 | Issue: | Latin America II 2000 |
| Article no.: | 7 | |
| Topic: | The Internet in Brazil: The Role of BNDES | |
| Author: | Estella de Araújo Penna | |
| Title: | Director | |
| Organisation: | BNDESPar | |
| PDF size: | 32KB |
About author
Not available
Article abstract
The Internet is changing the way companies of all types (high-tech, chemicals, steel, agribusiness,…) operate. The changes are not limited to buying and selling over the Internet, but rather go deep into the culture and processes of an enterprise. New technologies find niches in which to grow, possibly causing the demise of existing technologies. Many companies are born based on innovative technologies and business models enabled by the networked economy. Services appear and disappear in waves.
Full Article
The Internet economy is changing business and even forcing the change of the hardware it uses to better match user needs. Internet terminals, for example, are already evolving from all-purpose personal computers to application-specific devices. The Internet, moreover, promises to dramatically change the profile of local capital markets by encouraging the growth of the venture capital industry in Brazil. The National Development Bank (BNDES) BNDES is Brazil’s principal federal government agency for long-term funding aimed at promoting the country’s development. It has been a key player in all phases of Brazil’s development effort since it was created in 1952. BNDES Participações S.A. (BNDESPar), the equity arm of BNDES, aims to develop the capital markets and strengthen the assets and financial structures of companies. It is the pioneer of venture capital and private equity deals in Brazil. BNDES and its subsidiaries play a major role in enabling the changes promoted by the Internet in the Brazilian economy in terms of telecommunications infrastructure expansion, supply chain optimisation and small and medium enterprises development. Telecommunications Infrastructure Expansion Since the1998 deregulation of telecommunications and the privatisation of Telebrás, the state telecommunica-tions monopoly, BNDES has disbursed more than US$ 2 billion in loans to equipment manufacturers (switching, transmission, optical fibre, mobile infrastructure and handsets) and operators (incumbents and newcomers, wire-line and wireless). By year-end 1999 there were 27.8 million wireline and 15 million wireless terminals (16.8% and 9.1% penetration, respectively) installed in Brazil. Brazil now has more than 76,000 km of optical cables serving as its telecommunications backbone network. Supply Chain Optimisation The impact of the Internet on business-to-business e-Commerce is expected to be strong. An increased number of suppliers and clients can be reached, integrating enterprise resource planning (ERP) systems and e-Commerce platforms. Consulting groups anticipate the reduction of transaction costs along the supply chain of up to 30%. There-fore “bricks-and-mortar” companies, and the economy in general, may benefit from productivity gains. BNDES has financed the intensive employment of technology information by Brazilian companies and local governments to help them get ready for the networked economy. Small and Medium Enterprise Development The Internet allows small and medium enterprises to reach markets on a national and international basis, rather than limit themselves to regional markets. Although 45% of Latin America Internet users are in Brazil (9 million), they account for 88% of purchases in this region. Sales in Brazil totalled US$ 77 million in 1999 and are expected to reach US$ 2.7 billion in 2003. New companies based on web-enabled business models generally require funding in the form of venture capital. BNDESPar is funding Internet-based companies both directly and indirectly, through investment funds. BNDESPar, through one of its funds, has recently acquired an equity stake in IdeiasNet, the first pure-Internet public company in Brazil. Perspectives Although the perspectives for the networked economy are promising in Brazil, some obstacles must be overcome in order to fulfill the Internet’s potential. The main challenge that lies ahead is the low, roughly 5%, Internet penetration rate. Due to the huge income disparities, Internet access is limited to medium to high-end consumers. Internet connections are expensive; they are billed according to the period, hours per month, of usage. As technology advances, web devices, such as mobile handsets and television sets (present in 93% of the Brazilian households), may turn into the appliances of choice in order to bridge the digital divide in Brazil. Conclusion The new development cycle, based on the networked economy, can provide developing countries, like Brazil, with a unique opportunity to decrease social, economic and regional differences.The networked economy, particularly the Internet, offers new instruments to disseminate knowledge rapidly and economically. The intensive use of information technology is widely encouraged in areas such as education, health services, justice and public administration in general, generating multiplying effects throughout all layers of Brazilian society.
