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The Local Flavor (#24) – Necessary changes beyond social security reform

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Acesse a notícia original aqui.

Hidden on page 6 of the economic section of the O Estado de São Paulo newspaper on Saturday, the interview given by My Antônio Bernardo, consultants Roland Berger CEO in Brazil, calls readers attention to important changes the Brazilian economy will need to go through to enter a period of sustainable growth at high rates.

The first message is highlighted in the article’s title: “Brazil’s future relies on mid-sized companies”.

I would expand Mr. Bernardo statement to cover small companies as well. The country needs to create an agenda with the objective of helping small and mid-sized companies (SMEs) to achieve economic sustainability or, in other words, longevity with profitability. Some of the themes that should be tapped in this agenda are: increased productivity, long-term planning, competitive strategy and corporate governance best practices.The introduction of these four themes in the routine of SMEs will help them create value not only to shareholders but to other stakeholders as well.

The business potential of the SME segment has recently been highlighted by PagSeguro’s successful IPO. The company has been growing substantially the offering of services to the SME segment.

The lack of funding to the SME segment was another theme mentioned Mr. Bernardo. This is especially true when we talk about long-term funding.
Creating instruments that will offer long-term funding possibilities for SMEs, via debt or equity, is on the main innovation opportunities I see for the Brazilian market in the short to medium term.

Another comment made by Mr. Bernardo is that Brazil needs to define a strategic agenda that will help the country achieve its most complex objective in the next 20-25 years.

Brazilians are very short-term oriented. This behavior is probably a consequence of the long-period of hyperinflation the country experimented in the 1980’s and beginning of the 1990’s.
That said, the complex problems the Brazilian society faces require long-term solutions that will only be successfully implemented if a strategic thinking mindset is adopted.

Another point raised by Roland Berger’s Brazil CEO is the necessity to open the Brazilian economy as a required requisite to boost the country’s competitiveness.

He mentions that the trade chain in Brazil is of 18% of GDP which compares to Mexico’s 75%, Colombia’s 105% and Germany’s 80%.

Brazil’s higher participation in the global trade chain would help Brazilian companies to increase productivity and become more competitive, being able to seize new export opportunities.
It is important to mention that Roland Berger was the consulting company hired by the BNDES to develop its strategic plan.

I would conclude this piece highlighting that Mr. Bernardo considers Brazil a market with a lot of opportunities, despite the challenges.

I totally agree with him. Inefficiencies and distortions create at the same time risks and business opportunities.

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