Business Impact

Brazil

The giant of South America is weaning itself from oil and bringing the Net to the poor.

Brazil’s two top priorities are to reduce dependence on imported energy sources and to bring digital technologies to the vast majority of the country’s 180 million people who cannot now afford them.

In energy, the center of the greatest activity is biodiesel, a fuel made from the oil of seeds such as soybeans, castor beans, and cottonseed. Biodiesel could become an attractive, domestically produced alternative to petroleum-based fuels. Brazil has enacted a law requiring diesel oil sold in the country to be 2 percent biodiesel by 2008 and 5 percent biodiesel by 2013. Because the country has huge amounts of land that is unsuited for food crops but that can easily grow oil seeds, “Brazil can become a global biodiesel power,” says Maria das Graças Foster, secretary of oil, gas, and renewable energy at the Ministry of Mines and Energy.

The consequences could be considerable. Brazil now imports 15 percent of the 37 billion liters of diesel it consumes annually. Large-scale use of biodiesel fuels would allow it to all but discontinue those imports and would create jobs in needy farming communities. There are also significant environmental benefits: substituting biodiesel for petroleum-based fuels reduces emissions of unburned hydrocarbons, carbon monoxide, sulfates, sulfur, and other pollutants.

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Another alternative fuel that could help Brazil reduce its oil dependence is ethanol from sugarcane. A study conducted by Roberto Giannetti da Fonseca, a spe­cialist in foreign trade, found that Brazil is the largest producer of fuel ethanol in the world, with an export potential of up to 10 billion liters per year for about $2 billion in revenue. Because of its extensive use of ethanol fuel, Brazil has developed the flex-fuel car, which features a combustion engine that can burn ethanol, gasoline, or any combination of both. Volkswagen introduced the car in Brazil in March 2003. Last year, sales of new flex-fuel or ethanol vehicles amounted to 26 percent of overall car sales. According to Booz Allen estimates, that fraction could rise to 40 percent within the next two years, and Brazil could begin to export the flex-fuel technology. “Thanks to this technology, Brazil will be dependent on neither oil nor ethanol,” says Fernando Reinach, executive director of Votorantim Novos Negócios, the venture capital subsidiary of the Votorantimi Group, a major Brazilian industrial conglomerate.

While reducing energy dependence will help the Brazilian economy in the long run, another technological initiative is starting to have more-im­­mediate consequences. Only about 12 percent of Brazilians own PCs. The last few years have seen a number of projects designed to make computer technology accessible to large numbers of Brazilians for whom it was previously unaffordable. The Committee for Democracy in Information Technology (CDI), for example, collects PCs in good working condition that businesses have discarded as obsolete and ships them to information-technology training centers. More than 900 schools in Brazil and abroad have bene­fited from this program.

In 2001, a new project was born, one intended to provide Brazilians who don’t own PCs with a sort of virtual machine—as long as they have access to a publicly shared computer terminal.The project is called Computador de R$1.00, or Computers for 1 Real—the equivalent of about 40 cents. That’s the price of a recordable CD that stores personal data and settings that customize the appearance of a computer screen. The user simply inserts the disc into the CD drive of a computer at a school, a public library, or even a shopping mall. The system reads the disc and presents a personalized computing environment, complete with application software and access to additional content over the Internet. The system is already in place in pilot form in community centers and schools in cities such as São Paulo, Brasília, and Campinas; hundreds of Brazilian schools will soon begin offering system discs to their students. Project col­laborators include Siemens, T-Systems, Brasil Telecom, Brasília University, publisher Editora Abril, and Brazilian infotech firm Samurai.

One application of information technology in which Brazil is taking a leading role is voting machines. In Brazil’s 2000 local elections, for the first time, all 5,559 of its municipal districts offered voters the chance to cast their ballots electronically. Most polling places used a simple, portable electronic voting machine. To boost confidence in the system’s reliability, Brazilian law guarantees that all political parties can examine the machine’s software before the election, says Paulo César Bhering Camarão, information tech­nology secretary of the Supreme Electoral Court. A digital signature extracted from the software can then be used to verify that the program used on election day is the same one examined previously.

Laura Somoggi is editor of Harvard Business Review Latin America.

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