Today, we talk about Brazil’s massive financial inclusion project. What the recent heatwave tells us about environmental changes. And what you should know in the 2020 election.[sc name=”shortcode_daily”]
Covid-19 sped up massive financial inclusion project in Brazil
The Brazilian Central Bank has authorized Brazilians to sign up for PIX, [restricted]an upcoming instant payment system set to be rolled out on November 16. Within two days, over 10.1 million individual “keys” (IDs on the system) were created.
Why it matters. PIX is part of the Central Bank’s efforts to digitize the Brazilian economy — a process that has been magnified by the pandemic. Back in March, when the coronavirus emergency salary was approved in Congress, the government was met with a major challenge: it had to pay out aid to massive amounts of informal workers and the unemployed, and over 45 million Brazilians didn’t have a bank account.
- State-owned bank Caixa created 97 million digital savings accounts. According to Caixa CEO Pedro Guimarães, between one-third and 40 percent of all beneficiaries of the aid program did not have any access to banking services before that.
Projections. Brazil’s instant payments system is tipped to reach 20 million users in its first year and could pave the way for one of the biggest financial inclusion processes the world has ever seen.
- And, according to the Central Bank’s Financial System Director João Manoel Pinho de Mello, the idea is to expand PIX to other countries in 2022 or 2023.
Upside. “The payments market in Brazil ten years ago was extremely concentrated, with elevated tariffs, little competition, and therefore, very high prices, which led even to underutilization of some financial tools such as credit cards,” says Paulo Furquim de Azevedo, coordinator at the Center for Regulation and Democracy at the São Paulo-based Insper business school.
- The PIX system arrives as Brazil prepares to implement “open banking,” a concept built upon the use of open application programming interfaces (APIs) containing customers’ banking data, which can then be used by third-party developers to create platforms to help manage finances or carry out specific services.
- To ensure PIX will catch on, the Central Bank has forced financial institutions with over 500,000 clients to adopt it as an additional mode of transaction. That rule encompasses all major banks — responsible for 90 percent of transactions in Brazil.
Challenges. Brazil’s economy remains highly informal — and many transactions are still in cash and occur outside of the financial system. To retain these new users, banks will have to build solutions that specifically cater to their needs.
Brazil’s latest heatwave could be deadly
With a severe heatwave hitting the country, the Brazilian National Meteorology Institute issued an alert for the risk of death by hyperthermia in parts of Brazil’s Center-West and Southeast regions, as well as a small portion of the North.
Unusual. From 1998-2017, more than 166,000 people died due to heatwaves around the world — but these types of deaths are absolutely not common in Brazil. As we show in the chart below, the average high temperature in Brazilian state capitals jumped from 29.5oC to 31.4oC between 1962 and 2019.
Why it matters. The alert is yet another piece of evidence of the effects of climate change on Brazil. Alterations in rainfall have had an impact on crops and the number of extreme climate events has skyrocketed in recent years.
- In the Southeast region alone, there have been over 1,300 records of extreme rainfall since 2015.
Wildfires. Deforestation plays a central role in that process. A study published this week in the journal Nature Communications shows that as much as 40 percent of the Amazon is inching closer to the tipping point of switching from rainforest to savannah.
2020 election snapshot
Brazil’s 2020 municipal elections will take place in 39 days. Here are the main topics you should know about:
Social media. While the pandemic has disrupted traditional campaigning methods, some aspects of the race make 2020 seem like 2018. Despite being denounced and banned, the strategy of massive messaging services continues to run wild. Newspaper Folha de S.Paulo found at least five companies that sell phone number databases to political parties for as little as BRL 1,800 (USD 321) for 20,000 numbers.
- WhatsApp has accused one online marketing agency — under investigation for spreading false information to millions of voters in 2018 — of operating the same system by way of a dummy corporation.
- These services represent an evolved stage of Facebook’s micro-targeted ads. They sort people’s numbers by neighborhood, and allow the untraceable forwarding of messages to specific groups of voters.
- Tech giants have stood firm in their position that they must not arbitrate on which pieces of content should be blocked or deleted, handing that burden over to the Superior Electoral Court instead.
Lack of competition. In 117 mostly small municipalities, mayoral races will have only one candidate. Per Brazil’s electoral rules, one vote is enough to elect them, as they will have 100 percent of valid votes, regardless. In another 2,000 cities — almost 40 percent of the country — races will be decided between only two politicians.
- In contrast, the mayoral dispute in the city of São Paulo will include a total of 14 candidates.
Fraud. Almost 1,000 female candidates who didn’t receive a single vote in 2016 (not even their own) will run again in 2020. That is a major red flag for dummy candidacies, as parties pick uncompetitive female candidates — often without their knowledge — simply to fill gender-based quotas established by law.
Copyright. Called “Miss Piggy” by the Bolsonaro family, Congresswoman Joice Hasselmann (who is running for mayor in São Paulo) decided to reclaim the insult and began using the character in her electoral ads. But Disney has declared it has not authorized her to use Miss Piggy’s image — and could sue.
What else you need to know today
- Disinformation. In a deposition to the Federal Police, Congressman Alexandre Frota reportedly presented several IP addresses linking fellow Congressman Eduardo Bolsonaro — the president’s third-eldest son — to illegal networks that spread disinformation for political purposes. Mr. Frota says the information was obtained by the so-called Fake News Hearings Committee, a parliamentary investigation body that has stalled as of recently.
- Probe. Economy Minister Paulo Guedes enjoyed a major legal victory as a court of appeals closed an investigation into his suspected participation in a scheme to defraud pension funds. Mr. Guedes was a stakeholder in an asset managing firm accused of not meeting its fiduciary obligations towards investors. His defense attorneys claim all of his actions were “within the rules of the market and the highest ethical standards.”
- Emergency aid. A new study by think tank Fundação Getulio Vargas shows that 38 million Brazilians will be left without aid once the coronavirus emergency salary ends in December. These individuals are not eligible for receiving funds through the existing cash-transfer program Bolsa Família and have a monthly income of up to USD 224. To avoid a social crisis in 2021, the government has vented the idea of extending the emergency aid until March but has yet to propose how much it could pay out. The benefit began life as a BRL 600 monthly stipend and has now been reduced to BRL 300.
- Savings. For the seventh-straight month, Brazilians have saved more money than they spent. The trend is explained by the economic uncertainties raised by the pandemic — which encourages people to put funds away for emergencies. Between September 2019 and September 2020, the amount of money in savings increased BRL 163.7 billion — over 2 percent of the country’s GDP.
- CV. Newspaper O Estado de S.Paulo published an article raising suspicions about the résumé of federal judge Kássio Nunes, whom President Jair Bolsonaro has chosen to fill a vacancy on the Supreme Court. Mr. Nunes claimed that a four-day course he completed in La Coruña, Spain, was a specialization degree, and he mentioned two post-doctoral research projects — despite having finished his Ph.D. just two weeks ago. In recent years, numerous high-profile officials were caught lying on their résumés, throwing in nonexistent Ph.D., and master’s degrees.[/restricted]