Brazil’s poorest start banking on each other

– The economic toll of the coronavirus pandemic has hit especially hard in Brazil’s favelas, but the country’s 10 biggest slums now have a plan to fight back: they are launching their own bank.

Dubbed the G10 Bank, the new financial institution is set to open this month, offering microloans to small business owners struggling to survive the pandemic and debit cards to slum-dwellers excluded from the traditional banking system.

Brazil has the second-highest Covid-19 death toll worldwide – 225 000 – after the US.

The impact has been especially devastating in the favelas, the crowded jumbles of shacks that are the postcard of poverty there.

Not only have the poor suffered more from Covid-19 in health terms, they have also borne the brunt of the economic impact.

Many favela residents work in the informal sector – jobs such as childcare and housekeeping that disappeared when stay-at-home measures took effect, sending the unemployment rate to a record 14.6% in September last year.

President Jair Bolsonaro’s government had been providing emergency benefit payments of 600 reais (about R1 680) a month – later halved to 300 reais – to those most affected by the pandemic.

But it halted the programme at the end of last year, saying it was too expensive.

That left many Brazilians struggling to make ends meet. And banks or credit cards are usually not an option.

Traditional loans are a nearly impossible dream for households and businesses in the favelas.

Around 45 million Brazilians do not even have a bank account, according to a 2019 study by the Locomotiva institute – one in three adults in the sprawling South American country.

The G10 Bank aims to fill that gap. For many in the favelas, it could not arrive at a more urgent time.

The bank plans to offer lowinterest loans, as well as debit cards that can be used to give favela residents social assistance payments.

It will have initial assets of 1.8 million reais funded by anonymous investors.

It will have councils of economists and financiers overseeing its operations.

One-third of its funds will be slated for social programmes.

“We can tell that this is the moment when people need assistance the most,” said Gilson Rodrigues, coordinator of G10 Favelas.

“We hope to become the development bank of the favelas.”