The rise of the middle class in Brazil’s favelas
As Brazil continues to establish itself as an emerging economy, a new trend within the favelas in cities such as Rio de Janeiro is emerging; the rise of a new middle class.
Improved security, rising incomes and a booming credit market has led to an economic phenomenon in previously low-income areas.
The number of people rising out of poverty is so great, that if the favelas were a separate economy, it would be worth around $6 billion, and big-name retailers are beginning to take note of the positive changes.
Appliance retailer Casas Bahia attracted a queue of around 200 people when they opened in the Rocinha favela earlier this year. Local resident Joana Darc de Morandi told Bloomberg Business Week: “It’s very important for the neighbourhood.
“Casas Bahia being here is a show. It’s beautiful. It means everything. You can find anything you need.”
The Rocinha branch of Casas Bahia sold ten times more products during its first day of trading than that of an average store in any other location. The opening has been such a success that Roberto Fulcherberguer, vice president of Via Varejo, which operates the Casas Bahia brand, has already revealed plans to open another store in a favela location this coming year.
Casas Bahia's rival brand Ricardo Eletro have also taken note of the potential within the favelas, opening their first Rocinha store last October.
In 2011, it was estimated that around 56 per cent of the Rocinha's population were considered to be middle class, a 29 per cent increase from that in 2001, according to a study by Instituto Data Popular, research group based in Sao Paulo
Government reforms over the last decade have ushered in a new era for people across Brazil, with 30 million people leaving poverty behind under Lula da Silva between 2003 and 2010.
People can take home a pay cheque of 400 euros, when 20 years ago the same work would have only paid 50.
State-aid is widely credited as being a key player in lifting so many Brazilians out of poverty.
Sônia Rocha, an economist at Rio's Institute for Labor and Social Studies (IETS), claims that social injustice is now at its lowest level for decades, and claims the upswing in social fortunes and the subsequent job market means that unemployment has dropped significantly over the past decade.
The first government aid programmes were launched during the 1990's under the social-democratic government of Herique Cardoso. Measures at the time included the "Auxílio Gás" project, which saw the distribution of free gas canisters to the country's poorest families, ensuring they could prepare at least one hot meal a day.
Lula da Silva's government continued state aid by offering families in need basic food packages containing rice, beans, sugar, flour, pasta and milk.
The reforms meant that many people throughout Brazil, and within the previously poverty-stricken favelas, gained access to a greater disposable income, driving the local economy and creating jobs within the areas themselves.
In fact, the level of unemployment has dropped dramatically in recent years. 5.3 per cent were out of work in October, less than half the level a decade earlier, with many families managing to subsequently keep their children within school.
Government help is only one part of the rising affluence across Brazil. Previously no-go areas for many people, favelas were once dominated by gangsters and drug barons
Now it seems that local people have managed to reclaim their neighbourhoods, with the help of local police and their pacification community policing strategy. These projects have become more and more prevalent as the country prepares to host the 2014 football World Cup and the 2016 Olympic Games.
Last year, special forces moved into Rocinha, ridding it of the drug dealers and gangs that controlled the area, which is home to 69,000 and overlooks the wealthy beachside properties of the city, including Ipanema.
28 favelas have been pacified since 2008, and authorities are hoping to take similar action within 12 more neighbourhoods before the city hosts matches for the 2014 World Cup.
At the opening of Casas Bahia's Rocinha store, chairman of Via Varejo Michael Klein told journalists: “We are already looking for properties, either to rent or to buy, in any community that has been pacified and where there is protection by police or the army.
"The more communities that are pacified, the more Casas Bahia stores we’ll have.”
The company's sales during 2012 had increased by 9.1 per cent compared to last year, according to figures released in October.
They now believe that 70 per of its growth will come from Casas Bahia stores in the north-east of the country, one of Brazil's poorest regions.
It is not only the residents of the favelas that have risen through the social ranks of Brazil, there has also been a growing interest in its music and art too.
Brazilian funk, which is heavily influenced by Miami bass, rap, soul, and other American genres, has long been the music born out of poverty, describing the harsh realities of life within the poverty-stricken and violent favelas.
Open-air funk parties were made almost impossible to organise after a new law in 2007. But by 2009 the law was repealed, and funk was seen as a cultural movement. Dance competitions inspired by the genre now receive corporate sponsorship, something that would have been unthinkable only a few years ago.
This has led to the music being admired by a new middle class audience, and it has therefore gained a new level of social acceptance, with a recent survey suggesting that funk artists generate a total of $720 million a month in revenue.
Julio Ludemir, a writer and cultural producer said: "We're watching now the institutionalization of funk
"It's being accepted by the white elite. But it's very complicated; like with samba, you start by creating spaces for the middle class to come dance. Now, samba is no longer for the poor. It's for the middle class, tourists, people from Sao Paulo."