FAZENDO AMERICABRAZILIAN REMITTERS IN MASSACHUSETTS

Alvaro Lima & Pete PlastrikSeptember 2007

Introduction

Brazilians living abroad sent $7.4 billion back home in 2006 making Brazil the second largest recipient of remittances in Latin America after Mexico. Half of the remittances received in Brazil come from the Brazilians living in the United States. Although remittances account for just 0.4% of Brazilian GDP, they are, increasingly, playing an important role in the economies of Brazilian immigrant-sending states. Massachusetts, with its large concentration of Brazilian immigrants, is an important link in this chain. However, little is known about their financial habits. This report tries to feel this gap by tracing a brief demographic profile of Brazilian remitters and the patterns of remittance usage among Brazilian immigrants in Massachusetts. It also investigates the acceptance among them of the creation of a community development fund as an opportunity to leverage remittance flows.

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The research for this report was done by Alvaro Lima, Director of Research for the City of Boston and Board member of the Innovation network for Communities – INC and Pete Plastrik, INC’s President. The Innovation Network for Communities is a national non-profit organization focused on supporting civic entrepreneurs to develop and spread scalable innovations that transform the performance of community systems.

The research was funded by a grant from the Kellogg Foundation and completed during the period May-July of 2007.

Methodology

According to the 2000 U.S. Census, the total population of Brazilian-born adults, twenty-five years old or older, in Massachusetts is 24,056, representing 15.9 percent of the total Brazilian immigrant population living in the U.S., second only to Florida – 21.1 percent. A random sample of 250 subjects was drawn to assure confidence intervals of 6.17 percent at a confidence level of 95 percent. Inferences drawn from the survey should be limited to Brazilian remitters in Massachusetts. However, according to the American Development Bank – MIF, the percentage of immigrants who send money from Massachusetts is 70 percent so that inferences based on remitters cover a large part of all adult Brazilians.

The routes for the field work were designed around remittance agencies that send money to Brazil in areas with large concentrations of Brazilians. The subjects were selected randomly and intercepted at remittance agencies, to ensure that they were active senders. The survey was administered by a staff of five Portuguese speaking interviewers provided by TransComm and trained and supervised by Silvestre HMR&S who also tabulated the results. The survey included questions from the 2003 and 2006 surveys directed by Manuel Orozco of the Inter-American Dialogue in order to compare Brazilians with other immigrant groups from Latin America and the Caribbean. These samples include Nicaraguans, Dominicans, Bolivians, Mexicans, Salvadorans, Guatemalans and Jamaicans.

Demographics of Brazilian Remitters

Brazilian remitters are 35.6 years old with a high school level of education. When compared with other Latin American and Caribbean immigrants they are slightly older and rank third in College degrees after Nicaraguans and Jamaicans. The typical Brazilian household is composed of 3 to 4 people mostly (82%) adults over 21. They are mostly males (66.4%) with one out of four females (23.8%) holding a college degree a rate higher than any other Latin American and

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Caribbean group and almost three times higher than that of Brazilian males. Brazilian remitters also have the highest proportion (32.4%) of people with incomes over $35,000 and the lowest proportion (1.6%) of those making less than $10,000 among immigrants from Latin American and the Caribbean. One out of every three Brazilians living in Massachusetts, regardless of their educational level, has income of over 35,000 except for those with some college education whose majority earns 20,000 to 5,000.

When compared to other Latin American and Caribbean immigrants, Brazilians have the lowest proportion of U.S. citizenship (3.2%)1 with the majority of those who are U.S. citizens (37.5%) having lived in the country for over fifteen years.

1 Jamaicans have the highest proportion of U.S citizenship (56%), followed by Dominicans (43%), Salvadorans (17.3%), Bolivians (16%), Nicaraguans (14%), Mexicans (12.8%) and Guatemalans (12%).

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Most Brazilians (85%) are employed. The rest, are business owners (12.4%); students (0.4%); freelance workers (0.4%); housewives (0.4%); and 0.8 percent unemployed. Although college education are found only among business owners, students and housewives, these different levels of education do not affect incomes which is over $35,000 for almost all Brazilians as remarked above.

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However, incomes vary between those who are homeowners (10.8%) and those who are renters (88%). The median income for homeowners is over $35,000 while renters earn between $31,000 and $35,000.

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Finally, almost half (44.4%) of Brazilian remitters have been in the U.S. less than 3 years. The other half (45.2%) have lived in the country between 4 to 8 years.

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Financial Behavior of Brazilian Remitters

Brazilian remitters display some similar behavior as other Latin American and Caribbean remitters and vary in respect to others. On one hand, 50 percent of them send money home once a month. 33.2 percent remit twice a month, and 9.2 percent does it once every three months - a pattern consistent with that of remitters from many Latin American and Caribbean nationalities. On the other, monthly remittance of Brazilians ($875) is much higher than the average for other Latin American and Caribbean remitters.2 The average fee they pay ($9.28) is similar to that paid by other remitters.3

Minas Gerais, Espirito Santo and Sao Paulo are Brazil’s top remittance-receiving states with cities from Minas Gerais being the most important receiving cities.

2 The mean and mode for the most recent transactions is $747 and $500 respectively.3 The median is around $10.

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Compared to other immigrants from Latin America and the Caribbean, Brazilians display a very different behavior with regard to their agency of choice. While Western Union is the first choice agency for most other remitters in Orozco’s 2006 sample,4 it is the second choice for Brazilians with BrazTransfers occupying the first place and Chang Express the third position - both Brazilian owned companies. Their level of satisfaction is very high with 41.6 percent of them very satisfied or satisfied (51.2%) with their remittance agencies.

4 Exceptions include Banco Agricola, the first choice for Salvadorans and La Nacional for Bolivians.

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While Brazilians choose an agency based on accessibility or convenience, other Latin American and Caribbean immigrants look for quality of service and company reputation. Consistently, the majority (63.6%) of the agencies preferred by Brazilians is located within walking distance from home or less than a 30 minute drive (32%).

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Mothers and fathers are the main beneficiaries of remittances for Brazilians as well as every Latin American and Caribbean immigrant group except for Guyanese immigrants.5 Spouses constitute the second beneficiary group for Brazilians with children coming third. Consistent with all other Latin American and Caribbean immigrant groups, Brazilian receivers use their remittances to buy food

(24.6%) and clothing (17.3%). Medical expenses come third for Brazilians while housing occupies this place for all other communities in the 2003 sample comparison. The percent of

5 18.2 percent of them choose other relatives are the main beneficiaries with children coming second and other/father third.

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remittances sent for business investments among Brazilians is the second highest (5.3%) behind only that of Guyanese immigrants (8.5%).

Years sending money to Brazil, has a perfect correlation with years living in the U.S., that is, the longer Brazilians live in the U.S. the longer they send money home, a tendency shared by all other groups in the 2003 sample.

Unlike every other Latin American and Caribbean immigrants, 92.4 percent of Brazilians prefer sending money by making a deposit into the beneficiary’s bank account. Only 6 percent prefers sending cash. Brazilians, along with Salvadorans and Nicaraguans, have an average number of people (70.4%) with bank accounts in the United States. Mexicans and Guatemalans have below average account holders while Jamaicans, Bolivians and Dominicans have above average numbers.

Our analysis shows that education and years in the U.S. are the most important factors in determining bank account ownership for Brazilian immigrants residing in the United States. As

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for many Latin American and Caribbean account holders, Bank of America is the bank of choice for Brazilians (44.8%). Their second and third choices, Citizens (17.6%) and Sovereign (4.4%) banks are not shared by any other group in the sample.

As for almost all Latin American and Caribbean immigrants, the main reasons Brazilians do not have bank accounts are the lack of proper identification (40.7%), no need for accounts (36%) and the complication of the process (11.6%). While the second reason is subjective, the first and third have to do with accessibility and convenience.

When arranged by nationality according to both credit and debit card ownership, Brazilians stand in the middle with one third of them (35.6%) holding a debit card and another third (30.8%) holding neither of them.

As with monthly remittances, Brazilians make above average monthly payments to credit cards ($744) a much higher usage than that of Bolivians ($413), Nicaraguans ($341), Mexicans ($317), Salvadorans ($301), Guatemalans ($265), Jamaicans ($217) and Dominicans ($212). The majority of Brazilians (86.6%), as most immigrants in the 2003 and 2006 samples, do not have economic obligations in the United States. Only 6.3 percent of them have home loans, 1.6 percent hold a business loan, another 1.6 percent hold student loans and only 3.9 percent have other loan payments.

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Diaspora Capital – Leveraging Immigrant Remittances for Development

As referred earlier, another goal of the survey was to investigate the acceptance among Brazilian remitters of the creation of a community development fund as an opportunity to leverage remittance flows. The model for such a fund was advanced first on our paper “Leveraging Immigrant Remittances for Development” published by the Federal Reserve Bank of Boston.6 The main idea behind the fund was to capture resources for development from 1) remitters, 2) to be matched by transfer companies, and 3) public and private foundations.

Of the Brazilians interviewed, 66.8 percent showed interest in contributing a small portion of their remittances to support a development fund targeted to invest in their own community. Forty two percent of them would contribute 1% of the value of their remittance to the fund; 20

6 Leveraging Immigrant Remittances for Development, Alvaro Lima and Peter Plastrik, Community Developments, Issue 3, 2006, Federal Reserve Bank of Boston (www.bos.frb.org/commdev/cdevpubs.htm).

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percent could contribute 2 to 5 percent; 2 percent would contribute 10 percent or more; while 0.8 percent would contribute between 6 to 9 percent. When taking into account these contribution levels and the monthly remittances sent to Brazil, the potential monthly investment would be $362,471. If we were to use the mode and not remittance averages, the contribution would still be significant - $169,082 monthly.

Almost half (42.4%) of the Brazilians surveyed, chose English classes as their first choice for services to be financed by the investment fund followed by small business financing (25.6%) and scholarships (19.6%).

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