Latin America: The business opportunities you should consider investing in this year
Opportunity. A word we have come to associate as synonymous with success in the world of business. It has to be said that nowadays, interdependence between economic superpowers is not only strained but also reduced, both due to politics and also the COVID-19 pandemic, leaving gaps for new trade links and businesses to burst into global markets and fulfil the demand for services that is being created following the extended period of economic contraction. Now, this brings us on to Latin America, one of the most promising regions in the world for development and innovation, leading to a surge in popularity and by implication, new business opportunities that are constantly emerging. Running alongside this is the need for investment in these countries, either from abroad or internally, bringing incentives for investors and business owners looking to place money abroad, adding another dimension to the idea of opportunity, and making it even more worthwhile considering this year.
As a region, it has to be said that the rapid development of the sector has allowed Latin America to take strides ahead of other continents, assisted by high education rates and foreign investment. In 2021, the social situation around the world remains in a state of uncertainty, this is to say the precarious nature of the pandemic has caused a lingering impact on populations all over the globe, creating a subsequent impact on economic flows and activities on local, regional and international scales. It is for this reason that technology has become more significant than ever, with people opting to work from home and having to undertake typically routine activities through a screen.
Around 80% of the Latin American population live within conurbations, implying the rapid urban sprawl of cities in the region supports increasingly large populations, with increasingly large demands for connectivity. This presents opportunity for those of you looking to invest in local and foreign businesses, as those innovative enough to develop accessible technology having the potential for high returns. The large population also increases consumerism, and the success of platforms of eCommerce such as Mercado Libre demonstrates the need for such sites, and that there is opportunity for tech developers to tap into a market growing by 37% each year.
To explore this idea in more detail, we will focus on Brazil as a real-world example of business opportunity in the region. Global warming is a topic we have all grown to become familiar with, educated by the media and activism taking place in all corners of the globe. One factor that remains present in all representations of climate change is the need to seek alternatives in all aspects of life, whether it is using sustainable packaging material or lifestyle changes that could preserve the environment for future generations. One of the biggest ‘alternative’ markets is energy, where natural processes are used to harvest electricity.
It has been stated that Brazil is the second largest job market for renewable energy in the world, exceeded only by China, demonstrating the magnitude of the value held by this industry in the Latin American nation. It is also worth mentioning that EY have a scale called the Renewable Energy Country Attractiveness Index (RECAI) in which the most recent ranking had Brazil at number 11 on the list, making investments in the country very attractive for foreign investors and business owners. In terms of looking to the future, similarly to technology, innovation is key, and gaps for businesses looking to reshape the market are very present. With 45% of Brazil’s energy supply being renewables, this prospect is made more realistic, and will perhaps make you consider Brazil as the perfect location for you to invest.
The final market full of business opportunity that we will explore today is cannabis. A good place to start is hemp, a derivative of the Cannabis Sativa plant, a variety with very low levels of the psychoactive agent THC, making it very different to the drug we all hear about frequently. There are a number of uses for legalised cannabis and hemp, some of which include: building materials and clothing. The broad range of products makes it immediately clear how deep this market is, and that there is opportunity to be found in a range of different sub-markets.
If you are looking to invest in a sector of the economy that is still relatively small in Latin America, for example, the CBD market value is around US$9.8 billion, yet has limitless reach for expansion with new legislation on the horizon, then perhaps the legal cannabis businesses in the region could be worthy investments for you. Additionally, we already touched briefly upon climate change and a need for alternatives and running in the same theme as this are hemp-based construction materials, i.e., hempcrete, a carbon negative alternative to traditional concrete with an opportunity to solve urban sprawl issues sustainably, while also reducing pollutants in the atmosphere. The other stand out cannabis-based business opportunity is with clothing, as although fashion is a difficult industry to break into, the popularity of environmental conservation makes hemp fashion more appealing and therefore the investments made into the brands more lucrative.
So, if you are interested in finding out more about your opportunities for investment within a bustling Latin American market exhibiting more and more business potential, get in touch with us today. At Creimerman, we assist our clients with their cross-border ventures, helping ensure they are a success, and we would love for you to be the next.