Latin America
Latin America’s population is highly digital, with more than 82% of the population connected to 4G networks, presenting opportunities for FinTech, EduTech, HealthTech and AgriTech. In particular, FinTech is a sector with high growth potential, especially in Brazil, Mexico, Colombia, Argentina, Chile, Peru, Ecuador, Uruguay and Venezuela.
Mexico has the 12th largest population in the world, with 45% of its population under 25 years of age. There is a great demand for educational services, triggering the growth of private and public institutions of higher education, as well as the emergence and entry of online and blended education offerings. Telemedicine has also been growing in popularity.
Columbia is the second-fastest-growing country in Latin America and has a growing middle class with increasing spending power. The Sharing Economy, AgriTech and FinTech are bright areas for Columbia.
Brazil has a ready environment for tech solutions. Brazil is highly connected, has a growing middle class representing 70% of total households and has seen an 88% urbanisation rate, which indicates that consumers will be more receptive to new trends and technology.
BRAZIL
Brazil is a massive market, placed top 10 globally in terms of size, population and GDP. As with the rest of LatAm, Brazil is experiencing a connectivity hype, with mobile, internet, and smartphone penetration surging. Brazil is at the forefront of this digital transformation, with the country’s digital economy being expected to grow from USD 2.3 billion in 2017 to USD 41.11 billion by 2024. As Brazil continues to urbanise, its consumers are also known to be early adopters of technology.
Given Brazil’s position as the leader for 4G, it is also anticipated to become the first few economies to embrace 5G integration, creating opportunities for technology solutions providers in myriad areas including financial services, telecommunications, and cybersecurity. The country’s manufacturing sector is also moving towards industry 4.0 technology implementation, with an estimated impact of USD 200 billion over the next 5 years. Opportunities for ICT companies also present themselves in the FTTH market. Internet user growth and demands are projected to exceed the CISCO forecasts on the region as the country increases digitization in healthcare and education to face the global pandemic.
CHILE
Chile is the wealthiest economy in Latin America, with continually positive GPD growth since 2010 and low rates of inflation averaging around 3%. Chile also has the highest rates of mobile penetration in the region and with its transition towards 5G technologies, will see a rapid increase in smartphone adoptions. Mobile devices are the primary device for internet access. As traffic continues to increase, with a 5% year on year broadband subscriber growth, consumers will demand for better network infrastructure. Opportunities present themselves in Fiber to the X solution needs and the deployment of 5G is an impending heavy investment trigger for Chile.
Chile is also a hotbed for foreign investment, with significant incentives to draw in foreign companies looking to enter the market. Foreign companies enjoy unique tax benefits, are provided with a 4:1 equity leverage, and have access to Chilean Economic Development Authority (CORFO) Credit Lines. As part of the Pacific Alliance, Chile is a global player and follows international standards of trade regulations. The country has also established significant agreements with many countries, with double taxation agreements in the region and international FTAs. Chile’s eminent fulfilment of three major projects, the enhancement of its international connection, development of its 5G infrastructure, and the creation of a national digital highway, signify great potential for opportunities for digital solutions providers.
COLOMBIA
Colombia is among the strongest growing nations in Latin America, growing faster than the OECD average. Poverty fell from 42% to 27% between 2008 and 2018 as did unemployment from 11.3% to 9.4%. Reforms in the government have reduced informality and improved the business environment. While Colombia is currently experiencing political turmoil, the tech scene continues to bloom.
Colombia is the 4th largest software and IT services market in the region, with growing investment in key sectors such as industrial manufacturing, e-gov, finance, and communications. The government has created significant science & technology parks such as Ruta N in Medellin which aims to be the largest in Latin America. With 11 submarine communications cables and taking 13.1% of all sales in the region, Colombia has established itself as a premier location for Business Processing Outsourcing as well.
The country has also been driving towards digitization and broadband adoptions through its “The Digital Future is for All” plan. Opportunities emerge in the government’s drive towards 5G adoption as while the Telecommunications industry contributes greatly to Colombia’s GDP, mobile adoption rates remain the lowest in Latin America, leaving room for mobile technology solutions providers to enter. The government has also introduced tax exemptions on basic mobile devices to support adoption rates.
Colombian home broadband takes up the majority of internet usage in the country, and with the pandemic accelerating broadband traffic, opportunities arise for FTTH solutions providers. Similarly, Colombian fintech and banking are ripe for solutions providers, with 70% of Colombians currently unbanked. The government pushes for growth in the financial digitisation sector, with specific attention to e-Payments and fintech, and significant potential in Business landing and receivables financing solutions.
MEXICO
Mexico has the second largest GDP in Latin America, behind Brazil and is in the midst of rapid digitisation that is predicted to boost its GDP by up to 15%. Since 2012, the government’s National Digital Strategy has been transforming the country’s digital landscape, focusing on the public sector. On the digital government front, Mexico has improved across international indices since 2018. In 2016, Cisco Systems predicted Mexican internet penetration at 61% by 2021, in 2019, internet penetration had hit 70%.
Mexico is currently acceptable in digital maturity, according to a McKinsey & Company report which measures the ability of citizens to participate in a digital society. The country’s digital foundations remain its weak spot as citizens lack access to high-speed internet and many lack bank accounts. Yet, the government’s focus on public sector digitisation through initiatives such as the gob.mx platform is pushing Mexico towards a “very good” rating. Gob.mx is a one stop platform that allows citizens access to 34,000 databases from 250 government institutions and 5,400 public services, and is the centrepiece of the government’s digitisation efforts.
While the pandemic has slowed down Mexico’s IT sector growth, an IDC report suggests that banking and telecom sectors will see immediate recovery. As the government begins its transition toward 5G, the telecom industry, making up 3% of the country’s GDP, becomes more important than ever. Opportunities for Fibre to The X solutions providers are present in this transition, and is supported by Mexico’s Red Compartida, a modern nationwide broadband wireless 4.5G voice and data network.
Though entry into Mexico is difficult as it is not the most digitally evolved and does not possess strong local talent, the potential available to companies who decide to do so is well worth it.