Uber Returns to Brazil’s Favelas

(Bloomberg Businessweek) -- On a hot afternoon in early September, fruit seller Cosmo dos Santos Araujo sits in his usual spot in front of the public hospital in Vila Heliópolis, the largest of São Paulo’s favelas. He’s feeling good about the past five months, when business was better than ever. Sales started to rise almost immediately after Uber in March installed a new pickup point next to his fruit stand. “I’ve been here for five years, and sales definitively have improved,” he says, holding his young daughter as he reaches over to an Uber driver to hand him a slice of watermelon.

Ewelyne Luis Santos Maciel, a cleaning woman, is waiting for a ride home to Vila Moraes four kilometers (2.5 miles) away. Before the pickup location was established, she says, visiting relatives in the neighborhood was much harder.

Uber is making another attempt to set up shop in Brazil’s poorest neighborhoods. Getting people like Araujo and Maciel on its side is a crucial part of the effort. In number of rides, São Paulo is Uber Technologies Inc.’s biggest market worldwide, according to the company. Poor neighborhoods and suburbs, including favelas—where transportation options are limited and overcrowded and car ownership rates are low—represent a big opportunity. “Favelas are a giant market, and in Brazil alone $20 billion in revenue circles inside these communities every year,” says Pedro Sampaio, Uber’s social impact manager in Brazil and head of the Heliópolis project.

But these neighborhoods also present challenges for a company that from its earliest days has grappled with driver and passenger safety problems. Uber first entered Brazil in 2014. Two years later, a wave of attacks against drivers resulted in at least 16 deaths, according to Mike Isaac, author of Super Pumped: The Battle for Uber. Uber started blocking favelas as a pickup/dropoff option on its app. That created the perception that it was discriminating against those living and working in the favelas. As great as the opportunity in the favelas is, the company says it had to figure out a better way. Uber declines to comment on the figures reported by Isaac in his book; it acknowledges that neighborhoods with a high percentage of unfinished rides remain blocked, including most of Brazil’s slums.

More than 10 million Brazilians live in favelas, where gangs backed by organized crime control large swaths of territory. Armed drug dealers thrive on the favelas’ curved streets and in badly lighted alleys. Most of those living in the neighborhoods are in low-paying jobs as workers in factories, small shops, or services such as housecleaning. Several hundred fill the streets most mornings in Heliópolis, queuing up for public buses and crowding around a subway station.

The pilot is a partnership between Uber and United Central of Favelas, or Cufa, a favela economic development organization. Uber executives, working with local leaders and residents, mapped Heliópolis and identified eight virtual pickup points, including a church and a public school, and a physical spot next to the fruit stand that’s outfitted with a bench and a Wi-Fi connection—all deemed safer for drivers and customers.

“Their drivers were afraid,” says Cufa President Celso Athayde. “Uber had to go into the favela, talk to the residents.” Gathering feedback helped the company “better tailor its service,” he says. For example, it created a pared-down version of its app so that it could work on smartphones with less memory. The residents may be poor, Athayde says, but they’re willing to spend on things they need, such as transportation, as long as it’s affordable and especially if it helps the economy of the favela.

In addition to identifying the pickup locations, posters with the slogan “Tem Uber” (“There’s an Uber”) were plastered around the community. They feature a “Made in Heliópolis” logo. Local businesses were in charge of developing the marketing campaign. Greater involvement, Athayde advised Uber, would help create more trust and educate residents about the company and its business.

“This wasn’t only a mobility project, but a social inclusion one,” says Uber’s Sampaio. “We also had an ‘Uber expo’ in the favela with partners such as car rental companies to help attract potential drivers.” The company has also sponsored soccer and arts events in the neighborhood.

Drivers say they feel more secure driving to designated pickup spots. “I don’t go to certain areas of the favela,” says Cezar Nascimento dos Santos, who lives in Heliópolis and has driven for Uber for two years. He also doesn’t work on Sunday mornings, he says, when people head home from the fluxo—informal parties that bring thousands into the streets of the favelas.

Because each community is unique and the Heliópolis project was so “artisanal,” Sampaio says, Uber still hasn’t decided how it will replicate the project in other favelas. “It’s not like a cake recipe that we can do over and over again.”

To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net

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