I went to the Rio Olympics. Here's where I see opportunities for Brazil

I went to the Rio Olympics. Here's where I see opportunities for Brazil

I have just returned from ten days in Brazil. I was in our office in São Paulo for the first part of the trip, then went to a number of Olympic events in Rio de Janeiro, which is a most magnificent setting for the Summer Games. The backdrop of Pão de Açúcar and the Corcovado (the mountain with Christ the Redeemer atop it), the miles of beachfront (Ipanema, Copacabana), the traditional city center and the passion of the Brazilian fans were all equally stunning. Here are my observations on the country, based on discussions with executives, reporters and academics.

  1. This is one of the most important markets in the world for multinationals seeking growth opportunities. Its large population, immense size and dominant position in South America are obvious advantages. But there are deep problems, from criminality to depressingly low rates of literacy and a huge gap between rich and poor. The government is weak and overly involved in the economy. The legacy of President Dilma Rousseff and former President Lula da Silva is exemplified by the growth in BNDES (The Brazilian Development Bank), the state bank, which went from $45 billion to $450 billion in size in the period 2009-14, mostly lending to Brazilian companies building infrastructure or buying companies abroad.
  2. The recession is serious and will not ease for years. The drop in GNP is now the largest in the past 100 years… down 10.5 percent in the past two years. This economic problem is not attributable solely to the decline in commodity prices. Government spending was at an unsustainable level and has had to be reined in. Based on personal observation, the stores are bustling and the restaurants are packed (with locals, not just tourists) so those with money do not seem to be cutting back.
  3. The economy is quite mercantilist and its companies are oriented to serving the home market. An example is TOTVS, the fifth biggest software company in the world, which does 98 percent of its business in Brazil. Trade only accounts for 25 percent of GDP.
  4. The impeachment of President Dilma Rousseff, is a certainty in my view. Her successor, Michel Temer, is seen as a lame duck with little power. There are 27 parties represented in the Congress, an unsustainable dispersion of power based on a hyper-proportional system that advantages the smaller population centers with large land areas. Thus government is a risk factor, not a positive, for a recovery.
  5. The Rio Games have shown that the country can deliver on its building commitments. The venues were not extravagant by any means but comfortable, well-lit, good sight lines and creatively decorated.
  6. The absence of effective mass transit in Rio made the daily journey to and from the three main venues a serious challenge.
  7. There is a serious security issue in Rio. There have been reports that athletes from the U.S. and New Zealand were allegedly robbed and kidnapped when they walked outside of their housing complex.
  8. The country needs to improve its service. The team assigned to assist spectators at the Olympic venues was enthusiastic and friendly but not knowledgeable and therefore not helpful. There are two or three people doing the job of one person. There is a lack of technology that could make efficiency possible. Even entering a hotel to visit a client became a fifteen minute process with my request to enter having to be approved by ever higher levels of the security apparatus.

The question for every Olympics is whether the giant investment will pay off in the future. With all of the frustrations of traffic and service, I come away impressed and committed to the country. The enthusiasm of the people, the potential for improvement in government, the unbelievable quality of certain parts of the experience (shopping, food) give me confidence for the future. I am not sure of the impact for Rio specifically because it has so many unresolved issues, most notably the favelas which are not governed and the migration of the center of industry to São Paulo. If energy prices recover, there may be a different story.

Nancy Gay

Digital Media Strategist, Communications Consultant, Advisor

8y

Excellent article. No question, Brazil presents challenges, internally and externally, for business, sports and commerce. The beautiful culture and exquisite land are marred by flawed leadership and infrastructure, and burdened by needless bureaucracy. But I've seen how the passion and pride of Brazilians can go a long way in overcoming obstacles there.

Luciana Vilar

Sustainable transformation leader

8y

Thank you for the article, Richard. Although I completely agree with #7 that we have a serious security problem, I would argue that such allegations from swimmers were deemed untruthful upon investigation and are not the best example of that problem :) The security issue in Brazil strikes the poor a lot, who are oppressed by the all mighty police; as well as the rich, who seclude themselves in condos and inside armored cars. Freedom, then, takes the heat from a corrupt government that cannot guarantee basic needs of its population and therefore make them feel safe.

Frederico Curi

Coordenador de Compras | Dynapac Brasil

8y

Dear Richard Edelman, thank you very much for your words and optimistic view. I hope my lack of confidence is more a side effect of my frustrations than a real trend of the facts. I use to be positive and do my best for a better future, besides I feel that the problem is in the culture of our people. And culture takes time to be transformed. I feel shame of our behaviour everywhere. I feel jealous about japanese colleagues, that came to the world cup and cleaned their seats after the games. I dream with the day that our people will be more respectful with visitor athlets from anywhere. I see Brazilian people claiming about the corruption, but doing small durty actions frequently. Companies does not issue receipt for all sales because "the taxes are too high", "who pays all due taxes does not survive"... Indeed, the politicians are corrupt, the government is lost on the economics and seem to take wrong decisions all the time, but they are not the only guilties for our reality.

Camila Borghetti

Senior Executive Support, Marketing and Communications Management

8y

My comments will confirm some of the statements made by Richard. Yes, people in Brazil are really enjoying life. They are traveling, enjoying the social life, going back to school for higher education, looking for different opportunities inside or outside the country. These critical moments bring creativity for this country. The current president is just as bad as the other ones because it is a corruption machine that has too much power and everybody that starts working as a politician, early or later, will get dirty. I am questioning myself if the Olympics will pay off in the future. I am not sure, but I know that right now a lot of people are having fun going to the games. About the integrity of politicians, I am not sure that while the world is populated with human beings we will have 100% of integrity in any level of a government. It is already difficult enough in the private sector. We are full of ideologies, but in the real life we know a lot of dirty things run under the table everywhere.

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