The percentage of the population involved in creating or maintaining a business at any stage in Brazil is consistent with the entrepreneurial mindset of the population: positive, but cautious. This finding is underscored in the latest GEM Brazil National Report – the 24th in the country.
In 2023, 30.1% of the population aged 18 to 64, equivalent to approximately 42 million people, were involved in the creation or maintenance of a new business. Breaking this down further, 7.7% (11 million) were nascent entrepreneurs (in the business preparation phase or with a maximum of 3 months of existence); 11.1% (16 million) were new entrepreneurs (a company in existence for more than 3 months and up to 3 and a half years); and 11.9% (17 million) were established entrepreneurs (companies in existence more than 3 and a half years).
An online report launch event, held in collaboration with ANEGEPE and SEBRAE, focused on entrepreneurship and social inclusion. Key data from the GEM Brazil report was presented that showed how entrepreneurial potential yet to be explored can be addressed through social inclusion and entrepreneurship.
For example, early-stage entrepreneurial rates increase when the level of education of individuals from poorer families (income below 3 minimum wages) increases. The rate of early-stage Black or brown entrepreneurs who have a higher family income (above 3 minimum wages) is 1.55 times higher than the rate of white entrepreneurs. This shows entrepreneurship can be understood as a more efficient way to overcome social inequalities. (More in-depth studies need to be conducted to confirm this hypothesis).
Trends and takeaways for policymakers
The Brazilian economy in 2023 faced several challenges, but also significant opportunities. Inflation was a constant concern, and the Central Bank of Brazil took measures to control prices by adjusting interest rates. Despite the impact of climate change (floods and droughts), the agricultural sector stood out, with robust exports, especially for products like soybeans and meat, helping to alleviate some of the economic pressures. The unemployment rate has been declining since the beginning of 2021.
Politically, Brazil underwent a transition period following the 2022 elections, with the new government implementing reforms in various areas. Political polarization remained a challenge, with heated debates surrounding the government's policies.
The combination of economic recovery and political uncertainties influenced the business environment in Brazil. Investors have been closely monitoring the government's actions and their implications for long-term economic stability. Building a more unified political dialogue and seeking consensus on important issues is crucial for the sustainable economic growth in the country. In the midst of this environment, here are some key findings that stood out:
- For the first time since the question was asked in GEM surveys, the top motivation for starting a business in Brazil was no longer related to the lack of jobs. Making a difference in the world ranked as the top motivation.
- The rate of potential entrepreneurs in Brazil has remained around 50% since 2020. This may influence Brazilian entrepreneurship rates in the coming years, depending on the effectiveness of new policies and programs aimed at stimulating entrepreneurial careers.
- The GEM APS investigates the formalization of businesses. In 2023, 46% of entrepreneurs in Brazil were running properly registered businesses (highest number in the country this question has been asked). Despite this progress, it is still below the desired percentages; permanent initiatives are still needed to increase the number of formalized businesses for the Brazilian economy.
- The conditions for women to start their own businesses still need to be improved, especially in terms of access to a support network for mothers who decide to become entrepreneurs. Also important is equity in access to financial resources for women, especially from traditional financial institutions. It is worth noting that some productive microcredit programs in operation are prioritizing women in granting resources, but in general, they provide tiny amounts.
- Half of Brazilian entrepreneurs have completed high school. Entrepreneurial education should be intensified and rethought for this level of education. Educational policies should take this into consideration.
- Finally, it is important to further analyse entrepreneurship has originated from the favelas and poor areas. Actions in this sense have the potential to transform Brazilian social reality.
Key GEM learnings over the 24 years
There are very few economic research studies in Brazil that have the same longevity and regularity as the GEM. This makes it an unquestionable reference in any study or debate about entrepreneurship.
“This is a source of extraordinary pride for the entire GEM Brazil Team,” said Simara Greco, Head of the GEM Brazil Team.
GEM has demonstrated to Brazilian society that entrepreneurship is a sociological phenomenon that is present in the daily lives of the entire population, so talking about the topic has become easier.
Paulo Bastos, GEM Brazil Team member, concluded: “The results that GEM produces have the power to transform data into concrete images in the hearts and minds of many, so that they can identify themselves in Brazil’s entrepreneurship scene.”
Access the full report at this link.