Posted by: henriquesampaio | February 25, 2012

WHAT IS HAPPENING IN THE NORTHEAST OF BRAZIL?


Henrique Sampaio, Director of Financing and Project Recovery at the Ministry of National Integration
February 10, 2012 by Rachel Glickhouse.

Henrique Sampaio, director of financing and project recovery at the Ministry of National Integration, spoke during the first section of the Recife infrastructure and development conference.

“In the past, the northeast of Brazil represented the ‘Brazilian problem,’” said Sampaio. Poverty and underdevelopment marked the region, but this scenario has changed, leading to a “land of opportunities.” He named three factors responsible for the rapid growth of the northeast:

Sampaio: Northeast’s growth due to 3 factors: rise in wages, expansion of credit, & infrastructure investments.

Over the last decade these factors helped the region’s GDP grow robustly and consistently and above the national average. Sampaio attributed a rise in wages to the introduction of conditional cash transfer programs such as the Bolsa Família and to the increase in the national minimum wage, which increased 60 percent in real terms since 2003. But an overwhelming amount of income growth over the past nine years—around 75 percent—came from earnings, not donations. As a result, purchasing power increased, and the northeast was able to evolve into a large domestic consumer market. If the northeast were a country, it would rank thirty-ninth globally in terms of GDP. This rise in consumption has in turn helped attract new investments to the region, including from large multinationals such as Bunge and Kraft.

Credit for small businesses and entrepreneurs also helped expand the region’s economy. Banco do Nordeste’s CrediAmigo (Credit Friend) program was a major contributor, providing loans to entrepreneurs in both the formal and informal sectors. The program helped lift approximately 1 million people in the northeast out of extreme poverty. Sampaio also mentioned Minha Casa, Minha Vida (My House, My Life), a federal housing subsidy program for low income families, as an important factor in expanding credit.

The third factor Sampaio accredited to the boom in economic development in the northeast was long-term investment in infrastructure. With a geographic advantage and a booming consumer market, companies are looking to put money into the region, and are thus requiring better infrastructure. Airports, water access, and roads are among top priorities, and Sampaio mentioned two major infrastructure projects as examples of this: the transposition of the São Francisco River and the Transnordestina Railway.

The Transnordestina railway, under construction & being visited by President Dilma Rousseff today, will carry 30,000 tons of cargo per year.

He also mentioned that public policy and government administration will play an important role in these infrastructure projects, and that the key is ensuring they maintain functionality in the long term. To conclude, he quoted historian Luís da Câmara Cascudo, who once said: “The northeast doesn’t have problems, only delayed solutions.”

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