How social impact start-ups are solving the challenges of Covid-19 in Brazil
In the current crisis, Brazil is unfortunately the country with the second highest number of cases, exceeding a million Tests positive for Covid-19 by mid-June. One month later, more than 70,000 lives were lost.
More … than 40 percent of employment in Brazil is part of the informal workforce, resulting in more limited access to social security benefits, public health and established credit, according to the world Bank. Naturally, the pandemic has weakened already fragile ties. There is a cascading effect: the poor social security system compromises the ability of informal workers to comply with social isolation measures as they have to go out to work and support their families.
On 80 percent of Brazil’s poorest classes do not have the cash reserves to face a month without income. Precariousness hinders actions designed to contain the spread of the coronavirus. Overcrowded housing without basic sanitation makes it almost impossible to implement simple recommendations, such as hand washing. In Brazil, 48 percent of the population does not have access to a wastewater collection system and 35 million people do not have access to drinking water. Thereby, in the context of Covid-19, inequalities represent a risk factor just as important as age or certain chronic diseases such as diabetes.
To meet these urgent health, infrastructure and education needs, the Brazilian start-up community, with its platforms and technologies, can facilitate access for informal workers. Our current research in The Jump Potential and the United Nations Sustainable Development Goals (SDGs) examine how start-ups can solve Brazil’s socio-environmental problems.
Leapfrogging and social impact
The leapfrog – this child’s play where one pushes the shoulders of the other to go further – is different in this context. It is a way for developing countries to skip steps since the infrastructure that developed countries have used to be successful is no longer necessary in the digital age. Developing countries can take advantage of new technologies to fuel their growth.
In our study of 157 start-ups, we found that the solutions offered mainly included five SDGs (Figure 1). To reduce inequalities (ODD10), health-oriented start-ups (SDG3), quality education (ODD4) and access to economic growth (SDG8).
Professor Monteiro’s case study, “Digital transformation in Latin America: leaps and bounds and social impact”, presents several examples of how digital transformation has enabled disruptive educational technologies (edtech), financial technologies and health technologies to solve socio-environmental problems in Latin America.
By integrating technology to expand audiences and improve quality, online education ignores traditional classroom methods used in the developed world. Edtech offers solutions to the region’s educational challenges and is also gaining global recognition. It has the potential to reach people in remote areas without resources such as schools and teachers at all stages of education.
An example is Agenda Edu. A social impact enterprise, the multiplatform for communication management and engagement functions as a link between schools, students and tutors. The start-up is one of Top 100 the most innovative edtechs in Latin America.
During the pandemic, Agenda Edu helped Brazilian schools and educators maintain the link with students and families to ensure the continuity of the educational journey. Google searches for the start-up increased 266% over the period. The start-up co-founded the “movement for digital education“, offering free solutions to public and private schools. She has also organized online events to help educators and families adapt to the new reality. She promotes the use of technology in education as a means to reduce social exclusion scenario, it is necessary to rethink the orientation of education.
Fintech, in this case, is a facilitator of financial inclusion and a tool in the fight against poverty. Because the informal sector uses cash in daily transactions, it is a vector of contamination in times of pandemic. Those with limited access to financial services – the underbanked – rely on cash or checks, making them vulnerable to theft and fraud. For example, banks charge high fees for cash deposits, check cashing, money orders, and wire transfers. Fintech, on the other hand, offers underbanked people a ticket to financial inclusion and access to financial tools and services at a reasonable cost.
One of the fintechs created to reduce poverty is a peer-to-peer lender based in Brazil IOUU. Its mission is to revolutionize and reinvent the credit industry by connecting small businesses with investors. Nano-entrepreneurs, micro-entrepreneurs and SMEs need the fast and low-interest loans available on the platform. The interest rates on loans are up to eight times lower than those of traditional banks. Investors enjoy a higher return than in the established market.
Faced with the challenges of Covid-19, IOUU has launched a new campaign, offering more favorable conditions to small entrepreneurs looking for financing. The platform has also enabled small businesses to conduct customer transactions, boosting local consumption and industry.
Health has always been one of the most important challenges in Brazil. E-health start-ups contribute to the creation of sustainable health systems. Faced with the inadequacies of traditional health care in terms of access and quality, especially for the most disadvantaged, the social impact start-up Dr Consulta was launched in 2011.
Originally, the platform offered high-quality primary health services through a network of medical centers in popular neighborhoods. He switched to telemedicine during the pandemic.
The need for companies with social impact
Brazilian public sector provided support during the crisis. He strengthened the Bolsa Familia (a social protection network capable of reaching the poorest), relaxed labor laws to maintain jobs and provided emergency assistance to informal workers and SMEs. But social impact start-ups, with their agility, are essential to deal with the effects of Covid-19 on vulnerable populations. Their post-pandemic role certainly remains fundamental in terms of recovery, resumption of economic activity and creation of new pathways.
The growing trend in Brazil to invest in impact activities has been $ 131 million between 2016 and 2017. However, entrepreneurs still face difficulties in obtaining funds and resources. The pandemic is a red flag that gives us the opportunity to think about what kind of business we want. It is up to us to heed the warning of UN Secretary General António Guterres: “We can return to the world as it was before or deal decisively with the issues that make us all needlessly vulnerable to crises. “
Fabien Salum is professor of strategy and innovation management at Fundação Dom Cabral. He is also the coordinator of the Strategic Reference Center sponsored by Grant Thornton Brazil.
Karina coleta is visiting professor and associate researcher at the Fundação Dom Cabral.
Felipe Monteiro is a senior affiliate professor of strategy at INSEAD. He is also academic director of the Global Talent Competitiveness Index. He is program director for INSEAD partner program with Fundação Dom Cabral, Advanced Management Program (PGA).
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