Chile Extends State of Emergency Following Last Weekend’s Protests, Argentine Business Executives “Desperate” to Hear Plans for Economic Reform, SoftBank Leads $46.65M Funding Round for Brazilian E-Commerce Platform Olist, and more from LATAM
Other featured stories include: Mexican Fintech week wallet Partners with Mastercard to Provide Debit Cards, Colombia Hails “Revolution” as it Awards Renewables Deals Worth $2.2B, What Entrepreneurs Should Expect While Doing Business in Paraguay, and How Latin America Manages Water…
Chile’s Government Extends State of Emergency Following Last Weekend’s Violent Protests
Following a weekend of violent attacks, Chilean President Sebastian Piñera announced that the state of emergency he declared in Santiago on Saturday would be extended to cities in the north and south of the country.
A state of emergency has been imposed on the cities of Antofagasta, Chillan, Punta Arenas, Talca, Temuco, Valdivia and Valparaiso.
Last week, a proposed hike in public transport fares, which has now been suspended, sparked nationwide protests. Since then, demonstrations have widened, reflecting public anger at rising living costs and income inequality in one of the region’s wealthiest countries.
“We are at war against a powerful enemy, who is willing to use violence without limits,” President Piñera said during a televised statement on Sunday, as reported by Reuters.
Mark Keller, a Latin America analyst at the Economist Intelligence Unit (EIU), told CNBC via email on Monday that “there’s a feeling that democracy or the current government isn’t delivering for ordinary people.”
In Chile, famously known as Latin America’s “most stable and business-friendly economy”, there is a sense that the country’s economic growth has failed to improve the lives of the majority of its citizens (CNBC).
In various cities across the country, protesters have set buses on fire, ambushed metro stations and clashed with riot police. Military and police forces used tear gas and a water cannon against protesters over the weekend, and placed a night-time curfew on residents in major cities
According to Santiago governor Karla Rubilar, flights operated by Chile’s biggest airlines, LATAM, as well as Sky Airline, were suspended or delayed on Sunday morning after the curfew, public transportation shutdown, and continuing rioting blocked flight crews from getting to work.
NBC reports that Walmart Chile confirmed that it would close its stores across the country after 60 were damaged in the unrest in Santiago and its surroundings, Valparaíso, Antofagasta, Calama, Concepción, San Antonio and Temuco.
Argentine Business Executives “Desperate” to Hear Plans for Economic Reform
Resigned to the fact that their preferred candidate Mauricio Macri is anticipated to lose the upcoming presidential election, Argentina’s business elite is anxious to hear the next government’s plan to revive the damaged economy. This sentiment was reflected among the roughly 1,000 bankers, executives, academics and analysts who met in Mar del Plata last week for the annual IDEA conference.
Following President Macri’s defeat in the primary elections earlier this year, business executives are desperate to know how the left-wing candidate Alberto Fernandez plans to tackle inflation, promote economic growth, encourage investment and set taxes.
President Macri- who trailed Fernandez by 16 percentage points in the primary vote- spoke to the IDEA conference attendees via video conference, assuring the audience that his campaign wasn’t over yet.
As the Oct. 27 election approaches, the country’s economy is in a deep recession, the peso has fallen 35% since the beginning of the year, capital controls have come back, and according to Bloomberg, bondholders are heading for a restructuring..
Julio Figueroa, the chief executive officer of Citigroup Inc.’s Argentina operations, told journalists at the event that,
“Argentina first needs an economic plan.. No magic plan is needed, just a realistic one.”
This sentiment was also made evident in Washington D.C., where International Monetary Fund Managing Director Kristalina Georgieva said that talks over Argentina’s credit line can be continued once the next government’s policy framework is revealed (Bloomberg).
“[The IMF] is fully committed to work with Argentina and make sure that there can be policy improvements,” Georgieva stated.
Data released at the conference didn’t offer optimistic outlooks, either. As reported by Bloomberg,
“In a survey of 240 business leaders presented by the D’Alessio IROL consulting firm, held in October after the primaries, only 34% of the companies expect to increase its sales in the next 12 months, compared with 70% when they were asked in July.”
Marcos Galperin, CEO of online retailer and payments giant MercadoLibre Inc., expressed that he’s struggled to understand how Fernandez is going to pay for all the social spending he’s promised during his campaign.
“There is no way for 6 million formal workers to generate enough resources for 15 million poor people,” Galperin said (Bloomberg).
SoftBank Leads $46.65M USD Funding Round for Brazilian E-Commerce Platform Olist
Founded in 2015, the platform utilizes various sales channels, allowing shopkeepers to use the company’s SaaS solution to virtually offer goods and services to larger marketplaces.
Olis collaborates with “brick-and-mortars” (street-side stores), helping them establish their online presence, and therefore fortify trade and competitiveness for partners by increasing their chances to land sales in Brazil.
“Common clients are offline shopkeepers who want to sell online, shopkeepers already selling online but seeking better product placements, tenants looking for new sales channels or customers, end consumers, as well as importers and distributors.”
According to Olist CEO and founder Tiago Dalvi, the company plans to include their growing the number of sellers from 7,000 to 100,000 over the next two years.
“Our purpose is to boost trade from small entrepreneurs to large brands… To offer the best possible platform, we have created a complete ecosystem that adds value to consumers, merchants and markets. Now we are taking this model to the next level,” said (Contxto).
Financial products may be gradually incorporated into Olist’s platform. According to Contxto, the company is also reportedly seeking partnerships with other SoftBank companies, including Rappi and Loggi.
Mexican Fintech weex wallet Partners with Mastercard to Provide Debit Cards
Mexico-based weex wallet and Mastercard will be joining forces to offer physical debit cards to users. With this new license, weex wallet will supply more payment options to its consumers. The alliance with Mastercard will allow weex wallet to issue debit cards using its very own certified BIN (Bank Identification Number).
Ricardo Suarez, founder and CEO of weex wallet, said in an interview with Fortune Español,
“This association is the first of its kind for a neo-bank in Mexico, a clear indicator of the potential of the market and our intentions to lead the industry” (Contxto).
weex wallet has a high probability of leading the Mexican fintech market, especially when taking into account that ensuring electronic payments is “the first step in the right direction in Mexico” (Contxto). The platform will now be a full payment processor, without intermediaries.
“The Mexican market has incredible opportunities for fintech solutions and this partnership is a strong step towards achieving our goal and commitment to increasing electronic payments in Mexico,” stated Laura Cruz, general director of Mastercard in Mexico (Contxto).
Over the past two years of operations, weex wallet has registered over 500,000 accounts. In effort of lowering barriers for subscription, the platform ensures low commission rates and more than 15,000 locations where users can upload money to their account. In Mexico, these locations include Oxxo stores, Farmacias del Ahorro, as well as interbank transfers.
Colombia Hails “Revolution” as it Awards Renewables Deals Worth $2.2B
This Tuesday, Colombia announced that it has awarded contracts for wind and solar projects worth roughly $2.2 billion, as part of its initiative to boost renewable energy generation in the Andean country.
While the country boasts dream conditions for production of solar and wind energy due to “high radiation sunlight, three high-altitude Andean mountain ranges and long stretches of coastline”, potential investors have stated that major infrastructure construction and community support are essential to move these projects forward (Financial Post).
“This is the start of a revolution because it allows us to diversify our electric grid, ”Energy Minister Maria Fernanda Suarez said in the statement. She added that because 70% of Colombia’s energy already comes from hydropower, the country is especially vulnerable to droughts.
According to Financial Post, seven generators won eight contracts: five for wind projects, and three for solar. The companies cannot be named until they are officially informed of the auction results. Twenty-two companies will commercialize electricity from these projects. These contracts will contribute to solar, wind and biomass energy generation capacity of 2,200 megawatts by 2022.
In a separate statement, President Ivan Duque’s office announced that the contracts would bring in investment of about $2.2 billion, close to 7.5 trillion Colombian pesos.
“A collective Latin American target of 70% renewable energy use by 2030 is meant to put Colombia and eight other countries in leadership roles ahead of December’s U.N. climate change summit in Chile,” Suarez said (Financial Post).
What Entrepreneurs Should Expect While Doing Business in Paraguay
Home to 6.7 million people, Paraguay has a GDP of $27.44 billion (as of 2016 data), representing 0.4% of the global economy.
According to Nathan Lustig,
“Paraguay had the highest economic growth in South America from 1970 – 2013, averaging 7.2% per year, albeit from a low base. Paraguay has a moderate inflation rate of 5% on average and international reserves of 20% of GDP, twice the amount of the external national debt.”
For investors and entrepreneurs, there are unique advantages to doing business in Paraguay.
Another advantage lies in the fact that foreign investors have the same guarantees, rights, and obligations as Paraguayan investors. Unlike Argentina and Brazil, Paraguay allows free flows of capital into and out of the country.
Nathan Lustig reports that foreign investments are subject to 5% additional tax and a 15% tax on international remittances to nonresidents. However, you must be a resident of Paraguay manage a Paraguayan company or serve on board of directors, but entrepreneurs can comply by finding a local partner.
Local startups have also seen notable success. Guaranglish is a language learning application that teaches Paraguayans English and helps foreigners learn Guarani, a local indigenous language. Another startup, UnoWifi, utilizes free Wifi hotspots to provide companies with demographic information about customers, allowing these companies to run targeted marketing campaigns.
“There are some practical startups helping to bring Paraguay into the digital world. For instance, Movilpy is an online directory of all businesses related to automobiles, motorcycles and the motor world in Paraguay. Juhu lists all events around the country for movies, arts, and more. Paraguay En Tu Mano serves as the “Yelp” across the country, where businesses can register, and users can find restaurants and events nearby. TAXit! is an app that helps Paraguayans manage taxes,” Nathan Lustig reports.
Various Latin American startups have also expanded operations to Paraguay, such as Argentina’s PagoRural, which operates in the country’s Agritech sector.
While there is significant potential, the World Bank’s Doing Business Report ranks Paraguay at 143 for ‘Starting a Business,’ 153 for ‘Paying Taxes,’ and 116 for ‘Trading Across Borders’ (all out of 190). The country’s history of corruption and lack of transparency impedes the possibility of becoming more competitive on an international playing field. Social issues such as worker’s rights, child labor, and women’s rights issues are notable problems as well.
How Latin America Manages Water
With 30% of global freshwater resources, Latin America’s biggest challenge with water is not supply – but governance.
Whether it’s protecting forests, managing agriculture, or investing in infrastructure, government action is detrimental to whether Latin America can battle climate crisis.
America’s Quarterly has ranked eight Latin American countries, in accordance with the World Wildlife Fund’s index for government effectiveness in water management.
The WWF used a framework developed by the OECD to assess how states are utilizng policy and working with various sectors to manage water and mitigate water-related risks.
Photo Courtesy of America's Quarterly