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The amazing contrasts of Brazil

By Gillian Lacey-Solymar
Working Lunch

Sao Paulo view
With more than 18m inhabitants, Greater São Paulo is the world's second largest city

Watch: Brazil films
I'd never been to South America but my preconceptions were strong.

Violence, huge inequalities and nothing quite working.

So how right was that? Well, wrong, right and wrong. Two out of three ain't bad, as the song goes, but I generally try to be more accurate than that.

After 10 days in the country, hopefully my views are less naïve, less clichéd and more driven by the realities of this hugely complex (and hugely huge) country.

Preconceptions shattered

Brazil hovers somewhere between the developing and developed worlds.

But if pushed I'd put it in the latter category. My preconceptions were shattered the moment I got onto the plane.

I sat next to a Brazilian who is the medical director of one of huge US pharmaceutical giants in the UK. He was heading home.

"Why?" I asked, "For a holiday?"

"No", he replied, "my wife is pregnant and I don't trust the British hospitals. We'd rather the baby was born in Brazil."

Not the answer I was expecting at all.

High-tech

And this wasn't a one off. In terms of hi-tech, the Brazilians are right up there.

To keep on the hospital theme for a moment, in their top clinics, you are given a Pin when you enter and 24 hours after you've left all your tests are available to download from the net once you've typed in your four digit number. Don't even talk to me about the NHS equivalent.

But of course it's slightly disingenuous for me to pick these examples because it is not the equivalent of the NHS.

The private hospitals in Brazil may be top-notch but many of the public ones are appalling.

And as for the public education system - I was told again and again that no one from the middle classes would send their child to a state school.

So through health and education (or lack of) the inequality perpetuates itself.

Too dangerous

It has got better according to official statistics, but we were invited to a favela - a slum dwelling - and the inhabitants told a different story.

Tiago led us around his world for a few hours. It would have been far too dangerous to wander the streets alone.

The people we met were enormously friendly - big smiles from all the children but it was quite clear that there were certain alleyways that were out of bounds.

Where the drugs barons ruled no camera crews could follow.

Gillian and Tiago
Tiago Idalino de Oliveira is one of the millions of Sao Paulo residents who make their home in the favela

"The newspapers say that the economy is improving and life is better for Brazilians but that's simply not accurate", Tiago told us.

"In Sao Paulo there's a huge contrast between rich and poor - there are always new buildings going up and there are luxury apartments being built right next to the favela.

"So the world thinks it's getting better but here in the favela it's certainly not improving".

Business is booming

Last year alone Brazil saw the creation of 60,000 new dollar millionaires. If you're the right side of the income divide, business is clearly booming.

GDP has been rising at a healthy rate of 4.4% a year.

Although it pales compared to the phenomenal growth rates of other emerging economies such as India (9%) and China (11.5%), compounded it still means a significant rise in prosperity year on year.

But it's not so much the growth per se that is fuelling the feeling of boom - it is changes in the way the economy is run.

For the first time Brazilians are able to get a mortgage.

100% through equity

One of Brazil's leading bankers, Jean-Marc Etlin of Banco Itau BBA explained to us the enormity of the change.

"It's hard to explain to someone from the UK that until now property had to be bought 100% through equity."

He's right. I did find it hard to grasp. So how did you buy your house then I asked.

Well, he said, first you buy as small house then a larger one and so on.

Obvious I suppose, if there are no alternatives. Now though the credit has put a rocket under a whole sector.

Jean-Marc Etlin of Banco Itau BBA
Jean-Marc Etlin says the country is undergoing rapid change

The result of so few mortgages being held by the population meant that the banks also kept away from the mortgage market in general.

That of course has had the (largely unintended, but all the more fantastic) effect of allowing the Brazilian stockmarket to emerge virtually unscathed from the global credit crunch affecting the rest of the world.

Availability of credit

Now though, the genie is out of the bottle. Commercial rents have soared by a factor of three in the last few years and the trend looks set to continue.

For individuals though, whilst the availability of credit brings new freedoms theoretically, many are afraid of it.

One family we met, Margarete and Davi Rosa dos Santos told us: "We don't want credit - we've virtually never bought anything on credit".

The consequence of knowing little about credit though is that as Jean Marc told us, "The people don't run the numbers. They simply look at the payments and not the interest rate".

So that's how the department stores are able to get away with eye-watering rates of interest. Interbank rates may be above 11%, but to buy a table and chairs in 18 instalments will cost you a staggering 74%.

75 different taxes

So Brazil stands on the threshold of a modern economy but most experts think that it needs some serious fiscal reform before it can get there.

There is a huge notice board in downtown Sao Paulo. On it records, second by second, the amount that Brazilians are paying in tax.

The sheer speed of increase makes it hard to even read the numbers, but the point is more fundamental. Brazilians can pay up to 75 different taxes at federal, state and municipal level.

The complexity is enough to make even the macho weep. And it doesn't end there. The bureaucracy is mind-blowing.

Operates beautifully

Sao Paulo view

One company we spoke to, run by two entrepreneurs told us that trying to get an operating licence to run their company was virtually impossible.

"I have an MBA, he has an MBA", said Marcelo Ferraz, gesturing across at his partner, "but trying to get a licence is the hardest thing we've ever done".

After five years in operation, they still don't have one.

So some of it is a mess but much of it operates beautifully.

In many restaurants for example, the waiter takes your order on the small hand-held computers that transmit the information straight to the kitchens.

Where private enterprise is involved, things can work well - better - than back here in the UK.

Friendliness that's contagious

So what is the impression that I'm then left with?

A hard-working people (out go my ideas of slow Latin American tempo), a non-aggressive attitude (unbelievably, although the people drive as though blindfolded, no-one toots their horn) and a friendliness that's contagious.

Maybe we were lucky that we didn't see any violence - certainly people kept telling me to hold my handbag tighter - but as I walked through some of Sao Paulo's thriving avenues and watched people scurrying home from work, my overriding sense was of a country on the brink of something big.




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