Note from BW of Brazil: It’s a market that had yet to reach its full potential. And as the politics of racial identity continue to develop in Brazil the possibilities are enormous. I’m speaking on the consumer market of Afro-Brazilian buyers. Of course, Brazil has long been promoted as the country with “the largest black population outside of Brazil”, what this slogan really means is not quite as clear as it appears. Brazil of course received the most Africans that were used as slave labor of any country in the Americas, but today, it’s difficult to say how many of the more than 100 million pretos (blacks) and pardos (browns) actually identify themselves as black and how many also see the importance of supporting black issues, black politics and black businesses.
With ongoing campaigns for the development of black identity, this segment of the population could mean enormous growth for Afro-Brazilian entrepreneurs who understand what this long ignored, underserved community needs and desires. We’ve already seen past material pointing to the shortage of black dolls for black children and makeup/beauty products for black women. Now with the news that the Inter-American Development Bank is investing funds in Afro-Brazilian entrepreneurs, we could see an explosion in products targeted at specifically the black community as well as inventive black businessmen and women moving into very influential economic circles that could also signal good news for a Brazilian economy that has been in free fall for the past few years.
Discrimination still hinders black entrepreneurs, says Inter-American Development Bank
By Mariana Fonseca
The Banco Interamericano de Desenvolvimento (Inter-American Development Bank) (IDB) is eyeing a parcel of entrepreneurs that have grown in recent years: the owners of Afro-Brazilian businesses. After all, the majority of Brazilian entrepreneurs are already black – and the country has much to gain by investing more in this parcel of businessmen and women.
Between 2003 and 2013, the number of blacks heading companies in Brazil grew 27%. In the same period, the number of white people who own a business declined by 2%, according to a study by Sebrae.
Even so, empreendedores afrodescendentes (entrepreneurs of African descent) face additional barriers when the time comes to start a business. For example, only 9% of pretos e pardos (blacks and browns) that are business owners can hire employees – while 22% of white entrepreneurs are employers.
The lower level of development of enterprises also reflected in less money in the account at the end of the month: in 2013 the average monthly income of preto and pardo entrepreneurs was R$1,246, against R$2,627 among whites.
For Luana Garcia, specialist in Desenvolvimento Social da Divisão de Gênero e Diversidade do BID (Social Development of the Division of Gender and Diversity of Specialist of the Inter-American Development Bank), such discrepancies are due to “historical discriminatory arrangements.” “We want to reverse this discriminatory framework and promote the growth of Afro-Brazilian ventures,” she said in an interview with EXAME.com by e-mail.
Garcia is Brazilian, but is in Washington to coordinate Inova Capital: an IDB program to support Afro-Brazilian entrepreneurs and aims to invest $500,000 (about 1.6 million reais) by 2017.
The idea of Inova Capital is not only to help create an “Afro-enterprise segment,” but also to understand the consumption of this portion of the population.
Read the following interview with the IDB specialist, and understand why investing in Afro-Brazilian entrepreneurs can help lift the country.
EXAME.com – Why did the IDB decide to focus specifically on Afro-Brazilian entrepreneurs?
Luana Garcia – Access to financing and the ability to manage a business without doubt persists as major barriers to the growth of all companies. However, afrodescendentes entrepreneurs often face additional barriers due to historical discriminatory arrangements.
In a survey conducted by Procon-SP about racial discrimination in consumer relations, of 2010, the majority of respondents reported having witnessed discriminatory attitude of color or race at the time of purchasing of a product or contracting of a service. Banks and financial institutions were among the first three where consumers most felt discriminated against after the stores and shopping centers.
Meanwhile, afrodescendentes account for 68 million consumers and 11 million Brazilian entrepreneurs. Of the total business owners in Brazil, 52% are black. We want to reverse this discriminatory framework and promote the growth of the Afro-Brazilian ventures.
EXAME.com – How can entrepreneurship help overcome this historical discrimination?
Luana Garcia – Entrepreneurship is a very important lever for social and economic development of any society, as well as for professional and social growth of the entrepreneur himself. We, the IDB, believe that promote Afro-Brazilian entrepreneurship is critical to the sustainability of this development.
These entrepreneurs also generally are more familiar with the central problems of the most vulnerable areas of the cities, their circumstances and their markets. And large corporations and government funding agencies have encouraged companies that can boost the development of these social segments. A ample capital is available to finance innovative companies in this space.
In addition, for investors, investing in Afro-entrepreneurs offers an option to diversify the investment portfolio with economic returns and social impact.
EXAME.com – How will the IDB invest $500,000 for the Inova Capital?
Luana Garcia – Resources are directed to two areas: supporting and creating an Afro-entrepreneurial segment model and understanding the black consumer.
The first part involves creating a prospecting strategy of high-potential of Afro-entrepreneurs with high growth potential and economic and social impact. We will have, for example, the development of a methodology for comprehensive business training, inclusive and culturally relevant.
Another point is the creation of tools to increase the capacity of pitching, public speaking and summarized presentation or storytelling of businesses for investors. And we still have the increased visibility of these entrepreneurs, the exchange and access to corporate networks, accelerators and incubators, fairs and national and international investors.
We have already developed an intensive pilot at Inova Capital of training and coaching with 30 Afro-entrepreneurs, held in the first half of this year. We also organized a business competition with seven Afro-entrepreneurs, in partnership with the Anjos do Brazil (Angels of Brazil) in August.
In parallel, the IDB is conducting a survey in the country on the Afro-Brazilian market, which will continue until 2017. The study involves brand preferences, consumer behavior and advertising in social networks, for example.
EXAME.com – In terms of reducing inequality, what results have you seen after this intensive pilot and competition? Will there be a new selection?
Luana Garcia – It’s still early to talk about results in reduction of inequality, but the program has already made the first steps in this direction.
In the competition of afrodescendente entrepreneurs’ businesses, they could present their pitches to investors, four received awards for the program for their social impact and their potential to attract investment. The top three are part of the Anjos do Brasil platform, which is a real showcase for those seeking investment.
But it’s worth remembering that this program benefits not only the entrepreneurs of this first edition. Indirectly, it affects all Afro-Brazilian entrepreneurship, putting it in evidence and creating a model of support that can and should be escalated.
We still have no date for the next version, but we are confident that the investment of IDB demonstrated to the market that there effectively exist Afro-Brazilian entrepreneurs with high potential – what they lack are opportunities so that they can improve their management skills, presentation and formation of contact networks to make their business grow and to access capital.
EXAME.com – How does IDB see Brazilian entrepreneurial ecosystem in general? Are there new action plans?
Luana Garcia – Brazil has one of the most dynamic business ecosystems in the region. According to Sebrae, three in ten Brazilian adults have a business or are involved with the creation of a business.
That is, there is a vast ecosystem that should be encouraged: the IDB believes that the private sector is the key player in the country’s development.
We are working closely with governments to support the strengthening this ecosystem of innovation and enterprise. This includes creating training programs, inserting tax benefits to encourage innovation and implementing legal frameworks to streamline investment and business creation and also for the protection of intellectual property. We seek to make the environment more conducive so that more solutions emerge to the challenges of local and international development.