Forum Looks at BoP in Brazil
Editor’s note: Tomorrow in São Paulo, Brazil, NextBillion along with several other stakeholders including the Aspen Network of Development Entrepreneurs, will participate an event on “Modelos De Negocios Que Reduzem a Pobreza” or for the non-Portuguese speaker, Business Models that Reduce Poverty. The meeting will bring together numerous experts in BoP issues impacting Brazil, including Marcio Jappe, Director of Social Business Accelerator for Artemisia; and Rodrigo Brito, Co-Founder and Executive Director of the Entrepreneurs Alliance. I briefly spoke with Rob Parkinson, Coordinator for ANDE’s Brazil Regional Hub and organizer of the event. This will be the first of a series of posts focused on BoP issues in Brazil.
Scott Anderson, NextBillion: When most people think of BoP, they might tend to think India, Sub-Saharan Africa, or Bangladesh. But Brazil, which obviously has significant poverty also has which has seen its economy skyrocket in recent years. Why focus on Brazil now?
Rob Parkinson, ANDE Hub: While Brazil’s economy has indeed grown consistently in recent years – and is predicted to grow by 7.5% in 2010 (www.economist.com, Oct. 21, 2010) – this overall performance masks some worrying trends. Brazil has one of the highest levels of inequality – measured by the GINI Coefficient – in all of Latin America, and the quality of publicly provided education is very low when compared internationally.
Rapid rural to urban migration has created large ’favelas’ (slums) in many of Brazil’s cities, combining high concentrations of low-income families with little/no public services or urban planning, leading to crime, poor nutrition and poor health. At the same time harsh climates, soil degradation and/or geographic isolation mean that most people in rural areas still struggle to make a basic living. Feeling deeply uncomfortable with these challenges, and recognizing the limits of public policy in resolving them, a new generation of entrepreneurs and professionals is seeking to explore market solutions as an alternative.
SA: What BoP-related issues are really unique to Brazil at this time in its economic history?
RP: In addition to the aforementioned problems resulting from rural to urban migration, I would identify two further broad trends. The first is the effect of the government’s ’Bolsa Família’ program of behavior-tied financial transfers to BoP families, which has resulted in significant increases in income for some 12 million families across Brazil. The second is rapidly increasing mobile phone usage among BoP consumers, allowing previously marginalized people access to information and opportunities in other parts of the economy and creating new ways for businesses to connect with these consumers.
SA: Same question for business sectors. Where’s the growth in Brazil among sectors, ie. agriculture? Mobile financing? Water issues? What are the “hot” sectors for BoP in Brazil?
RP: Education – especially affordable universities and distance learning – and healthcare are seeing a lot of innovation and growth. Another growing area is commercialization of artisanal products – made by BoP producers – for high-income clients in Brazilian cities and export markets. Unlike in many developing countries, innovation and growth in financial products and services is limited, because of very stringent government regulations on the financial sector. In the process of creating the site and researching for content we’ve also discovered that there is very little consolidated information available about BoP business models in Brazil, since the country is so large and the topic is so new.