Half of all small businesses in Brazil close their doors in the first two
years of operation. That, says Silvano Gianni, head of the Sebrae (Serviço
Brasileiro de Apoio às Micro e Pequenas EmpresasSmall Business
Administration), is one of the highest business mortality rates in the world.
Sebrae just ran a survey
of small business mortality and found that 32 percent of the people who open
small businesses do not seek professional help for financial problems. And
the survey also found that 90 percent of them are not active in trade associations
The survey showed that
out of 1.3 million new businesses opened between 2000 and 2002, a total of
552,700 of them closed down before they were three years old, with the vast
majority (49 percent) closing before they reached two years of operation.
The remaining 772,600 generated 2.4 million jobs and investments totalling
US$ 6.5 billion (19.8 billion reais).
The Sebrae survey reports
that annually some 470,000 new businesses open in Brazil and that the main
reason they do not survive is weak management skills resulting in a shortage
of working capital and other financial problems, along with unsound or nonexistent
market knowledge. Sebrae also blames red tape for many small business problems
that lead to failure.
Gianni says the way to
lower the small business mortality rate is to train the businessman. He reports
that Sebrae will provide that training and open communications channels so
they can keep up to date on modern management techniques and practices.
Minister of Development,
Industry and Foreign Trade, Luiz Fernando Furlan, said that a strong economy
depends on two things: partnerships and investments in knowledge.
Furlan made his comment
at the 25th Small Business Conference at the Ministry of Planning,
Budget and Management. The principal topic of discussion at the conference
was how to achieve digital inclusion in the small business sector where 25
percent of GDP is located and 70 percent of the jobs are.
At the moment the sector
has 563 computerized centers. The goal is to set up partnerships that will
permit a total of 5,600 of the centers to be operational by the end of 2006.
The July survey (the 152nd)
by the Getúlio Vargas Foundation's Brazilian Economic Institute (Ibre/FGV)
of manufacturers (Indústria de Transformação) found that
optimism with regard to growth in the near future was at 22 points, the highest
since April 1995. The survey polled 945 businesses.
The business climate was
considered good by 33 percent of the companies interviewed, compared to 11
percent that thought it was weak. The Ibre/FGV survey takes into consideration
a series of factors, such as orders, profit margins and macroeconomic data
(interest and exchange rates, for example).
The survey found that
18 percent of the businessmen interviewed said demand was strong, 73 percent
said it was normal, and 9 percent said it was weak. A year ago, in July 2003,
those numbers were 8 percent, 50 percent and 42 percent, respectively.
According to Aloísio
Campelo, an FGV economist, the survey confirms a surge in domestic demand.
Presidential Chief of
Staff (Ministro da Casa Civil), José Dirceu, reports that over the
last 17 months government banks (Banco do Brasil, Caixa Econômica Federal,
Banco do Nordeste e Banco da Amazônia) have opened 3.2 million microfinancing
accounts. Dirceu explained that microfinancing was a fundamental part of the
government's effort to create more jobs.
Dirceu pointed out that
during the Luiz Inácio Lula da Silva administration, one million microfinancing
operations had taken place, resulting in the release of US$ 202.4 million
(612.3 million reais) to small businesses.
the government is also strengthening family farming. For the 2003/2004 harvest,
US$ 1.4 billion (4.5 billion reais) had been released by June. And for the
2004/2005 harvest, the government has earmarked US$ 2.3 billion (7 billion
reais) for family farming.
Dirceu reported that the
government has also set up special programs for small farmers in the North
and Northeast regions of the country, with low-interest loans (1 percent per
Brazilian industry wants
to define its role in the country's economic growth. It also wants to ascertain
its participation in the international market at present and what its position
will be over the next ten years.
To define these goals
and the means to attain them, the National Forum of Industry, created by the
National Confederation of Industry (CNI), met recently in the capital of São
The aim is to formulate
a Strategic Map of Brazilian Industry, which will consolidate the goals and
the strategies to achieve them.
"The map is the formulation
of a medium and long-term strategy," explained the president of the CNI,
Armando Monteiro Neto. "We are engaged in a task which has a horizon
cast farther into the future and which utilizes tools and methods that will
give it an important distinguishing feature: management of the strategic agenda
itself," he added.
The management tool to
which the president of the CNI refers is the "Balanced Scorecard,"
developed at Harvard University and used in strategic programs by private
companies, governments, and organizations throughout the world.
The meeting was the first
step in defining the Map, through a survey of trends, macro-objectives, and
the conditions for their realization.
The economist José
Roberto Mendonça de Barros presented the trajectory of Brazilian industry
to demonstrate successful experiences that might be used to advantage, and
Carl Dahlman, from the World Bank, conducted a panel on the current economic
The results of the encounter
will be debated by each of the entities that represent industry, after which
they will submit proposals and suggestions. Two more meetings will be held
to confirm the decisions, and the project is expected to be ready in December.
According to the president
of the CNI, this is not the first attempt to determine a long-term agenda
for industry, but what makes this one different already is its greater representativeness.
In addition to the CNI
and Federations of Industry from all over the country, the National Forum
of Industry comprises 32 national and sectorial associations, "which
are engaged in this task."
Among the themes that
were discussed, the president of the CNI highlighted what is in his judgment
a crucial point: investment in "human capital."
"This involves a
strategy that essentially concerns the question of education," Monteiro
He added that he is working
on a broader concept of investment in human capital, "not just the training
of workers, but training in management and research and development."
Stefan Barth works for Agência Brasil (AB), the official press agency
of the Brazilian government. Comments are welcome at email@example.com.
from the Portuguese by Allen Bennett.