Enterprise within the favelas: half of residents contemplate themselves entrepreneurs

Research by Digital Favela shows residents’ sources of income, digital access when shopping and also how local influence is important in consumption

half of slum dwellers in Brazil considers herself an entrepreneur, as revealed by the edition of Digital Favelaordered by Favela date. Among the respondents, 41% have their own business, and, for 22%, this is the main source of income. And, 57% of entrepreneurs declare to have invested in this work format to circumvent the absence of formal job opportunities in the formal market, while 54% say they have resorted to overtime and odd jobs to supplement their income during the last year.

For Celso Athayde, coCEO of Digital Favela and CEO of Favela Holding, entrepreneurship is, in many cases, a matter of survival. “Without a job, people are forced to look for alternatives and choose to invest in skills that can become services, such as food, aesthetics and electronics maintenance, for example”.

Most entrepreneurs currently remain in informality. Of them, 63% do not have a CNPJ – that is, they do not have a formally open company to carry out a remunerated activity. “Informality is still high because these are businesses created to meet emergency needs and to serve the community itself. As businesses consolidate, there is a search for formalization, which is important to obtain credit and grow”, says Athayde.

Access to capital for investment is pointed out as one of the difficulties in conducting business for 40% of respondents, followed by the lack of adequate equipment, in 25% of cases. For 14%, the greatest difficulty is in carrying out the financial management of the enterprise.

“When entrepreneurship out of necessity, people have few formal resources to base their business on. They breed and grow in the race, despite the difficulties. However, if they had access to more structure, they would certainly prosper even more.” Despite this, 81% are optimistic about the future of the business.

consumption and connection

The research also highlights the importance of the internet in Brazilian favelas. Of the entrepreneurs, 58% use the network as a source of information about the activity they carry out. It is also through it, especially through social networks, that 76% of people advertise their services.

“The data shows how the favela is connected, engaged and being a great source of influence. The residents themselves know the ideal language to attract their customers and the type of content that a particular subject needs. For this reason, they end up becoming digital influencers who, many times, can represent different brands that want this same connection with the favelas”, says Guilherme Pierri, coCEO of Digital Favela.

The recognition of the business by the other residents, the famous “word of mouth”, appears as a source of publicity for 56% of the owners. In addition, 88% of those who live in the favelas say they trust referrals from an influencer from their own community more than those from famous people (12%).

“The sense of community and belonging is very latent. As with large companies, referral is recognition of quality and increases the reputation of a product or service within that community. Therefore, representativeness and legitimacy end up being the great success factors in this communication”, says Pierri.

Regarding purchases, 41% have never purchased online directly. And about 61% of them manage to receive an order at their doorstep, while others have to ask for delivery to be made somewhere close by.

The survey interviewed 1,250 people aged 16 to 78 in favelas across the country from March 6 to 17, 2022. The estimated margin of error is 2.8 pp

Source: Exam