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TECHNOLOGY FOR BOP
Leveraging technology to create opportunities for all
By Mariana Rivas
Colombia has been experiencing over the last decades an ever-increasing digital transformation, with more people obtaining internet access, thus providing companies and individuals access to corporate and government services and international markets. As well as becoming a key tool for education and business growth and development. Nevertheless, the digital transformation has also become a source of inequality that exacerbates differences between high and low skilled individuals, large and small firms, and rural and urban areas.
This Base of the Pyramid (BoP) population is a collective with the capacity to generate economic dynamics and assume a role as customers and consumers able to acquire goods and services that fulfill their needs. Nevertheless, this population has historically lacked access to technology and connectivity, especially in rural and rural scattered populations. The absence of technification is a significant obstacle for development and contributes to creating poverty traps and perpetuates inequality. Therefore, designing and deploying technology for the BoP is a major opportunity given that:
- The current government is devoting a significant portion of resources fostering increased connectivity and access to technology
- Potential customers in this population segment represent an underserved market without access to services like automatization and digitalization of information and merchant transactions, thus representing a significant market opportunity
- Technology can be used as means to give access to basic goods and services by lowering the serving costs of traditional or new business models.
Despite this potential and the recent advances, Colombia has still a long way to go in terms of technology access and connectivity:
- 8 million people have no internet access (46% of households have connectivity)1
- Significant asymmetries exist between urban and rural areas: 46% household connectivity in head municipalities vs. and 6 % in scattered rural areas
- Only 6% of rural households with female heads have fixed or mobile internet access, showing significant gender gaps 2
The Challenge
To provide sustainable and inclusive access to technology, technological solutions, and connectivity to an underserved population with low incomes. The access should be provided with an approach based on sustainability, trying to generate market dynamics that ensure long-term access to these products and services instead of being dependent on aid and subsidies. The major challenges for this population in terms of technology access are:
- Closing gender gaps: Female population are significantly behind in technological skill set
- Lack of infrastructure: Rural areas in the country are lagged in terms of connectivity infrastructure deployment, therefore hindering the population’s capacity to adopt new technologies regarding their male peers
- Knowledge: The population in the BoP lack knowledge on the use of digital tools. Training workshops are critical for technological adoption and digitalization
- Finance: Technological development is Capex intensive, and the lower-income population has low access to financing alternatives. Only 62% of Colombian SMEs have no access to financing
Expected Development Outcome
Reducing technology and connectivity access gaps in terms of income, rurality, and gender.
- Improve the economic well-being of the base of the pyramid as a result of increased opportunities created by technology which include access to new markets, services, education and ultimately leading to better incomes
- Create new ways in which people can connect, including increased access to financial capital services (mobile banking)
- Increased job opportunities locally
Enabling Factors
We believe that in Colombia, there is the right environment to scale technology investments:
- Government policy: The current government has invested significant resources and incentivizes the diffusion of technology for the low-income population
- Dynamic competitive environment: The country has experienced increased private investment from telecommunication companies, and new players have entered the market
- Investment in infrastructure: The ministry of technology and telco is leading a project to expand broadband coverage to +3,600 localities in the country, which will reduce the digital gap and improve the quality of life of the population.
Obstacles to scale
- Lack of early-stage financing: SMEs still face financing challenges to invest in new technologies
- Need for blended financing: Public-private alliances might be required to carry out projects.
- Technological adoption: Getting the population familiar with digitalization and the use of devices is of utmost importance before they can proceed with the implementation.
What is AMPLO doing?
- Supporting companies providing technological solutions and financing alternatives for BoP population, aiming to close rural and gender gaps [Elepha, Teaté]
- Developing business plans, financial models and formulating inclusive growth strategies that increase the reach of technologies and exploit a more comprehensive portion of the market [Elepha]
- Promoting the catalyzation of private and public investments into inclusive projects [Elepha]
- Mapping existing financing instruments and investment opportunities to improve matchmaking, identify financing readiness gaps, and catalyze private and public investment [UNDP]
1. MINTIC (2020) Indicadores básicos de TIC en los hogares. Accessed February 8th, 2021.
2. DANE (2020) Mujeres rurales en Colombia. Accessed February 8th, 2020.
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