Over the last decade, we have increasingly heard about Brazil’s emerging middle-class and the government’s achievements in reducing extreme poverty. Its "Bolsa Familia" program is among the most successful Conditional Cash Transfer programs in the region, reaching 12.7 million families, or about 50 million Brazilians. According to the Fundação Getulio Vargas, more than 30 million Brazilians have moved up from the lower D and E classes over the past eight years, and another 35 million could move up in the next five. However, inequality remains high, to the point that even a foreigner can see the differences between the richer south and southeastern parts of the country and the poorer north and northeastern regions.
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Brazil’s C, D and E social classes comprise about 70% of the country’s population and that has certainly gotten the attention of the consumer industry! Realizing that these low and middle income families now have more money to spend, a growing number of private sector companies are developing products aimed at Base of the Pyramid (BOP) markets. You may not believe that offering affordable consumer goods can have a positive impact on low income communities, but if you happen to go to Brazil you’ll see how expensive it is to buy anything from appliances and electronics to clothes and even food. So competition could indeed drive consumer prices down, and cheaper consumer goods could also save people money.
Nevertheless, doing business with the BOP is not all about selling them products, but also about offering them affordable services that can somehow help improve their livelihoods. For example there is an urgent need for higher education, affordable housing projects and access to financial services with less prohibitive interest rates, to name a few.
Opportunities for the Majority (OMJ) has recently given a loan to Brazilian family-owned wholesale company
"Tenda Atacado." With IDB financing and support Tenda will provide microcredits to "transformadores" (small food producers and vendors) and give them basic financial training and food preparation courses through a partnership with CARE International. OMJ is also analyzing two additional projects in Brazil: one with Banco Gerador in the Northeast, and the other with VAR do Brasil Ambiental in the Northern city of Belem. The first aims to give access to credit and training to the owners of “mercadinhos” (mom and pop shops) that will also act as non-banking agents to provide banking services to low income households in the region, and the second aims to create income-generating opportunities for “Catadores” (waste recyclers) so they can supply the company with the raw materials necessary to produce biomass for co-generation of renewable energy in Brazil and Europe.
If you haven’t been to Brazil to see this beautiful and dynamic country for yourself, there is a good reason to visit this month. The IDB is holding BASE: The 1st International Forum for the Development of the Base of the Pyramid in Latin America and the Caribbean in Sao Paulo on the 27th and 28th of June. We believe that there are tremendous opportunities for companies to develop win-win business models that will benefit both investors and clients so we need your ideas to discuss ways to replicate, share lessons learned and motivate others to join this new and growing field. Many leading Brazilian companies will be represented there, but we also will hear about innovative business models from throughout the Latin American and Caribbean region, and beyond. We hope to see you all there!
