Brazil: Entrepreneurship rate fell again in 2021

RIO DE JANEIRO, BRAZIL – After losing 9.4 million entrepreneurs over 2020, Brazil has again registered a drop in the total national rate of entrepreneurship in 2021. According to the Global Entrepreneurship Monitor (GEM) report, conducted by Sebrae and the Brazilian Institute for Quality and Productivity, the number of people between the ages of 18 and 64 who, last year, had their own formal business or did something to open it did not exceed 43 million. A year earlier, this result reached 44 million. And in 2019, to 53.4 million people.

Although “slight” if compared to 2020, the drop last year was enough for the Total Entrepreneurship Rate (TTE) in 2021 to reach the lowest level since 2013. The rate indicates the percentage of the adult population employed as entrepreneurs. In 2021, the proportion was 30.4%, compared to 31.6% in 2020 and 38.7% in 2019, when the highest rate was recorded after 2015 (39.3%).

Despite the negative result, Brazil ascended two positions in the global ranking in terms of total entrepreneurship rate, rising from the seventh place occupied in 2020, to fifth place in 2021, behind only the Dominican Republic (45.2%); Sudan (41.5%); Guatemala (39.8%); and Chile (35.9%). Among 47 countries listed in the report, Canada ranks eighth among nations with the highest rates of entrepreneurship (27.4%); the United States ranks 14th (24.5%); and Norway ranks last, with only 6.6% of the adult population being entrepreneurial.

ESTABLISHED ENTREPRENEURS

A fact considered positive by Sebrae was the return of the growth of the so-called established entrepreneurs, in other words, those who have been running a business for more than 3.5 years. After two years in decline, the rate increased by 1.2 percentage points, from 8.7% of the adult population in 2020 to 9.9% in 2021.

For the president of Sebrae, Carlos Melles, the data reveals that part of the entrepreneurs who opened a company shortly before the covid-19 pandemic managed to survive the economic consequences of the health crisis. In part, thanks to public policies of access to credit, such as the National Program of Support to Micro and Small Enterprises (Pronampe), and initiatives such as the Emergency Program for the Maintenance of Employment and Income (BEM).

“These initiatives gave entrepreneurs more breathing space and allowed them to survive the impacts of the pandemic. These programs were essential for many companies to stay open,” said Melles when presenting the survey results to journalists.

The Initial Entrepreneurship Rate (TEA), formed by those who opened a business less than 3.5 years ago and also by those who took some action to have their own enterprise or had opened it up to three months before the survey date, dropped 2.4 percentage points, from 23.4% in 2020 to 21% in 2021. The so-called nascent entrepreneurs (those in the second group, who have taken some initiative to become the owner of a business), alone, have remained at the same level as the previous year – which, according to Sebrae, “shows that there are still many people seeking entrepreneurship as an alternative occupation.

HIGHER EDUCATION, SIMILAR INCOME

On the other hand, the report also points out that, in 2021, the rate of entrepreneurship by necessity decreased. While in 2020, 50.4% of respondents said they had invested in a business in search of a source of income, this percentage fell to 48.9% in 2021 – the third-highest percentage in the historical series (55.4% in 2002 and 50.4% in 2020).

In addition, the survey shows that the new entrepreneurs have a higher level of education than those who preceded them in this sector, as at least 28.5% of respondents have completed higher education (in 2020, they were 24.4%).

However, the increase in schooling is not yet reflected in a greater income gain: 57% of entrepreneurs earned, in 2021, less than three minimum wages. In 2019, they were 52%. On the other end, 10% of them said they earned more than nine minimum wages. In 2020, they were 10.3%.

With information from Agência Brasil