I have just returned from a three week trip to Brazil – must be pretty close to my twentieth in the past dozen years. The changes that I have seen in the ‘land of the samba sun’ (as I like to call the country) over that time have been quite dramatic, especially in terms of the improvement in the quality of life and standard of living of working families (I use my wife’s as the benchmark here). This has been pretty much due to the policies of the prior government led by Luiz Inacio Lula Da Silva (‘Lula’) which fuelled rapid economic growth essentially through stimulating a consumer spending boom.
But as almost everyone knows, the high single-digit growth in the Brazilian economy – previously up there with the other BRIC countries – slammed almost to a halt last year. And, despite earlier forecasts from the current government– under the leadership of Dilma Rousseff, Lula’s hand-picked successor – that the economy would grow faster this year, realists (among whom I count myself) see little chance of material improvement. The downturn originally had little to do with the global economic crisis (it was sparked by changes in government fiscal policy that dramatically dampened consumer spending); however, this has since become a significant factor in the equation.
Arguably it was the impact of the slowdown that indirectly led to the recent (and to some extent ongoing) spate of street protests. These were sparked by a 20 cent (7%) increase in Sao Paulo bus fares (since hastily withdrawn) but turned into a popular (in the literal meaning) revolt about the country’s woeful basic infrastructure and the poor quality of government services, including education and health, contrasted by the huge sums being spent to host the World Cup next year and the Olympics in 2016. This was further exacerbated by endless corruption allegations, most notably surrounding the so-called ‘mensalao’ scandal involving illicit monthly payments to politicians by the previous government.
As a more than disinterested observer, I can see the protestors’ point.
It is particularly the poor state of the country’s core infrastructure – and the seemingly glacial pace of investment to improve it – that creates both the greatest challenge and the greatest opportunity for suppliers to the Brazilian IT market. While I was there, I met as usual top management at a number of IT players, including HP, Accenture, Capgemini, Wipro, Tech Mahindra, and local (yet international) heroes Totvs and Stefanini. I also visited one of Brazil’s most exciting tech hubs, Porto Digital, in Recife, the capital of Pernambuco state. You will be able to read my more considered opinions on the opportunities that, despite all of this, still present themselves to UK players looking to find a market in Brazil, in the next edition of BrazilViews.
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