Even as Latin America and the Caribbean continues to make progress in macroeconomic resilience, the World Bank in its latest report has called for an expansion of digital solutions to drive greater growth and inclusion in these societies.

Amid what it deems ‘relative success’ in the wake of post-pandemic challenges and elevated growth projections of 2 per cent for regional gross domestic product (GDP) in 2023, up from 1.4 per cent previously, the bank contends that growth remains below that for all other regions across the globe. With growth rates of 2.3-2.6 per cent expected over the next two years, the entity said this was still not enough to fast track much needed progress for inclusion and poverty reduction in the region.

“Growth remains inadequate to reduce poverty and create jobs, while fiscal constraints limit necessary investments. Expanding digital connectivity, combined with complementary policies, offers the possibilities to create more dynamic and inclusive societies,” the World Bank said in its newest report titled ‘Wired: Digital Connectivity for Inclusion and Growth’ released on Wednesday.

“The region has proven mostly resilient to the several post-pandemic external shocks, but unfortunately growth remains anaemic,” commented Carlos Felipe Jaramillo, World Bank vice-president for Latin America and the Caribbean, calling on the region to urgently find ways to boost inclusion and growth, improve its governance and build social consensus.

“Digital solutions can be part of the answer as they help to complement structural reforms and to increase productivity, improve services delivery for the population and support government efficiency. We see major opportunities for the region here,” Jaramillo stated.

According to the report, the LAC, which it said has over the last three decades managed to execute well-grounded macroeconomic reforms to insulate itself from a number of shocks since the COVID-19 pandemic, the Russia-Ukraine war and a number of other post-pandemic crises including inflation and high interest rates, continues to be at risk as adversities in the global sphere prevails.

To this end, the powerful international funding organisation in calling for increased public private partnerships around digital solutions, sees their application as critical to combating much of the uncertainties.

“Private and public investment in digital connectivity can stimulate new sectors and jobs, offer new areas of trade, and increase the efficiency, quality and inclusiveness of government programs ranging from education to agricultural extension in remote rural areas,” said William Maloney, chief economist for the LAC at the World Bank.

The chief economist said that while digital connectivity was not a silver bullet for growth, due to its attached disadvantages which could exacerbate existing social inequalities — the region could significantly benefit from a number of wide ranging opportunities tied to a digital society. Before it can do so, the report, however, highlights a number of areas which it said must first be addressed if countries are to reap the benefits.

Some of these the World Bank said includes: the development of infrastructure and wide spread access to mobile Internet, a strengthening of digital and traditional human capital skills and managerial competences to ensure the availability of financing while facilitating efficient government protocols and a supportive regulatory structure along with better governance measures that will utilise digital networks and tools to reduce losses in inefficiencies, public expenditures and spending leakages.

“The costs of interaction with governments are high in LAC; half of administrative services require two or more trips to government offices and long wait times. Digital delivery of government administrative services will therefore be cheaper and appears to be much faster. In addition, to reducing interactions between government officials and citizens, they will also lead to less opportunities for bribes and corruption.

“By producing an accurate and secure way of identification, digital ID systems can facilitate the delivery of a variety of services while reducing public expenditure, detecting financial fraud stemming from identity theft, reducing errors, and promoting social and financial inclusion,” the report stated.

The findings in also acknowledging that cyber incidents are on the rise — increasing by 153 per cent in 2022, further warned that as more government and private services move online, more and more sensitive data will become vulnerable to digital criminals, thus, investments in digital security will be needed to complement and enable the acceleration of this digitalisation in the region.

“Along with investments and innovations in the expansion of digital infrastructure, parallel complementary developments are needed in cybersecurity infrastructure and regulatory frameworks for data privacy, ownership, and use,” the report further highlighted, pointing to 2017 cybercrime cost figures for the LAC which ranged between $US15 billion and $US30 billion, accounting for 0.24 per cent – 0.52 per cent of the region’s GDP.