Colombian entrepreneur David Vélez has been grappling with an unusual problem in recent months: he has become too rich. A co-founder of Nubank, the world’s biggest independent digital bank, Vélez saw the value of his stake rise as the pandemic prompted more and more Brazilians, Mexicans and Colombians to open online accounts. Forbes estimates he is now worth $5.2bn.

With Mariel Reyes, his Peruvian wife, “we started to ask a lot of questions about what it meant to have that level of wealth and how to use that wealth”, Vélez says. “We had a good standard of living, but we don’t need a lot of luxuries and we really didn’t see how this money could be spent.”

The question was especially urgent in Latin America because the region is home to some of the world’s most unequal societies. Coronavirus has hit poor communities particularly hard and pressure is growing on elites to share more of their wealth and open up greater opportunities to marginalised groups — or risk social unrest.

In the past, Latin America’s successful entrepreneurial families have spawned dynasties whose names became bywords for power and status. But this was not what Vélez wanted. “Am I going to leave all this money to my children, to my cousins, to my grandchildren, to the fourth generation? Or am I going to use it to improve the lives of people in Latin America today?” he says. “It is very obvious for me what the right answer is: you have to use this money today, to solve the problems and the pain that exists today.”

The impact of coronavirus on the health and economies of Latin America has been the worst in the world. Despite having only 8 per cent of the global population, the region has suffered almost a third of Covid deaths and its deepest recession since records began, according to the Inter-American Development Bank (IDB). But the impact on the population has been uneven. “The experience of the pandemic was one thing for the rich and another for the poor,” says Luis Alberto Moreno, who was IDB president until September last year. He says many wealthy people in the region travelled to Miami to be vaccinated early. “It was a wake-up call to the deep reality of inequality in Latin America. People have realised that the region has an enormous problem.”

Vaccination programmes are now bringing hope to Latin America after a slow start caused by a lack of supply. But disparities still exist. Wealthier countries, such as Chile and Uruguay, have fully vaccinated three-quarters of their populations. However, the picture is very different in poorer countries, such as Nicaragua and Haiti, which by early October had managed less than 5 per cent and 0.2 per cent, respectively, according to Our World in Data. “Immunisations are following the fault lines of inequality that have long divided our region,” said Carissa Etienne, director of the Pan-American Health Organization, in August.

In those Latin American countries where medical services were inadequate or overstretched, the wealthy abandoned cities during the pandemic, taking refuge in beach houses and country ranches or heading to the US. In Búzios, the chic beach and surfing resort in Brazil’s Rio de Janeiro state, demand for property rose, according to estate agent Hernán Javier Barbosa. “The condominiums were full,” he says. “The people were young or middle-aged who were working from home, [such as] lawyers, architects and psychologists.”

Brazilians who preferred an alpine environment had the option of Campos do Jordão, a mountain resort known as “Brazil’s Switzerland” for its gabled, half-timbered hotels. Benedito Gonçalves, an estate agent, says property prices rose “at least 30 per cent” and that “rental prices have doubled and there is no supply”.

Demand for property rose in Búzios, the chic beach and surfing resort in Brazil’s Rio de Janeiro © Buda Mendes/Getty Images

Poorer Brazilians experienced a very different pandemic. Patricia Villela, co-founder of Humanitas360, a not-for-profit organisation that works to reduce violence and improve life for disadvantaged people, says that, even before Covid, less well-off people had been battling three other viral epidemics: dengue fever and the Zika and chikungunya viruses. “Then coronavirus arrives in the homes not affected by these three diseases and we are all frightened,” she says. “The majority of Brazilians are poor, black and live on the outskirts of cities, while the minority are rich, white and live in urban centres, which are better protected [from disease].”

Brazil has suffered the world’s second-highest Covid-19 death toll, at more than 600,000. Villela says the pandemic prompted better-off Brazilians to donate food parcels — some containing food they would not eat themselves — but it was not enough.

“Philanthropy needs a focus on social justice,” says Villela, whose husband, Ricardo Villela Marino, is an heir to the Itaú banking fortune. “Donating can be something that continues [for a time], but it is not a long-term commitment. When they donate food parcels, by the sixth month, people start asking themselves, ‘Why am I still doing this?’”

There are calls for wealthier Brazilians instead to take lessons from the pandemic and tackle deeper social issues. “Brazil is a racist, machista [chauvinistic], class-ridden country,” Villela says. “This has never been admitted, but it needs to be. Brazil was sold for much of the 20th century and the start of the 21st as a country of racial democracy but . . . there is no racial peace in Brazil. The majority of the population has no voice.”

In Colombia, one of the region’s more unequal nations, a wave of social protest erupted after the government proposed a tax reform that would have imposed VAT on burials and household water supplies but not on bottled water. The demonstrations alarmed business leaders who were already fretting about the risk of the country lurching towards the radical left in elections next year.

“We received a big wake-up call that we have to get much better about publicising the philanthropy that we do,” says a member of a leading Colombian business family. “There is a lot being done by companies to help, but we have been very bad at talking about it. It is urgent that this changes.”

Further down the Andes in Peru, voters in June chose by a narrow margin the most far-left president the country has ever had. Pedro Castillo, a primary school teacher and smallholder from a remote mountain village, won with the slogan “No more poor people in a rich country”. Meanwhile, the number of billionaires in Peru tripled to six in the space of a year. Peru is a “magnified version of the rest of Latin America”, says Luis Felipe López-Calva, UN Development Programme director for Latin America and the Caribbean. “It’s a country with very high inequality, a very fragmented social contract, with public services of bad quality and limited coverage; a very big demand for private services [such as health and education]; and a sizeable rural, indigenous population, which is not incorporated effectively in the political sphere.”

Peru’s recently elected president, Pedro Castillo © Ernesto Benavides/AFP via Getty Images

In neighbouring Chile, polls suggest a radical-left former student leader, Gabriel Borić, will win the presidential election in November amid a strong desire for change, after a wave of mass social protests during the presidency of conservative billionaire Sebastián Piñera.

“The pandemic and the electoral supercycle are quite challenging for the Andean region,” says one Latin American wealth manager. “Our clients are waking up to the reality that the Chile, the Colombia and the Peru they knew may not be the ones they wake up to in future.”

As a result, he says, wealthy clients are reducing their financial exposure to their home countries. “This is well advanced in Peru, it is happening now in Chile and enquiries about it are coming in from Colombia,” he says. Those worried about new wealth taxes are also considering moving their domicile to Panama, according to another business figure in the region.

UN Development Programme regional director Luis Felipe López-Calva: Peru is a ‘magnified version of the rest of Latin America’ © Sumaya Agha/UNDP

Carlos Felipe Jaramillo, World Bank director for Latin America and the Caribbean, says the pandemic has deeply affected society in the region. “It’s hard to believe this won’t change certain attitudes,” he says. “People are talking a lot more about the need for more redistribution and more sacrifice by those on high incomes.”

Villela is less sure. “It is premature to think the pandemic will lead to a transformation of culture,” she says. “Three overlapping epidemics weren’t enough to transform our culture . . . we need to start looking at all the things we don’t want to see, such as the rivers of sewage running through poor neighbourhoods.”

Emergency social assistance programmes launched by some governments in the region, notably Brazil, helped to limit the increase forecast in the numbers of Latin Americans living in poverty, according to World Bank research. The bank worries that as cash-strapped governments unwind these programmes, poverty levels will rise.

In the meantime, the number of billionaires in the region has surged and those already in the Forbes list have seen huge increases in personal wealth. López-Calva analysed the Forbes data in a blog and reached the conclusion: “Those at the very, very top appear to be doing very, very well.” During the pandemic, he wrote, “the total number of billionaires in Latin America and the Caribbean increased by 31 [to 107] and their combined net worth increased by $196bn — this is roughly the size of the economy in Ecuador”.

House on a body of water
Belén, a barrio in Iquitos, Peru, where poverty levels are high © K.D. Leperi/Alamy

Although the surge in digital services has minted new tech billionaires such as Vélez, many Latin American beneficiaries of pandemic gains in wealth have been those holding strong market positions in traditional industries, such as mining, telecoms or banking. The pandemic has also filled the pockets of those providing private services to fill gaps left by deficient state coverage. Jorge Moll Filho, a cardiologist who set up one of Brazil’s biggest private hospital chains, Rede D’Or, has seen his net worth rise from $2bn in April 2020 to about $12bn, according to Forbes.

But the main lesson for Latin America, economists say, is that the pandemic has shone a light on deep structural problems of inequality, high labour informality and inadequate public services and, if elites fail to find solutions, social unrest and political turmoil are likely to grow. “It’s the moment to rethink the need for wide-ranging social reform that is inclusive, fiscally sustainable and favourable to growth,” says López-Calva. “That could be a way of bringing together different actors in society.”

Vélez and Reyes have made their decision. In August, the couple signed up to The Giving Pledge, a philanthropy movement founded by Bill and Melinda Gates and Warren Buffett. Vélez and Reyes committed to donate the majority of their fortune towards creating a philanthropic platform that will improve opportunities for the most vulnerable and disadvantaged Latin Americans.

The Nubank chief executive hopes his decision will inspire a new generation of Latin American entrepreneurs to redefine success. “It’s fine to accumulate wealth, but [you need] to invest that wealth in improving opportunities for others,” he says.

Additional reporting by Carolina Pulice in São Paulo

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment

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