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The pandemic and the acceleration of digital transformation: An uneven impact

Montevideo, March 2021- According to what was developed in The pandemic and the acceleration of digital transformation: An acceleration forced by circumstances, the pandemic accelerated the transformation processes that were already underway in the countries of the region. This was reflected in indicators such as the increase in the number of registered domains, the change in consumer habits, the increase in online shopping, the growth of e-commerce platforms and those that facilitate teleworking.

Despite the above, digital growth has not been even in all industries and all Latin American countries. Raúl Echeberría, ALAI’s Executive Director, indicates, “When we talk about the digital economy and platforms, we are talking about very dissimilar realities. While, undoubtedly, e-commerce in general has achieved an exponential growth, not all markets have experienced the same boost.”

Among the markets that have been favored, interviewees mentioned delivery services, retail sales services and markets, remote work platforms, medical supplies, the food industry and the sectors related to hardware (computers, tablets, laptops, etc.). However, other sectors have been badly hit, including tourism, the hotel industry, and companies that have not been able to adapt their processes and operations into a digital format.

The COVID-19 crisis has exacerbated pre-existing structural differences among countries and sectors with different digitalization levels. In this sense, Echeberría referred to three big weaknesses or gaps in the region, namely: connectivity, digital skills and digital financial inclusion.

As for connectivity, Echeberría indicated that almost 40% of the Latin American population has little or no access to the Internet. “Without a high-quality connectivity, digital transformation is not possible,” said Echeberría. In line with this, eLAC-CEPAL added, “A large number of companies have not digitalized their processes yet; in some countries of the region, only 10% of the companies have deployed digital sales channels.”

With regard to digital skills, eLAC-CEPAL warned, “The number of workers who can work remotely is limited, either due to the type of work they do or because they lack the necessary digital skills. This reflects the difficulties that the production apparatus and the population face in the continuation of their economic activities and the possibility to generate resources.” In the lockdown context, this gap affects not only the economic and commercial activities but also “other important activities that now rely more heavily on Internet access, such as government services, educational content and telehealth services,” as explained by eLAC-CEPAL.

Lastly, Echeberría warned, “There are large countries in the region where only a small portion of the population has access to a credit card or some kind of online payment method, which is a barrier to the development of e-commerce.

– The original post was published in the LACTLD Report No. 12