Where Einstein Meets Edison

Tudo bem? Encouraging women entrepreneurs in Brazil

By all accounts, Brazil is in the midst of an entrepreneurial revolution. The country’s emerging market is attracting a flood of foreign investment, and the national government actively nurtures domestic innovation to promote and sustain economic development. Beyond federal policy, Brazilian society itself is very entrepreneurial. According to recent statistics from the Global Entrepreneurship Monitor, a highly-regarded research non-profit, 17% of all adults in Brazil are engaged in entrepreneurial activity, the highest rate of any country in the survey.

Brazilian women, in particular, stand out for their entrepreneurial drive. Three Brazilian women participate in starting new businesses for every four brazilian men (1). This ratio is one of the highest in the world – higher than the 1:2 ratio in the U.S. – and welcome news in a society with deep paternalistic roots.

Increasing the number of women involved in starting new businesses is critical for Brazil’s long-term economic growth. Research shows that the economic status of women has a profound ripple effect on their households and communities. When women are economically empowered, children are more likely to be educated and healthy, and more money is likely to be reinvested into the family enterprise (2). The woman’s own health and wellbeing improves, her family’s needs are met, and the entire community benefits. Because women are more likely to put earned income to productive use than their husbands, investments in women can have a significant multiplier effect.

This multiplier effect is particularly important for economic development in the lower strata of Brazil’s socioeconomic ladder. Brazil is plagued by one of the largest wealth gaps of any country in the world.  The wealthiest 10% of the population control almost 50% of the country’s wealth, whereas the poorest 10% have only less than 1% (3). 70% of Brazilians are poor, and 90% of Brazilians are not college graduates (4).

And yet access to business knowledge, mentoring, and awards are often limited to the educated. For example, Endeavor, a global organization that provides resources to aspiring entrepreneurs, doles its vital resources out selectively. It seeks high-impact applicants who are “rich in accomplishments” and have a business with “growth potential, including a scalable business model and expanding market, capable of boosting the company’s growth and, consequently, the generation of jobs and income in the country” (5). This set of requirements prejudices poor women. The paucity of role models, limited knowledge about new venture creation, limited access to smart capital, lack of trust, and lack of management expertise/contacts present significant additional hurdles to entrepreneurial success.

Last year, I travelled to Brazil and interviewed women entrepreneurs, many of whom started businesses in the food services industry. Their diverse yet similar experiences provide great insight into this challenge:

  • A single mother who began working at age 10, Maricel sells tortillas to support her 14-year-old daughter, sending her to school so that she can pursue opportunities her family never had. “My mother worked in this plaza,” recalls Maricel. “She always told me that it didn’t matter how small or simple my stand was, as long as it was mine.”  In the past few years, she has received six small loans, which have helped her buy fruits and vegetables to prepare and sell.  “I feel good about what I’ve achieved through this business,” she says. She proudly states that she has never missed a payment and looks forward to purchasing a small refrigerator and additional tables with her next loan. (6)
  • Deborah had little experience making bread but was determined to make the business work.  She took a SABRE ABCs of Business course to learn more about running a business.  Deborah was given recipes for various kinds of bread and specific instructions for pricing it.  In addition, she learned the importance of establishing a brand, setting reliable hours and carefully tracking earnings and expenses.  Deborah proudly shows off her notebook revealing carefully kept notes on sales, income, and expenses, formatted just as the ABCs of Business curriculum instructs. (7)
  • Fernanda, a businesswoman who started her business at age 23, was able to turn a start-up capital of R$3,000 into revenues currently exceeding R$1.1 million. “The government offers several lines of financing and credit that will help you get started with your dream.” (8)
  • Juliana, owner of a juice company, credits Endeavor with launching her business.  The organization provided a MIT MBA to define an expansion strategy, mentors to provide legal advice on labor taxes and export structure, and board members to determine the best capital structure and financing options for the company.  The profits from her business enabled her to add a room and a tin roof to her concrete house. But most importantly, she is able to provide an education for her children. “When I was young, I had to work. Now all of my children are in school,” she smiles. “It makes me happy to give them an opportunity I never had.” (9)
  • Ducking into a chatty hole-in-the-wall café, I find it staffed with shyly smiling young ladies. Patricia, owner of the café, tells me how she began her career in the food industry.  She started reading cookbooks religiously, and began making pastry empanadas and selling them.  With this source of income, she was able to educate her children. (10)

These interviews offer prescriptions for action:

  • Governments that want to realize the maximum gains from their investments in female entrepreneurship would do well to address obstacles that keep women in lower-paying jobs or out of the labor force entirely.  Improving the condition of women can have benefits for society that transcend the direct benefits to individual women.  Women’s independent earnings improve the well-being of families and communities, reduce poverty and stimulate job creation.
  • Education is the key to entering the formal economy and the Brazilian middle class. More education improves the chances that a female-run entrepreneurial business will make the transition from a start-up to an established business. To support their families, though, many women are forced to work in the informal economy, and thus miss out on resources that bestow an aura of credibility and legitimacy on those who operate in the formal economy and within established frameworks.
  • There is currently a capacity gap in the microfinance community.  Women lack access to mentors, networks, business advice and other critical wrap-around services.  Women in the informal economy need vocational training, financial literacy and confidence building in order to successfully open or expand their micro-businesses.  Women without formal education and girls who drop out of school face traditional barriers to capital access.  They can overcome these obstacles by learning how to write a business plan, overcome their fears and build confidence as well as introductions to banks and other lenders.
  • By working with a wide variety of stakeholders and experts from the microfinance, education, public and private sectors, we can better connect micro-entrepreneurs and other uneducated people with the resources of the capital markets and the technology industry.  Poor entrepreneurs have the skills and drive, but lack opportunity and education.  We can empower women entrepreneurs by providing them with a unique and innovative combination of financial and non-financial resources to help them achieve economic independence and self-sufficiency.

For women, the chance to start and run a business is the best way out of poverty.  Creating the kind of environment in which this hope can flourish requires effort in a broad range of areas, from security and infrastructure to education and health. Ensuring that entrepreneurial women in Brazil have an equal chance to succeed and lift themselves out of poverty will benefit more than just the individual. It will help their families and the communities they live in as well, and provide Brazil with the flourishing middle class it will need to sustain its present growth.

 

 


 

1. Global Entrepreneurship Monitor 2000 survey can be found at http://www.gemconsortium.org.

2. Microloans for Women, http://www.accion.org/Page.aspx?pid=1876 (last visited May 6, 2010).

3. Interview with Akintoye in Rio de Janiero, Brazil (Mar. 15, 2010).

4. Id.

5. Instituto Empreender Endeavor Brasil, http://www.endeavor.org.br/cases-seja-empreendedor (last visited May 6, 2010).

6. Interview with Maricel, Owner, Sidewalk Stand,  in Sao Paulo, Brazil (Mar. 27, 2010).

7. Interview with Deborah, Business Owner, in Sao Paulo, Brazil (Mar. 27, 2010).

8. Phone interview with Fernanda, April 26, 2010.

9. Phone interview with Juliana, April 7, 2010.

10. Interview with Patricia Volpi, President, 85 Broads – Sao Paulo, in Sao Paulo, Brazil (Mar. 27, 2010).

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Hua Wang

About

Hua Wang is a member of the Private Investment Funds Group at Proskauer, resident in the Boston office. Prior to joining Proskauer, Hua was a Global Scholar at the Kauffman Foundation and founder of a clean energy startup based in Chicago's 1871. She also worked in-house at Cisco Systems and focused on intellectual property strategy. Hua graduated from Northwestern University School of Law and Duke University. Prior to attending law school, Hua was an investment banking analyst at Lehman Brothers and a strategy consultant at Accenture.