Sep. 7, 2018
The digital revolution has the potential to reshape Colombia's economic environment but only through a comprehensive approach.
Digitalization in Latin America has mobilized up to USD200 billion over the past 10 years, and in Colombia, it has contributed to 6.12% of GDP growth between 2005 and 2013. However, in order to ensure that this digitalization process will effectively benefit the economy, Colombia has to confront some major issues like access to internet and regulatory measures.
Many Colombian companies are already concentrating a bulk of their annual investments on the development of these new technologies. In Colombia, the telecoms sector is likely to lead the transformation, since all its players have on-going digitalization programs. Furthermore, other sectors such as financial services and banking are starting to understand the importance of digital transformation for their business.
In order to help companies throughout this process, Colombia has implemented 18 Digital Transformation Centers aimed at supporting more than 11,000 companies with business diagnostics and technical assistance. According to the current Minister of Information Technologies and Communications, David Luna, the digital economy is an opportunity that presents many challenges to Colombian companies. Therefore, through the installation of these transformation centers, businesses will be able to take advantage of digital technologies and be part of the economic engine of Colombia.
The Colombian government is showing great commitment in this regard, yet a lot remains to be done. For example, strengthening online security will require stronger cooperation between the government and businesses as well as the introduction of new IT laws. Furthermore, a better internet infrastructure requires more PPPs. Finally, improving financial inclusion and digital payment require less restriction on digital transaction and more competition to allow businesses to develop more efficient and reliable tools of transaction.
Colombia has experienced great changes over the last decade. Stronger economic growth and reduction in poverty have guaranteed Latin America's fourth-largest economy a spot at the forefront of economic development. World Bank Country Manager for Colombia Issam Abousleiman remarked on these results in a TBY interview, explaining how in the past 15 years extreme poverty was reduced by over 50% to 7.4% while moderate poverty fell to 26.9%.
Digitalization and sustainable economic development can benefit each other if improved internet access and data flows are made to work toward economic growth, social inclusion, and better governance. In this regard, it is fundamental that the government implements and enables a regulatory environment that guarantees more internet access, lowers costs, and builds a skills base that will help to maximize opportunities.
As a study on internet services in Colombia conducted by the Superintendent of Industry and Commerce within the Ministry of Commerce, Industry, and Tourism demonstrates, the current perceptions of digital services are negative among Colombians. The study shows how approximately 45% of Colombians cite the cost of access as the main reason why they do not use the internet while another 28% do not use it because they believe it is not necessary. Finally, 15% do not use it because they cannot afford the devices to connect to it.
Digitalization also requires a comprehensive regulatory environment. The latter has to reinforce consumer trust in the use of the internet and extend protection through intellectual property laws. Within a more regulated environment, a more diversified and competitive economy has the power to enact new online businesses to grow.
Despite Colombia's long way to go to implement a full digital transformation of its industries, the CEO of Everis, Diego Tovar, told TBY: “Most definitely, every sector of the economy in Colombia will be affected by the digital economy in such a way that everyone, from government to healthcare, needs to start thinking about it because this will be determinant in our new world."