Em Conversa looks to uncover the secrets in Latin America (LatAm) that have caused the fintech market to boom, from being worth less than $50million in 2016, to $2.1billion in 2022. This week, we sat down with Jorge Loyola Castro, trade manager at ProChile, the Export Promotion Bureau improving Chilean trade policy, to learn about how businesses can expand from LatAm.
Chile is positioned as the leading innovation ecosystem in Latin America and the Caribbean and as a result, has an increasing number of scale-ups which are looking to expand internationally into new markets, such as the UK.
To understand what is driving this desire to expand and how it can be made possible, we sat down with Loyola Castro:
Can you tell me more about the company and your role within it?
ProChile is an institution which sits within the Ministry of Foreign Affairs. Its main roles include the promotion of the exportable supply of goods/services and the diversification of exports and the attraction of foreign investment and tourism. It also looks to strengthen the image of the country whilst simultaneously contributing to the country´s sustainable development.
ProChile’s network is extensive, with its HQ in Santiago, the institution has one office in each region of the country and 56 offices abroad across 41 countries.
I work as a trade manager at the London office in charge of the sectors of innovation and technology.
What are some digital growth trends we’re seeing in Chile?
I would say we’re seeing four different trends. The first is the development of global connection and robust connectivity. Specifically, the expansion of fibre optic. In late 2019, Google finished installing its first underwater fibre optic cable that connects Los Angeles, California with Valparaíso, Chile.
Chile currently has 11 cross-border fibre optic connections, which will be joined by 20 further connections that will be ready by 2024. Projects to expand the fibre optic network in Chile included investments of US$450 million and expanded the network from 18,000 to 36,000 kilometres, which doubled the fibre optic infrastructural backbone
The second trend is the development of 5G. The 5G network started being deployed throughout the country during 2022. Now, the goal is to reach a minimum coverage of 90% within the next 3 years (2024).
The third trend revolves around data centres. Ranging from country stability, telecommunications infrastructure, access to a matrix of competitive electricity generation with an important renewable energy contribution, as well as the potential of national and regional markets have transformed Chile into the Southern Cone hub for the installation of data centres. (Google, AWS, Oracle, Microsoft, Huawei, Ascenty)
The last trend I want to mention is with internet penetration and the penetration of mobile connections. With 26.32 million cellular mobile connections (137 per cent) Chile has the highest penetration of mobile connections in LatAm. Internet penetration is the highest in the region as well: at 92 per cent with 17.7 million users.
What is ProChile Global X doing to improve the digital growth sector in Chile and LatAm?
ProChile Global X is a soft-landing program for Chilean companies willing to expand toward Europe and UK. The program was a response to both:
- the need of diversification on the destination of Chilean services
- increasing appetite of Chilean companies to reach new latitudes beyond LatAm.
The program aims to improve the digital growth sector in Chile and LatAm by connecting Chilean digital companies – very often with offices in LatAm – with European innovation ecosystems. This could help them to take their developments to the next level. Furthermore, Europe is seen as a market of validation for its products and services. Allowing them to jump to larger markets or investors, i.e. US.
How does the Chilean digital growth sector compare to that of the rest of the world?
LatAm: key player in the region on doing business and competitiveness
Chile is considered the economy with the best business climate in Latin America. The World Bank ranks the country first in its Doing Business Index, while the Institute for Management Development (IMD) places it at N°1 in Latin America in its competitiveness ranking (N° 38 globally).
Other notable stats include:
- #1 Business Environment Ranking EIU 2021-2025
- #1 Most Competitive Country IDM 1997-2021
- #1 Economic Freedom Heritage Foundation 2022
- #1 Global Innovation Index GII 2022 (in LatAm)
Since 2017 onwards, it has been leading LatAm in the Global Talent Competitiveness Index:
- +900,000 companies created in the last five years with the company-in-a-day process.
- +130 private and public support entities for entrepreneurs and innovators.
World: one of the leaders on digital infrastructure
The Chilean economy is considered one of the most open and connected in the world, maintaining 30 international agreements with 65 economies that represent 87 per cent of global GDP and 63 per cent of the Earth’s population.
#7 worldwide – Country with the highest mobile data for each user. Source: Broadband Reports 2020 – OECD
#2 worldwide with the highest fixed broadband speed. Source: Speedtest Global Index 2022
What are some unique challenges associated with the region/country in the digital growth space?
While Chile has made a lot of progress in fostering entrepreneurship and innovation, access to venture capital funding in Chile and generally in LatAm remains relatively limited compared to such regions as USA or Europe.
Furthermore, Chile has a relatively small domestic market. This presents a challenge in terms of market size and scalability for digital businesses. Thus, startups face limitations in expanding their business nationally and need to look for opportunities internationally.
Plans for the future (roadmap and growth plan)
ProChile Global X will keep connecting Chilean digital businesses with European partners, incl. UK and presenting the wide range of innovative solutions Chile has to offer. The most important task for us would be to keep providing our business with market information, so they can take a step into European markets and identify the opportunities to grow together with our local partners.