besides worth mentioning the memorandum signed this year about cooperation with Google and the National Cloud Operator. Together, we examine how to best exploit the possible of Google technology in the public sector in Poland – especially where their implementation can bring the top added value. Work is inactive ongoing, and the results of the first phase of the task will be presented soon.
How to build the sustainable capacity of state institutions to operate under conditions of uncertainty and disruption? What function can the Polish improvement Fund play in this regard?
From our perspective, the function of PFR in this area is very crucial – and in fact it is in all erstwhile themes. This year we started work on a fresh strategy. The strategical orientations mentioned above are just the announcement of a broader paper that will find what the PFR should look like over a period of respective years. The strategy will not only cover current activities, but will besides specify our function in the wider ecosystem of improvement institutions.
Poland is at an interesting minute of transformation today. We control our "growth engine" from a low-cost model and catching up to an innovative model. PFR actively supports this direction – including through investments in the deep-tech sector.
Looking long-term, we want the Polish improvement Fund to be an integral part of the state's resilience strategy – not only in the context of a crisis response, but besides as an institution supporting development. Poland is at a very interesting minute of transformation today: we are switching our "growth engine" from a low-cost model and catching up, to an innovative model. The PFR is powerfully active in this process, including through earlier investments in the deep-tech sector, which is increasingly besides linked to defence, especially in the current geopolitical context.
You mentioned that Poland is present at the minute of changing the improvement model – from the economy making up for the distance, towards the innovative economy and expanding the global presence of Polish entities. What function can PFR play in this process? Can building global activity of Polish companies besides be an component of strengthening the organization resilience of the state?
Foreign expansion is not just a search for fresh outlets. It is besides a signal that Poland is gradually becoming an exporter of capital. Although this is not yet happening on a massive scale, concrete examples of specified activity are already emerging. This is simply a sign that we are beginning to function like mature economies that have been investing outside their own borders for years. These processes foster the strengthening of skills in innovation, openness and global economy.
Definitely. present we see that more and more Polish companies – and this is simply a fresh quality – show a real appetite for taking abroad risks. So far, business improvement has mostly been based on the home marketplace or possibly within the European Union. Today, we are increasingly seeing this appetite growing, both among SMEs and large players.
The PFR has tools to support specified expansions – both point and larger scale. We have experience in handling large investments and acquisitions, so we are ready to actively accompany companies in their activities. Moreover, we coordinate the activities of the full PFR Group, which offers a wide scope of financial and advisory instruments. We want to service as so-called. one halt shop – 1 point of contact for entrepreneurs seeking support.
Foreign expansion is not just a search for fresh outlets. This signal that Poland is gradually becoming an exporter of capital. Not yet on a mass scale, but we already have concrete examples of specified processes. This is simply a sign that we are starting to match mature economies that have long invested outside their borders. This, in turn, develops innovation, openness and ability to act according to global rules.
In this sense, global expansion becomes a fresh form of organization resilience – flexible, developmental and tailored to the challenges of the modern world.
