In Brazilian favelas, entrepreneurship is the ticket to success

</span></p> <p><span style="font-weight: 400;">Jaubra is a good example of how necessity, combined with creativity, has turned residents of Brazil&#8217;s favelas (peripheral communities of urban centers where things as simple as hailing an Uber can be challenging) into entrepreneurs. Of the 12.3 million people who live in favelas, 40 percent wants to open their own business (against a national average of 23 percent), preferably within their own community. </span></p> <p><span style="font-weight: 400;">This data (the most recent available) was published in 2015 by Data Popular, an institute specialized in <a href="http://datapopular.com.br/">surveying</a> the Brazilian lower-middle class. Three years ago, this population was enjoying the <a href="https://brazilian.report/2018/02/22/inflation-impacts-brazilians-income/">perks</a> of a growing economy and access to cheaper credit. After the crisis hit Brazil &#8211; and <a href="https://brazilian.report/2018/02/26/brazils-economic-crisis-not-everyone/">especially lower-income</a> households &#8211; <a href="https://brazilian.report/2018/04/30/brazil-unemployment-rate-stats/">unemployment</a> pushed many people toward entrepreneurship.</span></p> <h3>The economic force of the favela</h3> <p><span style="font-weight: 400;">&#8220;We are facing a 500-year-long crisis in the favela. We struggle to make ends meet, so we must all figure out a way,&#8221; says Clayton Rodrigo dos Santos, founder of the streetwear brand DAV8. His business was created in Jardim Ibirapuera, a poor area in São Paulo&#8217;s south zone. The brand&#8217;s tagline is a direct message to its target audience: &#8220;Never deny your origins.&#8221;</span></p> <p><span style="font-weight: 400;">Articulate and self-conscious, Mr. Santos overcame the lack of opportunity and obtained three degrees, in digital marketing, logistics, and business management. &#8220;We produce everything in-house except the fabric. We work with the community and make the money circulate here. It&#8217;s a way to boost the local economy,&#8221; he says. </span></p> <p><span style="font-weight: 400;">Although DAV8 exports collections to Spain, France, Japan, and Germany, the biggest chunk of its sales happens through WhatsApp. </span></p> <p><span style="font-weight: 400;">Focusing on favela residents does not only make sense from the social perspective. It is also good business. If Brazil&#8217;s favelas were a state, it would be the fifth-most populated, with a GDP of up to BRL 63 billion (USD 17 billion).</span></p> <h3>A banking system of its own</h3> <p><span style="font-weight: 400;">Rio de Janeiro&#8217;s Complexo do Maré is a group of several connected favelas not far from Guanabara Bay. It is often associated with gang violence and drug trafficking. It is also home to one of the most innovative Brazilian fintechs, Banco Digital Maré, which tackles how the country&#8217;s banking system excludes poor consumers. In Brazil, 48.4 million people have no access to a bank account, according to the World Bank &#8211; in other words, one-third of the economically active population and the ninth biggest rate in the world.</span></p> <p><span style="font-weight: 400;">Such communities hardly have bank branches or ATMs, and residents must walk to other areas to withdraw cash. Banco Digital Maré, however, has four branches in the favelas, and more than 20,000 active customers. In March alone, the company intermediated transactions of BRL 2 million in payments of small bills.</span></p> <p><span style="font-weight: 400;">Banco Digital Maré is one of the few fintechs that focuses on the people excluded from the banking system &#8211; only 10 percent of the country&#8217;s 350 such startups have that positioning. </span></p> <hr /> <p><img loading="lazy" class="alignnone size-large wp-image-4978" src="https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1-1024x606.png" alt="Where Adults Lack Access To A Bank Account" width="1024" height="606" srcset="https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1-1024x606.png 1024w, https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1-300x177.png 300w, https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1-768x454.png 768w, https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1-610x361.png 610w, https://brazilian.report/wp-content/uploads/2018/06/export-25GbZ-1.png 1180w" sizes="(max-width: 1024px) 100vw, 1024px" /></p> <hr /> <p><span style="font-weight: 400;">Besides providing banking services, the startup also gives financial advice. &#8220;Our customers do not have a lot of knowledge about technology and might be a little afraid of using the app for payments. We have a team to help and teach them how to do it. In the beginning, most of the bills were paid late, but now the payment rate after the expiration date was reduced by 65 percent.” </span></p> <p><span style="font-weight: 400;">Positive results are pushing Banco Digital Maré to extend its operations to Vila Prudente and Heliopolis, peripheral communities in São Paulo, and to the city of Arapiraca, in Alagoas, Northeastern Brazil.