A well-developed infrastructure connects agents, promotes market integration, reduces transaction costs, facilitates the flow of information and is crucial to increase productivity in the country. Brazil lacks this infrastructure and needs to improve the efficiency of its investments. The nation has better logistics than its Latin America neighbors, but worse than its emerging peers. This urgent agenda will be in the spotlight in 2019 and in upcoming years.
In 2015, more than 40 percent of households had no access to sewage treatment, and more than 15 percent had no access to treated water via the general network. More than 90 percent of the population has access to electricity and cell phones - but blackouts are still common. Brazil had in 2016 just 12.9 subscriptions of fixed broadband Internet per 100 inhabitants. By comparison, that same year, Chile had 16.2 subscriptions per 100, China had 23, and the United States had 33, according to the International Telecommunication Union.
Given this gap and the benefits in jobs and productivity that infrastructure brings, thereâs likely to be a regular pipeline of projects across sectors in the coming years. This will require private investment because the government is currently unable to provide funding, as done in the past, due to a massive fiscal crisis.
In this paper, Oliver Wyman analyzes the current status of the Brazilian infrastructure, presents the current gaps, and summarizes the challenges ahead. It points out what needs to be done to attract private sector funding and ensure an efficient allocation of resources. Infrastructure: Rules and Incentives is part of the Panorama Brasil series of papers that aims at collaborating to the diagnosis of the current economic and social situation in Brazil and motivating the debate of what is required for the country to pave a sustainable growth path with a better income distribution.
Figure 1: Infrastructure gap in Brazil
The inadequate infrastructure is reflected in poor indicators across key sectors, demonstrating that basic infrastructure is not yet universalized
Source: PNAD– Pesquisa Nacional por Amostragemde Domicílios, IBGE; Confederação Nacionaldos Transportes; World FactBook; Antaq; ANTF; Oliver Wyman Analysis