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  • Building resilience to health risks in the private sector

    A Six-Step Roadmap to Enhance Private Sector Resilience to Health Risks

    An IDB Invest poll shows nearly 60% of projects have temporarily ceased work or faced major project delays because of COVID-19. Early lessons coupled with existing best practices in public health and safety principles provide a six-step action road map to build resilience against such risks.

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  • Three ways banks can attract millennials

    Three ways banks can attract millennials

    71% of the millennials in the United States would rather go to the dentist than listen to what banks are saying, according to the Millennial Disruption Index, while 35% of the banks in Latin America feel they are not meeting the needs of this generation, and 71% admit they are unable to rapidly adapt to technological advances, according to a study done by the GMix program of Stanford University and Technisys. However, in upcoming years this age group will be the main source of consumers and labor. Millennials represent close to 30% of the population in Latin America and the Caribbean. For more than half of them, only innovative companies will be successful. In effect, four out of every ten believe that the private sector is the true driver of innovation, according to a survey conducted by Deloitte. For this reason, banks in the region are looking for new formulas to attract them: 1.     Chile: Collaborative spaces The millennials are the “BRICs” of the age groups: due to their size, they can disrupt the economy, particularly the banking industry, according to Scratch. In Chile, banks are betting on collaborative spaces to approach this generation. Thus, was born Work/Café, a space open to the general public for working, holding meetings, and using free Wi-Fi and that already has six locations in the country. The Santander Group’s wager includes a cafeteria with discounts for clients, executives specializing in financial advice, and ATMs for cashing checks, making deposits, and transferring funds. Another characteristic sought by millennials is flexibility. Thus, these branches add four hours to traditional banking hours in Chile, remaining open for 18 hours, Monday through Thursday. Work/Café also gives talks in order to keep capturing clients constantly. [clickToTweet tweet="35% of the banks in #Latam feel they are not meeting the needs of the millennials" quote="35% of the banks in Latin America feel they are not meeting the needs of the millennials" theme="style1"] 2.     Brazil: 100% virtual In Latin America and the Caribbean, 55% of the population buys products via the Internet and 90% of millennials are digital banking clients. For this reason, a Brazilian bank made the decision to be the first 100% digital bank. Banco Original developed a website, applications for mobile telephones, tablets, and even Smart TVs to reach its public on line and close its branches. To avoid in-person visits, this Brazilian bank developed a site with services for personal, commercial, and agribusiness banking. In addition, it developed Bot Original, a service enabling interactions via Messenger and even on Facebook, with a robotic system of instantaneous responses for clients. 3.     Mexico: On-line support for SMEs One of the region’s largest financing gaps is experienced by small and medium enterprises (SMEs); this gap is estimated at between $210 billion and $250 billion. However, for more than half of the region’s millennials, a venture is one of the most important achievements. Thus, the banking system is seeking ways to facilitate access to financing for SMEs given that applications for financing for companies of this type still require in-person visits in many countries. Bankaool, Mexico’s first 100% on-line bank, developed financing tools for SMEs. Clients can apply for and receive financing for their businesses in a more streamlined and expeditious way. This has also allowed the bank to carve out a niche within the financial industry based on its work generating inclusive businesses. Innovative wagers continue to flourish in the region and in the rest of the world, from applications for different financial operations and the use of biometric profiles, to the development of products for women’s banking. They all seek a positive effect on returns, efficiency, and the consumer’s experience. It is thus essential to continue looking for strategies that make attracting millennials possible since, as John D. Wright once said, “Business is like riding a bicycle. Either you keep moving or you fall down.” Now we need to see what the banking sector’s next move will be in the region. Subscribe to receive more content like this! [mc4wp_form]

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  • Brazil: Infrastructure Challenges and Opportunities

    Brazil: Infrastructure Challenges and Opportunities

    Within weeks of the Brazil Investment Forum, the development of the economy of South America’s colossus presents numerous challenges and opportunities. A major one is how to continue providing incentives for private sector investment in infrastructure to bridge the country’s funding gap. Synergies among development entities open up new and interesting opportunities for this market.

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  • How to support business productivity: three lessons learned in Brazil

    How to support business productivity: three lessons learned in Brazil

    Increased productivity is considered the only sustainable model for improving living conditions over the long term: it reduces the use of resources and increases production, which is reflected in higher per capita gross domestic product (GDP) and is a necessary – although not always sufficient – condition for wage growth. Unfortunately, in Latin America and the Caribbean, productivity has not increased since the mid-70s, and has in fact shrunk in many countries. A recurrent action by governments to change this situation is the creation of business support programs. Although the model varies according to sector and country, the basic argument is the same: market deficiencies keep companies from reaching their potential; if these obstacles were eliminated, companies could operate more efficiently and generate greater social well-being based on increased competition, innovation and access to external markets or better coordination in value chains. Business-support programs: the case of Brazil But are business support programs of this type really effective? To answer this question, a recent study by the IDB Office of Evaluation and Oversight analyzed the case of Brazil, where nearly 900,000 companies received more than 1.4 million government subsidies to support their productive activities between 2002 and 2012. During this period, 5.4 million mostly small-sized companies (75% had less than 10 employees in 2012) were operating in the country, basically in the trade and services sectors. 16.4% of these companies participated in at least one productive support program, primarily in the form of capital provided for investments. The largest companies, which also offered better salaries and employed workers with higher educational levels, generally received training for export and support for innovation. Support in the form of working capital and, to a lesser extent, investment capital, benefitted smaller companies, with lower salaries and employees with lower educational levels. The Results: What can we learn from them? Due to the intertwined nature of the programs, it is difficult to link effects and interventions, so that the study focuses on the nearly 600,000 companies that only participated in a single program. The results are not very promising: there have been few effects on productivity or other indicators. One of the positive results determined by the study is that the survival rate of the beneficiary companies (90%) exceeded the average for Brazilian companies (67%). However, in only a few companies was it possible to draw a connection between the interventions and increased productivity. The results, although better in support programs for companies in the industrial sector, were rarely positive for the trade and services sectors. In fact, the interventions tend to be associated with decreased salaries and employment. These results point to the need to redefine the scope, design and monitoring of business support programs in Brazil, and leave us with key challenges for improving their efficacy in the future: Improved incentives: given that productivity is not explicitly defined in the programs as an expected outcome, the programs have no incentives to encourage companies to invest in new technologies and take measures to increase efficiency. Coordination of efforts: even though several programs are designed to work in combination or at least in parallel with others, the results suggest the need to optimize the current mechanisms for coordination among organizations working together. Results measurement: difficulty in evaluating some of the programs underscores the importance of incorporating monitoring and evaluation mechanisms in their design, which will make it possible to learn from the results. Understanding the effect of productive development programs on companies and on the economy, beyond the Brazilian case, requires additional analyses, but this study can be a starting point. I invite you to access all the data here. Subscribe to receive more content like this! [mc4wp_form]

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  • Four countries leading in solar in Latin America and the Caribbean

    Four countries leading in solar in Latin America and the Caribbean

    Nearly half of the global electric power capacity could come from solar energy by 2025, according to McKinsey & Company. Multiple Latin American and Caribbean countries, benefitting from exceptional resources and evolved regulatory frameworks, have seen rapid growth in solar energy in the last few years. Utility scale projects are now considered commercially viable and receive private financing, while the application of distributed solar is growing quickly. However, falling solar prices are squeezing the industry, and macroeconomic uncertainty will continue to test its strength. Meanwhile, developers are now consolidating to gain market share and achieve profitability.

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  • How cattle ranchers can profit from planting trees

    How cattle ranchers can profit from planting trees

    In agriculture it’s not often that you find a relatively simple way to increase production by up to 20%. Planting trees turns out to be one such way for cattle farmers. Cows like shade and grow much faster if they graze on pastures dotted with trees. Studies show that combining livestock herding and forestry on the same stretch of land can lead to an 8% to 20% increase in dairy and meat production in the Southern Cone region.

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