Eduardo Moreira is a businessman, engineer and former investment banker. He is the author of the bestsellers Inequality, What Power Don’t Want You to Know, and Enchanters of Life. He writes about social change.
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Market and social changes
Brazil is the gold medal in inequality, taking advantage of the times of the Paralympics for the metaphor. In Brazil, around 1% of landowners concentrate 50% of arable land, while 1% of the richest keep around 30% of the income. Only 0.16% of investors concentrate more than 1/3 of investments. And despite many of them clamoring for change, using market instruments to finance the dream of a fairer future seems unusual.
A vegan, when applying their savings, may be financing the construction of a refrigerator without knowing it. Or a pacifist militant may be investing in an unconscious weapons factory. An environmentalist can put his money into a company that deforests and pollutes. This is a much more common reality than one could (or would like) to imagine.
It was with this in mind that some institutions in the world, such as Triodos Bank, started to encourage the question “which world do you finance with your money?”. The Dutch bank’s slogan leaves no doubt: “Finance change, change the world of finance.” (Finance change. Change Finance). Even more than weapons and terrorist threats. This questioning can change the structure of the system and empower an entire population to truly choose the world they want.
In Brazil, this debate is quite embryonic. Social inequality is also expressed in the capital market. The distance between small investors, who have increased in number, and millionaires, who have always been in the market, is huge. While the richest diversify their investments, investing 60% of their income in stocks and funds, the average account holder invests more than two-thirds of their investments in savings (Anbima feb/2021).
However, with the recent popularization of investments, increasing competition between banks and brokers for freshmen, there is also a need to diversify the possibilities of instruments. In Brazil, for example, the Finapop (Popular Financing of Family Farming) was inaugurated last year to bring together investors seeking investments that will not be judged solely by the financial rate of return they promise, but by the world they build.
In the first operation it helped boost, Finapop financed the completion of an agribusiness that supplies organic rice and pork to nearly 400,000 people in the greater Porto Alegre region. Investors had a higher return than the savings account; and peasants were able to borrow at a rate lower than that offered by commercial banks. It’s a milestone.
It is noteworthy that the MST, which became known as the largest popular movement in the world with land occupations, has joined Finapop to strengthen the production of healthy food in settlements and finance the expansion of cooperatives, at a time of dismantling policies for family farming.
“But wouldn’t family farmers’ cooperatives linked to the MST to access the capital market be nonsense?”, some ask. Nonsense is having a financial system that produces nothing and has the biggest profits in the world. Nonsense is having people who work and have their income eroded by 300% interest per year. It is nonsense to have multibillion-dollar programs to encourage the production of commodities that will become animal feed abroad. Nonsense is doing nothing and forgetting family farmers who produce healthy food for our meals. Nonsense is not reacting to the current system logic.