Brazil’s favelas join forces to create their own stock market

By Carlos Meneses

Sao Paulo, Nov 26 (EFE).- In a bid to end decades of economic marginalization, Brazilian favelas have created their own stock market, which community leaders see as a mechanism to boost local firms and attract investment from around the world.

The entrance to the Social Pavilion in the Sao Paulo favela of Paraisopolis is not guarded by figures of golden bulls and the buildings sits among blocks of houses of bare brick, not gleaming towers of glass and steel.

Inside, the only visible sign of the recently inaugurated Stock Exchange of the Favelas is a bell mounted on one of the walls.

Behind this revolutionary initiative is the G10 Favelas, an organization comprising community leaders and entrepreneurs from Brazil’s 10 largest favelas, including Paraisopolis and Rio de Janeiro’s Rocinha.

“The idea emerged to create a bridge between start-ups and investors who want to be active in the favelas of Brazil,” Paraisopolis resident and G10 chairman Gilson Rodrigues told Efe.

To get the project off the ground, G10 turned to DIVI-hub, a digital crowdfunding platform that secured authorization from Brazil’s CVM securities agency to act as regulator of the new exchange.

Any start-up based in a favela is welcome to participate.

“It has to follow certain regulations, present a plan, register and we open the IPO (initial public offering),” the 37-year-old Rodrigues said.

With shares priced at 10 reais (just under $2), even poor and working-class people have an opportunity to become investors.

“It’s a stimulus for the population of the favela, who are suffering with two crises: health (because of Covid-19) and the economy, which brings hunger and unemployment,” Rodrigues said.

The first company to be listed on the week-old exchange is Favela Brasil Xpress, whose founder and CEO, Givanildo Pereira, sought to address the difficulties favela residents encounter in getting their online orders delivered.

Traditional delivery companies shy away from the favelas, which lack an ordered system of street addresses and have a reputation for being crime-ridden.

Where the established firms saw problems, Pereira, 21, glimpsed an opportunity.

“I started alone. I went to get the packages, sorted them, delivered them. I did everything,” he said, recalling workdays that began before dawn and often extended into the wee hours of the next day.

Unable to keep up with demand, he sought to expand, but no bank would lend him money.

Ultimately, he secured a loan of 15,000 reais ($2,700) from the G10 Bank, an early venture of G10 Favelas, and with that money Pereira was able to buy equipment and hire employees.

Favela Brasil Xpress now operates in seven favelas in Sao Paulo and Rio and Pereira is hoping to capture 1.3 million reais ($230,000) from the IPO to finance further expansion.

Consultants Data Favela and Locomotiva estimate that the nearly 14 million inhabitants of Brazil’s favelas represent 119.8 billion reais ($21.5 billion) in annual purchasing power.

“We can be the agents of our own transformation,” Rodrigues said. EFE