(C) Digital Transformation in Latin America - A Leapfrogging Opportunity

IN1551
Case Study
Digital Transformation in Latin America:

Leapfrogging and Social Impact
09/2019-6358
This case was written by Felipe Monteiro, Senior Affiliate Professor of Strategy at INSEAD and Senior
Fellow at the Mack Institute for Technological Innovation at Wharton, and Anne-Marie Carrick, Senior
Research Associate at INSEAD. It is intended to be used as a basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation. It is intended to be used
as a basis for class discussion rather than to illustrate either effective or ineffective handling of an
administrative situation.
This case was developed with funding from the Emerging Markets Institute at INSEAD.
Copyright © 2019 INSEAD. Revised © September 2019 INSEAD
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One key advantage that emerging markets have in the digital space is a lack of
legacy. Many companies in mature markets have more than 20 years ingrained
cultures, mindsets, business models, ways of working and, of course, technology
landscapes that are not necessarily conducive to operating with an agile innovation
approach. 1
Laurence Buchanan, Partner, Ernst & Young’s Advisory business,
who leads Digital for the EMEIA region2
Leapfrogging – using the lack of existing infrastructure as an opportunity to adopt the

most advanced methods – has been a highly effective strategy for developing
nations over the last few decades.3
One of the most well-known examples of leapfrogging was the M-Pesa mobile payment system
founded in Kenya in 2007, which allowed people access to banking services through their mobile
phones. It leapfrogged the traditional banking services and created a mobile banking revolution,
and enabled financial services to reach the unbanked population at a lower cost, since no
physical infrastructure was involved. M-Pesa had helped lift 194,000 Kenyans out of poverty (2%
of Kenyan households)4 and enabled 185,000 women to leave subsistence farming and move
into business or sales employment. With 33 million people using the mobile wallet 5 and 96% of
households outside the capital Nairobi having at least one M-Pesa account, it transformed
Kenya’s economy.67
With the digital revolution in full swing, there was a potential wealth of opportunities for emerging
markets to leapfrog other technologies. Latin America was no exception. The region’s rapid
adoption of mobile vs fixed devices to access the internet was one example that “impacted
sectors including fintech, ehealth, edtech, civictech and the growth of ‘smart’ cities. By 2020,
analysts estimated smartphone penetration in Latin America would reach 71% (well above the
global average of 66%).8 With the anticipated arrival of 5G in the mid-2020s, they also predicted
the region would have over 50 million users by 2025, with Argentina, Brazil and Mexico leading
the way.9
Latin America had advanced mobile internet usage globally, with its mobile ecosystem providing
a large scalable platform for entrepreneurs and innovators (Exhibit 1). Digital innovations offered
opportunities to address social issues such as financial inclusion, poor healthcare, inequality and
limited access to education. With more transparency, the digital revolution could also reduce
corruption and increase efficiency.
1 Leapfrogging Innovation: Digital Technologies in Emerging Markets. Performance, Volume 8, Issue 2, May 2016.
2 EMEIA = Europe Middle East India and Africa.
3 How Blockchain Could Help Emerging Markets Leap Ahead. Harvard Business Review. Vinay Gupta and Rob Knight,
May 17th 2017.
4 How Blockchain Could Help Emerging Markets Leap Ahead. Harvard Business Review. Vinay Gupta and Rob Knight,
May 17th 2017.
5 https://gomedici.com/m-pesa-mobile-phone-based-money-transfer-global-presence 2018
6 http://www.techweez.com/2017/05/10/safaricom-fy-2017-data-m-pesa/, May 2017.
7 https://www.cnbcafrica.com/news/east-africa/2017/01/04/mpesa-economic-impact-on-kenya/ January 2017.
8 The Mobile Economy Latin America and the Caribbean 2017.GSMA, 2017.
9 The Mobile Economy Latin America and the Caribbean 2017.GSMA, 2017.
Copyright © INSEAD 1
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However, there were barriers to overcome. Despite a wealth of natural resources in Latin
America – which covered 15% of global land mass – growth in the past few years had been
sluggish, attributed in part to “declining fertility rates, an end to the commodity boom, and the
risk of increased protectionism.”10 Education and inequality were still bottlenecks, and related
outcomes lagged behind those of OECD countries. Despite improvements in secondary and
tertiary education, the average performance of 15-year olds remained well below the OECD
average. There were still challenges to be overcome to make education accessible, relevant and
of a high standard. According to an OECD 2016 report, over 50% of 15-year-olds lacked the
basic competence to perform well in the labour market; less than 2% were considered top
performers in mathematics compared with the OECD average of 13%. Inequality was one of the
reasons for the region’s poor performance in the Programme for International Student
Assessment (PISA) that evaluated education systems worldwide by testing 15-year-olds in key
subjects. Chile, the highest Latin American performer in the PISA rankings, scored 10% lower
than the average (Exhibit 2). Despite this, another OECD report found that more than 12 million
adults in Latin America participated in some form of online education, including courses,
webinars, podcasts, collaborative software, access to materials etc.11
The knock-on effect for business development and innovation was huge, with profound
implications for the labour market. Low skill sets were part of a cycle of low productivity, low
wages, long hours, job insecurity, poor working conditions and little training.12 The digital age
required different skill sets, many of which were lacking in emerging and developed markets
alike (see Exhibit 3). Edtech ventures mushrooming in the region offered a solution.
The region’s infrastructure was poor, but digital transformation offered a means to improve it
through ‘smart cities’, edtech, civitech and ehealth (Exhibit 4). There was no shortage of
innovative ventures, with 20 ‘unicorns’ and thousands of other tech ventures springing up. The
region was attracting more foreign investment with the latest unicorn, Quinto Andar, that had
raised series D funding of US$250 million in September 2019, led by SoftBank Group
International. The fintech sector was instrumental in fighting for greater financial inclusion by
offering services through mobile. According to an article in Forbes13 the civictech sector had
taken off more than in most other regions, with national and local governments developing digital
strategies to increase connectivity, improve services and enhance accountability.
In the digital race, Latin America was lagging behind in some respects while surging ahead in
others. Innovation was key to develop technologies necessary to embrace the digital age.
Undoubtedly, the potential existed for the region to emerge as a winner, but though the
opportunities were vast they would require government support and private investment to break
down barriers. But the climate appeared to be changing:14 Could Latin America deliver on the
potential of the digital revolution and take advantage of the leapfrogging opportunities? How
could these be translated into social impact by offering solutions to some of largest challenges?
10 Where Will Latin America’s Growth Come From? McKinsey Global Institute, April 2017 – discussion paper
11 https://www.endeavor.org.mx/sala-de-prensa/endeavor-insight-edtech-las-habilidades-del-futuro-a-un-solo-clic
February 2019
12 Broadband Policies for Latin America and the Caribbean: A Digital Economy Toolkit, OECD 2016
13 https://www.forbes.com/sites/annefield/2017/02/28/3-5m-fund-to-boost-civic-tech-ventures-in-latin-
america/#468f56da43ca 2017
14 N.B. The case focuses primarily on Argentina, Brazil, Chile, Colombia, Mexico and Peru, although some graphics and
statistics may refer to Latin America and the Caribbean area (LAC).
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The Digital Revolution
Ones and zeros are eating the world. The creating, keeping, communicating, and
consuming of information are all being digitized, turned into the universal language of
computers. All types of enterprises, from small businesses to large corporations to
non-profits to government agencies, are going through a “digital transformation,”
turning digitization into new processes, activities, and transactions.15
“At least 40% of all businesses will die in the next 10 years...if they don’t figure out
how to change their entire company to accommodate new technologies.”16
John Chambers, Chairman, Cisco Systems
Digital had touched all sectors of business and society. With 22% of purchases made online and
67% of the world population owning a mobile device,17 the digital revolution was well underway.
From 2013 -17, mobile had one billion new subscribers, with an average annual growth rate of
5%.18 New business models were disrupting traditional ways of doing business – be it Uber,
Facebook, Google, Amazon, Paypal, Skype, Spotify or WeChat. In the hospitality industry, the
largest player owned no beds (Airbnb); in retail, the largest company owned no stores
(Amazon).19 In response, incumbents were reinventing their businesses. One example was
IBM’s supercomputer Watson that combined artificial intelligence (AI) and sophisticated
analytical software.
It was difficult to pinpoint when the digital revolution began or how to define it. . “The digital
economy” – one based on digital computing technologies – sometimes called the “internet
economy”, the “new economy”, or the “web economy” (Exhibit 5) - emerged over several
decades. The term “digital” traced back to 1679, with Gottfriend Willhelm Leibniz’s development
of the modern binary number system published in the Explanation of Binary Arithmetic, which
linked it to ancient China.20 (click here for more information).
Significant landmarks in the history of digital included the arrival of mass-market personal
computers (PCs) in the mid-1980s. In the 1990s, organisations and businesses computerised
processes with the maturing of digital design tools and robotized manufacturing equipment. The
2000s witnessed the arrival of outsourcing and “offshoring” operations and services. Henceforth,
multinational enterprises could exploit once-incongruent corporate IT systems to improve
coordination.
There were two fundamental dimensions to digital transformation for all businesses: i) cutting
costs, ii) getting closer to the customer.21 Connectivity was key. Analysts estimated that 63% of
15 https://www.forbes.com/sites/gilpress/2015/12/27/a-very-short-history-of-digitization/#7e5d58f49ac2
16 Digital Economy Compass, April 2017, Statistica
17 https://www.gsmaintelligence.com/research/2019/02/the-mobile-economy-2019/731/ 2019
18 From McKinsey report, November 2017. Source: OECD, Ofcom UK, ONS, Parks Associates, Payments UK, AIMIA
Institute, emarketer.com, Moneysupermarket.com, Google, Comscore, MinTic Colombia.
19 How digital is changing the way of doing business, Digital/McKinsey, Gustavo Tayar. November 2017.
20 Source: https://www.forbes.com/sites/gilpress/2015/12/27/a-very-short-history-of-digitization/6/#4ce87ae82e62
21 United Nations Conference on Trade and Development – UNCTAD, Information Economy Report 2017. Digitalisation,
Trade and Development.
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the world’s population would have access to internet by 2021 and 50.5% by mobile.22 In 2018,
smartphone sales reached almost 1.5 billion.23 People spent more time on mobile devices as the
number of apps grew. Cisco estimated that there would be a seven-fold increase in global
mobile data traffic by 2021.24 Yet almost half the world’s population was still ‘offline’, notably in
the poorest, most populated countries (Exhibit 6).
Connectivity to customers, suppliers and other stakeholders allowed organisations to turn

processes and devices into networks to capture the vast amounts of information they received.
Businesses used digital platforms that connected all players rather than doing business through
intermediaries.25 Platforms were an integral part of the digital economy, used for making
payments (e.g. Paypal) and ecommerce (e.g. Amazon, Alibaba). Businesses often used third-
party platforms for new projects rather than building them in house (Exhibit 7).
Most digital initiatives were built on “3rd Platform technologies” including mobile, cloud
computing, big data/analytics and social technologies. Innovation accelerators such as IoT,
robotics, 3D printing and security, all depended on these platforms and were considered key
growth factors for many businesses.26
Another dimension was the advent of social media, and with it new tools for data analysis.
Facebook monthly users increased from 1 million at the end of 2004 when it was launched, to
600 million at the end of 2010, and 2.4 billion by the second quarter of 2019. By January 2019
there were 3.48 billion social media users globally – an increase of 288 million (9%) since
January 2018.27 Social media platforms connected 2.8 billion people – almost a third of the
world’s population (Exhibit 8).28
If you make customers unhappy in the physical world, they might each tell six
friends. If you make customers unhappy on the internet, they can each tell 6,000
friends.
Jeff Bezos, Founder and CEO, Amazon.29
Key technologies underpinning the evolving digital economy included advanced robotics,
artificial intelligence (AI), the Internet of Things (IoT), cloud computing, big data analytics, 3D
printing and digital payments (Exhibit 9).
For global manufacturing firms, digitalization influenced all stages of the supply chain, from
inbound logistics and supplier management to internal processes and customer management.30
In the finance industry, fintech was disrupting traditional ways of banking and investing, with new
currencies emerging such as Bitcoin. In healthcare, digital was improving processes. Big data
analysis allowed hospitals to understand how patients reacted to specific medicines. Cities were
22 Statista Digital Market outlook 2017

23 Gartner’s through Statista 2019
24 http://www.zdnet.com/article/mobile-data-traffic-will-increase-7-fold-from-2016-to-2021-cisco-says/ February 2017.
25 https://auriga.com/blog/digital-transformation-history-present-and-future-trends, 2016
26 https://auriga.com/blog/digital-transformation-history-present-and-future-trends, 2017
27 https://wearesocial.com/blog/2019/01/digital-2019-global-internet-use-accelerates, 2019
28 https://wearesocial.com/blog/2019/01/digital-2019-global-internet-use-accelerates, 2019
29 Digital Economy Compass, Statista, April 2017
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becoming “smarter” with the development of connected cars. Services such as Uber were
transforming transport. Education was reaching a wider audience through online courses and
webinars. The digital transformation was a global phenomenon that reached every country and
sector of society.
The Future
In 2018, there were 23.14 billion IoT connected devices – an increase from 22 billion the
previous year – and the figure was estimated to reach 75.44 billion by 2025,31 driving the
development of 200,000 new apps. By 2020, spending on cloud services would be more than
US$500 billion, three times the 2016 level.32 According to International Data Corporation (IDC),
worldwide investment in digital transformation initiatives would reach US$2.2 trillion in 2019,
60% more than in 2016.33
The vast amounts of data collected through these platforms would transform many sectors,
making it easier for businesses to target and respond better to customers’ requirements. Yet
despite the scale of digital’s effect on business and society, it was unclear where it would
ultimately lead.
We are at an inflection point as digital transformation efforts shift from ‘project’ or

‘initiative’ status to strategic business imperative. Every (growing) enterprise,
regardless of age or industry, must become ‘digital native’ in the way its executives
and employees think, what they produce, and how they operate. At the same time,
3rd Platform technology adoption and digital transformation is happening much faster
than most expected and early competitive advantages will go to those enterprises
that can keep pace with the emerging DX34 economy.
Frank Gens, Senior Vice President and Chief Analyst, IDC35
Gartner estimated that by 2021 the physical, financial and healthcare worlds would be so
digitized, that 20% of all activities would involve at least one of the top seven digital giants..36 IDC
forecast that 30% of G2000 companies would allocate capital equal to 10% of revenue by 2020
to develop their digital strategies.37
Digitalization created vast opportunities but required a new mind-set and willingness to embrace
change. Companies and individuals needed to accept the reality of constant change to find a
place in the digital world.38 Regulation would also play a role in the digital revolution – it could
influence the rate of digital adoption and its overall impact (Exhibit10):
31 https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/ 2019
32 http://www.businesswire.com/news/home/20161101005193/en/IDC-Sees-Dawn-DX-Economy-Rise-Digital-Native,
2016.
33 International Data Corporation (IDC) has been chronicling the emergence and evolution of the 3rd Platform, built on
cloud, mobile, big data/analytics, and social technologies, for nearly a decade. 2016
34 DX economy is another name for the digital transformation
35 www.businesswire.com/news/home/20161101005193/en/IDC-Sees-Dawn-DX-Economy-Rise-Digital-Native, 2016.
36 According to Gartner, June 2017, these were: Google, Apple, Facebook, Amazon, Baidu, Alibaba and Tencent.
37
https://www.idc.com/getdoc.jsp?containerId=IDC_P32575 November 2018
38 https://auriga.com/blog/digital-transformation-history-present-and-future-trends DATE
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The full impact of the digital economy will only be apparent if and when all (these)
features mature, and become integrated and widely used. However, various factors
such as data security risks, data localization pressures, as well as data collection
and privacy concerns, may significantly slow down its development.39
Leapfrogging Opportunities in Emerging Markets

Digital technologies are enabling smart companies to overcome obstacles in
emerging markets and harvest rich rewards. Every day, digital start-ups show their
capacity to disrupt traditional business models and fulfil consumer demand in fresh
ways.40
Digital transformation required basic infrastructure, including access to broadband and the
internet. While these were taken for granted in developed economies, for emerging markets they
could be challenging. By the end of 2018, it was estimated that 51.2% of the global population
were online (3.9 billion people).41 In developed countries, use of the internet had grown from
51.3% in 2005 to 80.9% at the end of 2018 compared to developing countries, 7.7% in 2005 and
45.3% in 2018. 42
Broadband connectivity in developing countries (when available) tended to be slow, expensive,

hence less productive. Nevertheless, emerging markets had several advantages over developed
economies in the digital age, including the chance to leapfrog using innovation.
It [leapfrogging] has been a highly effective strategy for developing nations over the
last few decades.43
As indicated, M-Pesa’s digital leapfrogging had reached 33 million users in Kenya by 2018, with
new operations in Asia and Eastern Europe.44 Another leapfrogging example was India’s
Aadhaar biometric ID system, introduced in January 2009 by the government. By November
2017 it was the world's largest biometric ID system with over 1.19 billion members (99% of the
adult Indian population) and was hailed as “the most sophisticated ID programme in the world”.45
However, the system had caused controversy, many seeing it as a mass surveillance system
that “infringes on privacy rights, which were enshrined by India’s Supreme Court in 2017.”46
In China, Alibaba, the ecommerce giant with a market capitalization of US$454 billion by July
2019, was another example.47 On its creation in 1999, analysts claimed ecommerce would never
work because few people in China had credit cards, internet penetration was low, logistics were
lacking,; government controlled the internet and the Chinese distrusted doing deals online.
41 https://news.itu.int/itu-statistics-leaving-no-one-offline/ December 2018
42 https://news.itu.int/itu-statistics-leaving-no-one-offline/ December 2018
43 How Blockchain Could Help Emerging Markets Leap Ahead. Vinay Gupta and Rob Knight, Harvard Business Review,
May 2017.
44 https://gomedici.com/m-pesa-mobile-phone-based-money-transfer-global-presence 2018
45 Adhaar most sophisticated ID programme in the world: World Bank - Daijiworld.com”. Daiji World. March 2017.
46 https://time.com/5388257/india-aadhaar-biometric-identification/ September 2018
47 https://ycharts.com/companies/BABA/market_cap 24th January 2018.
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Tencent, another success, built a digital ecosystem in China, and had a market capitalization of
US$391 billion in August 2019.48 It was the parent company of WeChat, the most popular instant
messaging platform for smartphones.49
One of the new ways of working to emerge from the digital revolution was blockchain, a
technology that also held leapfrogging potential (Exhibit 11). Analysts believed there was a huge
opportunity to invent fresh solutions that were adapted for emerging markets.50
“If M-Pesa and similar services could lift tens of thousands of people out of poverty,
imagine what a full-scale transformation built on blockchain might do […]. Nations
that have somewhat efficient systems might lack the incentive to adopt blockchain
technologies at this time, (but) if they do, the many ways they might leapfrog
developed nations are limited only by the imagination of billions of people whose first
real access to governance and trade infrastructure will look entirely 21st century.
Those are big dreams and we should not be surprised if some of the world’s next
leading megabrands and global platforms are born far away from the traditional
centres of technology development. The future is global and so is blockchain
innovation.”51
As a developing market, Latin America could use these new technologies and ways of working
to solve social issues such as financial inclusion, inequality, education, healthcare and
corruption.
Latin America – Leapfrogging and Social Impact

The region (Latin America) is growing again. However, the years of economic
stagnation have halted social progress, and Latin America and the Caribbean needs
to spur the economic recovery and find new engines of growth to reduce poverty and
boost prosperity.52
Latin America covers Mexico, Central America and South America. It has a population of 600
million, a combined area of 20.16 million km² (15% of global land mass)53 and encompasses 27
countries. Population density is high in cities but averages 21% in rural areas (Exhibit 1).
In emerging markets, digital technologies enable truly entrepreneurial businesses to

do something extraordinary: to identify hitherto unrecognised demand and overcome
long-standing institutional and other obstacles to reach vast pools of potential
customers.54
48 https://finance.yahoo.com/ 2019
49 How digital is changing the way of doing business, Digital/McKinsey, Gustavo Tayar. November 2017.
51 How Blockchain Could Help Emerging Markets Leap Ahead. Vinay Gupta and Rob Knight, Harvard Business Review,
May 2017.
52 http://www.worldbank.org/en/region/lac 2018
53 NB. Some exhibits refer to LAC = Latin America and the Caribbean islands;
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As a developing region, Latin America had an opportunity to grow through digital transformation.
On a B2B level, companies that lacked the resources to invest in IT systems in the past could
use new technologies to leapfrog to digital. However, it was important for these to be used in an
ethical and responsible manner, with multinationals playing a key role in accelerating their
adoption. Tânia Cosentino, President Microsoft Brazil, explained:
We are committed to making AI accessible and valuable to all individuals and

organizations, extending human ingenuity with intelligent technology. We are
committed to sustainable development and with our work we have been able to
touch on several UN SDGs. We have decided to focus resources, including our
technology, specifically on (...) addressing inequality in access to digital skills,
especially for at-risk youth, supporting humanitarian action to build stronger
communities and use technology to protect our planet.
I am very happy to see that we have projects in Brazil supported by the AI for Good
initiative. Microsoft has been here for 30 years fulfilling our mission of empowering
every person and organization to achieve more, with a commitment to contributing to
building a better and more competitive future for the country.55
The explosion of smartphone usage indicated that the region was leapfrogging broadband fixed
telephony. In Latin America, more people connected to the internet via mobile broadband. The
number of subscribers implied a huge untapped potential for mobile broadband services. In
Brazil, Latin America’s biggest market and country, people spent 4.45 hours daily online (via
mobile), coming third behind the Philippines and Thailand (the world average was 3.14).56
55
Source: Interview with case authors 2019
56 Globalwebindex (Q2 & Q3 2018). Figures represent the findings of a broad survey of internet users aged 16-64. Via
Hootsuite January 2019
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More than a billion individuals across Latin America will be connected to a mobile
network by the end of the decade, equivalent to about three-quarters of the region’s
population. Some markets in the region will be approaching saturation by this point,
but many will still have plenty of room for growth. But the real story in Latin America
is not about market penetration: it is about the rapid migration to smartphones and
super-fast mobile networks and the impact this is having on society and the region’s
economies.57
Innovative Players
Latin America is witnessing the emergence and growth of a new species of

companies that is transforming our business landscape: the Technolatinas i.e.
technology-based private companies born in the region. Most of them are
entrepreneur-driven digital ventures with an international footprint. They can already
be counted by the thousands and are spreading beyond the internet into new spaces
like biotechnology, digital medicine, renewable energy, software security, space
tech, fintech and agtech.58
The entrepreneurial community was thriving in Latin America. For a group of companies that first
gained attention at ‘Disrupt San Francisco’ in 2012, Ignacio Pena coined the term
“TechnoLatinas”59 and by 2019, Latin America had 20 “unicorns” 60 (Exhibit 12) with the newest
one added to the list in September 2019, QuintoAndar, after it raised a US$250 million series D
led by SoftBank Group International:
In a round that is considered massive by U.S. standards but is positively gargantuan

in Brazil. The round takes the company ‘to unicorn status,’ according to CEO Gabriel
Braga, although he would not disclose its exact valuation.”
Mini Silicon Valleys were emerging from Santiago to Mexico City, and the region was attracting
venture capital investment. Start-up clusters were emerging in Brazil, in San Pedro Valley with
Porto Digital, and CESAR in Recife. 61
Industry analysts attributed this to many factors: governments that enabled large investments in
fibre-optic cable in the region and abroad; a fall in the price of smartphones leading to rapid
market adoption; the appetite for social media in Latin America; and smart capital.62 In Brazil,
there were more than 130 million Facebook users – the third-largest user base worldwide.
Instagram users were more than 80 million – the second largest user base worldwide, with more
than 120 million WhatsApp users, making it the most widely used communication in Brazil with
91% penetration among internet users (Exhibit 13).63
57 https://www.idgconnect.com/idgconnect/opinion/1020747/look-mobile-ecosystem-latin-america January 2018

58 TechnoLatinas, Latin America Riding the Technology Tsunami. 2016 www.tecnolatinas.comN>B Agtech is Agriculture
technology.
59 The Rise of the TechnoLatinas: A Full-Fledged Start-up Movement Emerges in South America. Alex Williams.
TechCruch.com. 2012.
60 A unicorn is a privately held startup company valued at over US$1 billion. The term was coined in 2013 by venture
capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.
61 https://techcrunch.com/2017/01/19/brazil-a-look-into-latin-americas-largest-startup-ecosystem/
62 Innovation and Social Media Hub, The Cipher Brief, Omar Téllez (Moovit), 26th January 2016.
63 McKinsey & Company. Brazil Digital Report. April 2019.
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In the past, attracting investors to the digital start-up space in Latin America had been difficult in
the absence of a track record of established VC firms in the region, the immaturity of the new
generation of entrepreneurs, and scarcity of exit opportunities,64 but this was changing:
Much has changed in this region in the past 15 years in terms of its digital ecosystem
creation and the use of new technologies. Today, with more than six countries
deserving investment-grade debt by S&P (Brazil, Chile, Colombia, Mexico, Panama
and Peru, among others), Latin America is radically different.65 Successful
technology companies and venture capitalists that have accompanied these
countries have reaped generous benefits.66
There had been a series of major exits in the region including Mercado Libre (NASDAQ), B2W
Digital (BOVESPA), TOTVS (BOVESPA), Globant (NYSE) and Linx (BOVESPA). These
increased investors’ confidence and demonstrated that Latin America could compete in the
digital world. Large businesses such as Stefanini, a Brazilian IT company present in 41
countries, added to the newfound assurance as they expanded beyond national borders.67
Successful digital entrepreneurs exploited the penetration of social and mobile technologies to
drive growth. São Paulo, Rio de Janeiro, Buenos Aires and Bogotá individually surpassed New
York City in terms of Facebook, Skype or WhatsApp subscriptions and usage.68 In 2013, The
Wall Street Journal named Brazil “the Social Media Capital of the Universe”.69
In parallel to the techno-latinas, tech start-ups with a social impact mission emerged at the
forefront with a new business model. Ricardo Podval, CEO of Civi-co, explained:
The Brazilian entrepreneurial ecosystem has been growing every year, with 39% of
the economically active population in the country owning their own business. This
potential focused on social impact is the key to realize the social innovation needed
in the largest country in Latin America. In the age of Industry 4.0, automation, IoT,
we still have the challenge of bridging the social inequality gap of our society. And
this has to do with a new way of doing business where profit only makes sense with
a purpose.70
Civi-co was an innovative co-working space in São Paulo that only hosted organizations and
companies with civic/social projects. Its purpose was to create communities between these
teams with a mutual goal of social transformation.71
The Future: 5G and Beyond
The mobile ecosystem (network operators, infrastructure service providers, retailers, distributors
of mobile products etc) was estimated to contribute 5% of regional GDP in 2016.72 Brazil had
64 https://techcrunch.com/2015/08/11/top-vcs-chasing-digital-companies-in-latin-america/
65 N.B. Brazil was downgraded in January 2018 from BB to BB-.
66 https://techcrunch.com/2015/08/11/top-vcs-chasing-digital-companies-in-latin-america/ 2015
67 See INSEAD case study “Stefanini and the Digital Revolution: Transforming and Being Transformed”; Felipe Monteiro
and Gabriel Rozman. 2017
68 https://techcrunch.com/2015/08/11/top-vcs-chasing-digital-companies-in-latin-america/ 2018
69 The Social Media Capital of the Universe. The Wall Street Journal. Loretta Chao, 5 February 2013.
70 Interview with case authors September 2019
71 https://officesnapshots.com/2018/02/13/civi-co-coworking-offices-sao-paulo/ 2018
72 The Mobile Economy Latin America and the Caribbean 2017, GSMA, 2017.
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witnessed a 4G growth spurt, predicted to reach 57% by 2020 from a mere 10% at the beginning
of 2016.73 Analysts projected that the gap with the rest of the world with regard to 4G adoption
rates would be closed by 2020, reaching 42% compared to a global average of 44%.74
Although operators and consumers in 2019 focused on 4G, 5G would begin to expand globally
and by 2025 was predicted to exceed 50 million, with Argentina, Brazil and Mexico leading the
way.75 Brazil was a pioneer in developing 5G. In June 2017, it signed an agreement with the EU,
US, South Korea, Japan and China to develop a 5G platform, becoming the sixth country of a
body that would determine how 5G technology would operate in the future.
The adoption of 4G and the development of 5G had serious implications for the future of the
Internet of Things (IoT). The Brazilian Development Bank (BNDES) and the Ministry of Science,
Technology, Innovation and Communications (MCTIC) announced in 2017 that they would
subsidise the development of an IoT national plan, prioritizing smart cities among other areas.
The national bank estimated that IoT could bring revenues of US$132 billion by 2025. Pilot
projects included the hospital 4.0 initiative, aimed at reducing queues for hospital services and
cases of infection. Another initiative, Fazenda Tropical 4.0, sought to boost productivity and the
quality of rural production using data that could help to monitor biological assets.
One of the main elements that digital transformation promised was social impact. Although the
digital revolution touched all sectors of business and society, this case focuses on the
leapfrogging potential and social impact for the following areas in Latin America: edtech, fintech,
smart cities, ehealth, and civictech.
Edtech – Improving Education and Reaching a Wider Audience

The Association for Educational Communications and Technology (AECT) defined educational
technology (edtech) as:
The study and ethical practice of facilitating learning and improving performance by
creating, using and managing appropriate technological processes and resources.76
Edtech (integrating technology into education) promoted a more diverse learning environment as
well as learning how to use the technology itself. Analysts estimated that global investments in
edtech would reach US$252 billion by 2020. In Latin America, the e-learning market had grown
over 14% annually since 2013, becoming the fourth largest edtech market globally after North
America, Western Europe and Asia in terms of revenue.77 The sector expected to generate over
US$3 billion by 2023, with a CAGR of more than 4% during 2018-2023.78
Edtech was a way to reach a wider audience through online education, skipping the traditional
classroom methods used in the developed world. Edtech offered solutions to the region’s
76 Richey, R.C. (2008). "Reflections on the 2008 AECT Definitions of the Field". TechTrends. 52 (1): 24–25.
77 https://www.theedadvocate.org/which-country-is-leading-the-edtech-movement/ 2018
78 https://www.businesswire.com/news/home/20180813005342/en/Latin-America-3-Billion-E-Learning-Market August
2018.
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education challenges, gained global recognition and secured investment, boasting the potential
to reach people in remote areas that lacked resources (schools and teachers) – at all stages of
education.
As in Asia, investors are taking notice and spending capital to support edtech. The
region [Latin America] has also adopted numerous educational policies that
encourage digitalization. The recent trend of globalization, talent migration, and
consistent improvements in corporate competencies and individual talent grooming
are some of the key factors attributing to the growth of the Latin America e-learning
market. Government initiatives to set-up sophisticated learning systems are
encouraging the migration of many global players to the Latin American market.79
According to UNESCO in 2019, more than 12 million adults in Latin America participated in
some form of online education including online courses, webinars, podcasts, collaborative
software, access to materials, etc.80 The surging levels of mobile and internet access as
described above was one reason edtech opportunities were increasing.
Besides an increase in mobile devices, there are other reasons why Latin Americans
are turning to online educational resources. According to the latest Endeavor
INSIGHT EdTech report, top reasons include the simplicity of studying online (versus
in a classroom setting), better job opportunities, among others. Colombia, for
example, is the Latin American country with the most searches for online courses to
better job opportunities.81
Several trends drove edtech growth in Latin America. Companies adopted digital learning
through bring–your-own-device (BYOD) policies that gained government support. Cloud-based
and SaaS adoption was increasing, allowing companies to offer employees programmes online.
One example, the platform Colegium based in Chile, provided apps for schools and parents that
included billing, collections, library administration and communication tools. Another Chile-based
venture, Ludibuk, provided a digital library for K-12 pupils.82
Many start-ups emerged in the early childhood education space in the region. These ‘babytech’
ventures raised US$260 million between 2015 and 2017.83 Companies such as the Mexican
Kinedu helped families understand early childhood development needs and facilitated parenting
with an algorithm that curated personalized activities for babies. MOOCs (massive open online
courses) helped to bridge the gap between workplace skills demand and traditional educational
offerings. In Latin America there was lack of high-skilled tech talent such as software
developers. Ventures including Platzi and Crehana helped to close the talent gap with online,
live-streamed courses that covered marketing, data science and analytics. Learning languages,
in particular English, was a challenge for the region, but platforms such as Open English helped
thousands of Latin Americans.
79 https://www.businesswire.com/news/home/20180813005342/en/Latin-America-3-Billion-E-Learning-Market August
2018
February 2019
82 12th Grade children.
83 https://techcrunch.com/2017/05/06/baby-tech-draws-seed-funding-and-a-few-big-rounds/ 2017
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Some edtech start-ups in Latin America were founded with a mission to impact society, including
the Brazilian FazGame a platform where children learn by creating a gaming tool. Through its
gamified educational technology, students could improve the quality of their basic education.
Another venture dedicated to social impact was Agenda.edu a multiplatform for communication
management and engagement in educational environments that worked as a link uniting
schools, students and guardians.
We have solved the problem of educational communication by making it more

efficient, practical, safe, reducing costs, increasing school sustainability and
positively impacting educational performance. We are an engagement and education
management platform in educational environments. We now want to become
technology hubs within educational environments. Our biggest differential is the fact
that we are concerned with the pedagogical side and therefore prepared to train and
advise schools We are the Rappi of education..84
By 2019, Agenda.edu was present in 1,600 schools in 600 municipalities in Brazil (see Exhibit
14 for other examples of edtech ventures in the region). With increased investment, the growth
of the edtech segment and government interest, there was huge potential to impact education
for all ages and abilities, taking a different trajectory (compared with developed countries) and
providing education through technology, leapfrogging the bricks and mortar to reach the wider
population, even in remote regions.
Fintech and Financial Inclusion in Latin America

With more than 1,100 (fintech) companies in the region offering various innovative
solutions to Latin American consumers and firms. Beyond the rapid growth in terms
of new start-ups, however, there are also noticeable signs of consolidation, which
demonstrate the level of maturity of the ecosystem as a whole, as well as the
growing interest expressed by foreign and local investors, which translates into
investment. Furthermore, important trends, such as the emphasis on providing
services for small and medium enterprises (SMEs) and segments previously ignored
by the traditional financial system, continue to emerge, confirming Fintech’s potential
to spur development in the region.85
Defined as “computer programmes and other technology used to support or enable banking and
financial services”,86 fintech was hailed as a facilitator of financial inclusion in emerging markets.
According to the Global Findex database in 2019, 69% of adults – 3.8 billion people – had an
account at a bank or mobile money provider, which was considered a key element to escape
poverty. This was an increase from 62% in 2014 and 51% in 2011.87 From 2014 to 2017, 515
84 Interview with Professor Fabian Salum, FDC, May 2019

85 Report on Fintech in Latin America 2018: Growth and Consolidation, IDB and Finnovista. 2018
86 https://en.oxforddictionaries.com/definition/fintech 2018
87 https://www.worldbank.org/en/news/press-release/2018/04/19/financial-inclusion-on-the-rise-but-gaps-remain-global-
findex-database-shows 2018
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million adults obtained an account and 1.2 billion since 2011, according to the Global Findex
database.88
Those who had limited access to financial services – the “underbanked” – relied on cash or
cheques, leaving them vulnerable to theft and fraud. High fees were charged at bank locations
for cash deposits, cashing cheques, money orders and transfers. Fintech offered the
underbanked a ticket to financial inclusion and a way to gain access to financial tools and
services at a reasonable cost. Examples included crowdfunding, robo-advisors, digital
payments, peer-to-peer (P2P) or social lending, and insurance telematics.
The number of fintech startups has increased dramatically in Latin America, giving a
significant boost to ambitions for greater financial inclusion. The Inter-American
Development Bank and Finnovista say the number of financial technology startups in
the region increased by 66% between 2017-18.89
In Latin America, where nearly half the population was unbanked,90 there was a surge of activity
in the fintech industry – analysts estimated that the market would exceed US$150 billion by
2021. Technologies such as mobile money were one way of bridging the gap. With the cost of
mobile devices falling and penetration of mobile phones exceeding 100%, there was an
opportunity for the unserved population to access financial services through mobile and
eliminate the middleman (Exhibits 15 & 16).
Since 2014, the share of adults making or receiving digital payments has risen by
about 8 percentage points or more in such economies as Bolivia, Brazil, Colombia,
Haiti, and Peru. About 20% of adults with an account use mobile or the internet to
make a transaction through an account in Argentina, Brazil, and Costa Rica. By
digitizing cash wage payments, businesses could expand account ownership to up to
30 million unbanked adults—almost 90% percent of whom have a mobile phone”91
Fintech offered easy payment methods to both businesses and customers. In Brazil, for
subscription-based businesses, services included Vindi. Ebanx facilitated cash payments for
online purchases. For payment through smartphones in-store PicPay had the solution. Paulo
Veras, co-founder and former CEO of 99Taxis described how fintech helped his business
improve people’s lives:
Banking and access to credit have been historically restricted to a privileged few in
most emerging markets. Modern digital players have been creating a whole new
fintech industry which broadens access to financial services, enabling more people
to improve their lives. We developed a pre-paid card aimed at drivers that became
the first financial instrument for hundreds of thousands of people previously excluded
89 https://www.publicfinanceinternational.org/news/2019/03/fintech-growing-rapidly-latin-america 2019
90 https://www.brinknews.com/fintech-is-transforming-latin-americas-financial-sector-heres-how/ 2019
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from the system, giving them more control over their finances while lowering security
risks.92
In January 2018, China’s Didi Chuxing acquired 99 Taxis for approximately US$600 million, 93
one of many partnerships between Uber competitors worldwide. 99Taxis had 18 million users,
600,000 drivers, and was present in 1,000 cities.94
New technological capabilities spurred rapid expansion, but regulation was critical to creating the
right environment for mobile money ecosystems to thrive. In some countries, fintech had faced
stiff opposition from banks who saw it as a threat. Governments played a key role in facilitating
the growth of fintech services. In Colombia, the government paid out childcare support and other
benefits for military families via mobile money. In Ecuador, VAT rates were lower on purchases
made via a mobile wallet as an incentive.95 In Mexico, regulatory barriers to opening a bank
account were relaxed for low-value, low-risk accounts, making it easier to get into the banking
system. In Peru, government, financial institutions, telcos and other services collaborated in the
creation of BiM, a fully interoperable domestic mobile money platform.96 Mathias Fischer, director
for regulatory issues at Brazil’s Fintech Association noted:
These fintechs are easing access for stores to accept credit and debit cards,
consumers who previously didn’t have access to a credit card or a prepaid card now
have access to that technology. The recent regulation stimulated this.97
Brazil’s Central Bank introduced regulations for payment institutions in 2013. A quarter of fintech
start-ups focused on payments, making it the most competitive sector in the country according to
data released at the end of 2017 by the Inter-American Development Bank and Finnovista.98
PagSeguro, which provided online and in-store payment services including mobile services for
small businesses in Brazil, was launched in 2006 as an online platform to provide the digital
payment infrastructure necessary for ecommerce to grow in Brazil. At the end of January 2018, it
raised US$2.27 billion in an IPO on the New York Stock Exchange, according to Bloomberg.99
Nubank, founded in Brazil in 2013 as a financial services company, offered a no-fee, low-interest
credit card that customers could manage through a smartphone application. 100 “Nu”, the
Portuguese word for naked, was said by its Colombian-born founder David Vélez to convey
“transparent, without prejudice, devoid of traditional rules.”
92 Source: Interview with case authors September 2019.

93 https://www.nytimes.com/2018/01/03/technology/didi-chuxing-99-brazil-ride-hailing.html 2018
95 https://thesparkgroup.com/blog/2016/10/17/digital-marketing-affects-fintech-latin-america/
96 https://www.linkedin.com/pulse/look-latin-americas-fintech-space-marcelo-
licht?trk=hb_ntf_MEGAPHONE_ARTICLE_POST, 2016
97 http://www.latinfinance.com/magazine/2017/november-december-2017/regulators-put-fintech-regulations-into-place-in-
latin-america 2017
98 http://www.latinfinance.com/magazine/2017/november-december-2017/regulators-put-fintech-regulations-into-place-in-
latin-america
99 https://www.bloomberg.com/news/articles/2018-01-24/brazil-s-pagseguro-raises-2-3b-in-largest-nyse-ipo-since-snap,
24th January 2018.
100 https://aws.amazon.com/solutions/case-studies/nubank/ 2018
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We are, in fact, a technology company created to provide financial services. The
credit card is just the beginning. 101
Within two years, Nubank had received 5.5 million credit card applications. Industry experts and
start-up partners estimated it had more than 1 million clients by 2018. (In contrast, in the United
States, a more mature market, Simple Bank, a start-up that worked with checking accounts and
debit cards, amassed 100,000 customers in five years of activity).102 By 2019, Nubank’s clients
had risen to 8.5 million, making it the largest online bank outside of Asia,103 the same year it won
‘unicorn’ status.
Other fintechs emerged with the specific goal of creating social impact and overcoming the
issues of financial inclusion (Exhibit 17). In Brazil, the financial services platform Banco Maré
served people at the base of the pyramid – the unbanked. Created in the Mare favela in Rio, one
of the most dangerous drug-trafficking areas in the city,104 with the motto “A simple bank for a
simple life”, Banco Maré offered an accessible and free platform of financial services. It was
based on a mobile app and supported with local presence in kioscos, local shops that offered
Banco Mare’s services and provided customer support.
We understood that the first demand was bill payment. Being there is important to
know what we should offer. We listened to them and developed our service portfolio.
We also saw that more than developing a local currency, this public wanted financial
inclusion. Our service is one of Maré's goals, to bring good service to an
underserved public, even treated badly. We have no doubt that we have impact. It is
much more challenging to show the investor that I have revenue than impact. My
impact is visible, all of our customers are from the community, our staff are, and we
empower them, so we don't care today to measure our impact.”105
Another venture created to reduce poverty was Brazilian-based IOUU, with a mission to
revolutionize and reinvent the lending industry by connecting small businesses with investors to
alleviate poverty. It helped nano-entrepreneurs, micro-entrepreneurs, and SMEs who needed
fast low-interest loans.106 The P2P lending platform offered an interest rate on the loan from
1.3% a month to 3.9% – up to eight times less than traditional bank loans. The investor
benefitted from a higher return than in the established market.
Our goal is to unite technology for the purpose of impacting micro and small
businesses. They are 30% of the national GDP, 52% of the payroll, with short life
span and cannot get credit or can only pay very expensive (second largest bank
spread in the world).107
Bruno Sayão – CEO and founder of IOUU, explained:
101 http://epocanegocios.globo.com/Empresa/noticia/2017/02/ate-onde-vai-o-nubank.html August 2017

102 https://epocanegocios.globo.com/Empresa/noticia/2017/08/nubank-tem-mais-de-1-milhao-de-clientes-e-fecha-1-
semestre-com-receita-de-r-236-milhoes.html 2017.
103 https://www.vox.com/recode/2019/6/5/18654454/nubank-softbank-valuation-brazil-banking-funding 2019
104 https://www.bbc.com/news/world-latin-america-26809732 2014
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Each month, we draw up a report related to the previous month’s. The main question
is: What is the social impact of these loans in the peer-to-peer community within the
context of the IOUU. We bring the borrower and the investor together. For example,
there's a hot-dog stand in Rio de Janeiro that had a loan from us. We talked to him
and suggested that he invite two or three of the investors who are from Rio de
Janeiro to his tent to eat hot-dogs.108
The transaction value of the fintech market in Latin America amounted to US$92,713 million for
2017, and CAGR 2017-21 was estimated to be 18.2%, resulting in an estimated total of
US$180,756 million by 2021. The market’s largest segment was digital payments, representing a
total transaction value of US$102,573m in 2019, and an average transaction value per user of
US$401.109 Analysts projected the number of fintech users would increase to 298.86 million by
2023.110
Smart Cities – Improving Citizens’ Lives

A smart city can be described as one that applies information and communication
technologies with the aim of providing an infrastructure that guarantees sustainable
development and increases in the citizens’ quality of life.111
Among various definitions, a “smart” city can refer to ICT-based solutions to issues in
governance, quality of life and essential services, transportation (mobility), economy, people and
environmental issues.112 With a large portion of its population concentrated in metropoli with
more than 10 million inhabitants (Exhibit 1), most cities in Latin America had problems with
traffic, pollution and government inefficiency. “Smart cities” promised to address these issues
and were a hot topic in Latin America, with several initiatives in the IoT space. Telefonica and
Huawei opened a laboratory in Brazil to develop IoT applications, made available to partners
and third-party developers with the goal of boosting:
IoT ecosystem and drive innovation in the IoT space…Telefonica and Huawei also
have a smart meter project with Chilean water utility Kamstrup. The group
successfully tested connectivity management of a telemetry solution for residential
water meters. Telemetry will allow clients to monitor their daily use, facilitate
accurate invoicing by avoiding estimated use, and will detect leaks.113
In Mexico, AT&T in collaboration with GE and local authorities installed cameras, microphones
and sensors in streetlamps to help authorities estimate crowd size and check vehicle speeds.
For motorists, these helped locate parking spaces. Ultimately, they saved energy costs,
monitored air quality, and could issue alerts on extreme weather conditions.114 In Mexico City,

109 Source: Statista Digital Market Outlook 01.2017
110 https://www.statista.com/outlook/295/103/fintech/south-america 2018
111 Top Smart Cities in Latin America. Mihnea Bataraga, May 2017. Citiesdigest.com
112 Smart Cities in Latin America, Realities and Technical Readiness. Amarta Calderon, Gustavo Lopez and Gabriela
Marin, pp15-26. © Springer International Publishing, 2017
113 The Mobile Economy Latin America and the Caribbean 2017. GSMA, 2017.
114 The Mobile Economy Latin America and the Caribbean 2017. GSMA, 2017.
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Rutgers University experimented with technology that allowed buildings to absorb smog – a
huge problem in the capital.
Colombia’s capital Bogotá tackled congestion problems with the introduction of fast transit
buses, bus corridors and interconnected bicycle paths. Electric taxis appeared on the roads
through a partnership with the BYD Company. Medellin, capital of Colombia’s mountainous
Antioquia province, was said to be one of the “smartest” cities in Latin America, using gondolas
and escalators to integrate mountain communities with the rest of the city.
Rio de Janeiro received a major capital injection to “smarten” the city with the creation of an
integrated operations centre, in collaboration with IBM, that enabled real-time monitoring of
criminal activity, traffic emergency data and video surveillance cameras that warned the
authorities of unrest, traffic problems and other threats.115
Ride-sharing app Uber, according to its website, had the second and third-largest presence after
the US in Brazil and Mexico.116 Uber was the region’s market leader, followed by the Brazil-
based Easy (formerly known as Easy Taxi), and Cabify, a Spanish company. Successful local
competitors included Colombia’s Tappsi and Brazil’s 99 Taxis.
With over 180 million urban dwellers, Brazil was among the most coveted ride-hailing markets,
with several competitors vying for a piece of the pie. In 2018, Brazil had more than 20 million
users of the service, 500,000 drivers, and was present in 100 cities with more than 1 billion
trips.117
115 Top Smart Cities in Latin America. Mihnea Bataraga, May 2017. Citiesdigest.com
116 https://uberestimator.com/cities 2019
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Transportation has been a very analogic industry for over 100 years. Finally
technology and connectivity are catching up and bringing efficiency and more
options into the mix. For example, finding a taxi before 99 was created could take up
to 40 minutes. That wait time was reduced to 2-3 minutes. You also see a new push
for shared vehicles, from bicycles, scooters to pooled cars, which all contribute to
decrease traffic.
In smart cities, which are just now becoming a reality, vehicles (and thus people)
flow at an easier and more predictable pace. Using AI and distributed data gathering,
traffic lights adapt their timing in real-time to provide the best conditions for
decreasing traffic jams. Some cities claim to have reduced the time to get from A to
B by 10-20% by rolling out such capabilities at scale. That saves citizens hundreds
of hours per year of commute time.
Some apps, such as Didi, integrate private cars, public transit and all other options in
a single app. They make it very easy for any citizen to pick the fastest or cheapest
way to reach their destination. Based on all of this data, the whole city gets an
upgrade, bus routes can be adjusted, as well as the real-time configurations of
reversible lanes.118
Paulo Veras, co-founder and former CEO, 99Taxis
Boomera, a ‘circular economy’ company based in Brazil, tackled the issue of third-party waste,
developing a range of solutions from research to the coordination of collection, recycling, and the
production of new products. In 2019, 20% of its revenues came from third-party waste
management, with the remaining 80% generated from sales of its products (canvas and resins)
that used the waste as raw material. It had 400 active clients including P&G, Nestlé, Unilever,
Track & Field and C&A. Guilherme Brammer, CEO and founder of Boomera, explained:
The idea is to turn the customer's garbage into new products - or products that come
back to the company (packaging that comes back in another format, for example). Or
if you can't go back to the company, find out what to do with this disposal. We plug
into the business process with our solution development intelligence, our collection
network and our factories. When the solution goes beyond what we do indoors, we
look for partners with expertise in a particular manufacturing process. Our differential
with competitors is the vertical integration of the process; we are in logistics, product
pipeline design… we deliver product recycling and innovation in another line.119
118 Source: Interview with case authors September 2019.

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When I made the decision to quit the business executive's role in companies and
found my own company in 2011, I began looking at Brazil and discovered something
that was invisible to me and still is for many - there are more than 500,000 people
who live in landfills and take their daily livelihoods into the illegal landfills or
dumpsters. We visited many of these and now have more than 200 cooperatives
working in the ecosystem we created. In addition, we witnessed people who have
just R$20-R$30 (Reais) a day to buy food for the family – this exists in the 21st
century in Brazil.”
Ehealth – Building Sustainable Health Systems

Building sustainable health systems in emerging economies is one of the biggest
challenges of our time. However, following the path of established health systems in
developed economies is not the answer. With so many types of innovation available
today, emerging economies have an opportunity to bypass development stages that
were previously unavoidable and sidestep the pitfalls of entrenched systems. We call
this leapfrogging.120
Healthcare required urgent investment and attention in the region. The outbreak of the Zika virus
in 2016 was a reminder of the constant threat of epidemics. There was also a rise in chronic
illnesses such as cardiovascular disease, cancer and diabetes, which put increasing pressure on
the healthcare systems and required innovation (Exhibits 18 & 19). However, experts warned
countries in Latin America that they should not replicate the path that developed economies had
taken, as they risked “manoeuvring themselves into financially untenable situations that are
worse than those developed economies face today.”121
An alternative was ehealth, defined by the World Health Organisation in 2018 as “the use of
information and communication technologies (ICT) for health”:
120 Health Systems Leapfrogging in Emerging Economies Ecosystem of Partnerships for Leapfrogging. The World
Economic Forum. Vincent Forlenza and Arnaud Bernaert in collaboration with BCG. 2017
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They had at their disposal multiple disruptive technological innovations, alternative
operating models and behaviour change initiatives that were not available for
developed economies when they first began to address NCDs (non-communicable
diseases).122
Bottlenecks in the handling of public and private health institutions’ processes,
patients and even waste have also increased the demand for e-health solutions and
attracted VC investors.123
Eduardo Grytz, partner at Sao Paulo-based VC firm Performa Investimentos.
Latin American countries were managing larger investments in health than ever before and
would need to make forward-thinking choices about how to allocate these additional resources.
They also had another advantage:
There were fewer sunk costs of existing infrastructure and equipment, lower fixed
costs from building overcapacity, weaker vested interests and less divided public
opinion compared to developed economies.124
Fiscal pressures may create a leapfrog effect, driving Latin American adoption of
telehealth faster than more developed healthcare markets like North America and
creating a regional hub for digital firms, redefining the medical landscape.125
As healthcare costs and the aging population grew, together with chronic diseases, some
countries in Latin America shifted focus from acute care to monitoring. In Chile, the government
piloted a remote patient-monitoring system in 2014 via the telehealth provider AccuHealth. By
2017, it monitored 9,000 patients, 24 hours a day, from the patient’s home who suffered from
chronic diseases, many in remote areas without a local clinic. Analysts estimated it saved an
average US$4,500 per patient per year.126 AccuHeath planned to expand its activities to one
million patients across Latin America by 2020, notably in Mexico, Brazil and Argentina.
Colombian-based 1DOC3, was founded in 2014 to address the scarcity of trustworthy medical
content available to Spanish-speaking web users. Teaming with doctors throughout Colombia,
the company created an online portal that fielded anonymous health queries in real time. The
ehealth platform connected 490 million Spanish-speaking people with licensed and trusted
doctors. Users found personalized answers to health-related questions, while doctors built an
online reputation, attracted new patients, and created the largest health-related Q&A curated
database in Spanish, free of charge. Within the first month, the site received 10,000 queries,
which within six months grew to 200,000.
Also in Colombia, e-health technology helped connect patients in remote locations with
healthcare specialists, through ventures such as X-rol Telemedicina, a three-year-old startup
that received state funding. As half of Colombia’s population lived in towns with less than 10,000
123 https://www.forbes.com/sites/mergermarket/2018/09/12/latin-america-offers-sound-diagnosis-for-e-health-
investors/#5aca0f74164b
125 Opportunities in Latin America Healthcare Sector – Looking Ahead to 2017. Global Healthcare Intelligence Jan 2017.
126 Opportunities in Latin America Healthcare Sector – Looking Ahead to 2017. Global Healthcare Intelligence Jan 2017.
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inhabitants, these types of companies could also help local insurers and healthcare providers
reduce the cost of specialist treatment for patients in remote areas.127
Prior to launch, 1DOC3 engaged a large network of doctors to field health questions. As the
service became increasingly popular, a more efficient way was required to process user queries.
It used the IBM® Watson™ Natural Language Classifier service running on IBM Bluemix®
technology, and created a cognitive platform that categorized queries in real time, delivering
targeted content for repeat questions, and routing new requests to medical specialists in the
appropriate fields.128
Another example was Dr Consulta, a low-cost clinic in São Paulo, launched in August 2011 to
offer high-quality, low-cost primary healthcare services via a network of medical centres.
Through its platform a patient could schedule appointments near to home or work, at an
affordable price. This was an attempt to address the capacity limitations of the public health
sector in Brazil.
Only 45% of health facilities in the country are public, and are unable to meet 80% of
demand. Compounding the problem in Brazil, 30% of municipalities do not have
hospitals and 25% do not have doctors. As a result, 40% of patients seen by the
public feel that the health care service within the country is poor or very poor. For
this reason, Dr. Consulta began with the aim to solve these problems through low-
cost clinics, with a focus on patients.129
Dr Consulta targeted people without health insurance, locating clinics in low-income

neighbourhoods that were easily accessible. According to ANS, the national health system, 75%
of the Brazilian population did not have a health plan in 2017.
Mexican Nimbo X was founded in 2014 as a “digital patient manager” or system “that presented
itself as an AI assistant to help doctors provide better care for their patients.”130 It helped primary
care providers gain better control of patient information through a digital patient management
system:
We are focusing on the new wave of physicians and clinics. We are in 20 countries.
We want to make healthcare more efficient and affordable. We help physicians with
an internet connection to treat their patients wherever they may be with the
assistance of an easy to use, affordable and powerful application.131
It also offered an analytic service that could suggest medical diagnoses and treatments to
facilitate the physician-patient interaction during consultations.
Revenue in the “ehealth” market in Latin America amounted to US$458 million in 2017, with an
expected CAGR from 2017-20) of 22.3%, resulting in an estimated market worth US$837million
by 2020.
127 https://www.forbes.com/sites/mergermarket/2018/09/12/latin-america-offers-sound-diagnosis-for-e-health-
investors/#5aca0f74164b
128 https://www-03.ibm.com/software/businesscasestudies/us/en/corp?synkey=C733086K42590B22 2016.
129 Dr Consulta website January 2018.
130 http://ehealthreporter.com/en/pais/mexico/ 2017
131 http://ehealthreporter.com/en/pais/mexico/ 2017
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Civic Tech – Increasing Trust and Transparency
This digital transformation is recasting the relation between states and citizens.
Digital citizens are asking for better services, more transparency and meaningful
participation. Their rising expectations concern the quality of the services city
governments ought to provide, but also the standards of integrity, responsiveness
and fairness of the bureaucracy in their daily dealings. A recent study shows that
citizens’ satisfaction with public services is not only determined by the objective
quality of the service, but also their subjective expectations and how fairly they
consider they are being treated.132
Civic technology (civictech) enabled engagement, participation and better relationships between
the people and government by enhancing citizen communications and public decisions,
improving service delivery and infrastructure. It included IT and civic applications, platforms
supporting government bodies, institutions, and other software that enabled these goals. Digital
communications provided a foundation for political and economic exchanges.133
Growth is back in the Latin American and the Caribbean (LAC) region after years of
remaining subdued. Lack of trust in public institutions, however, weighs down on
opportunities for further growth and investment. Political transitions across the region
can provide an opportunity to enact reforms that strengthen institutions and underpin
economic development.134
National and local governments developed digital strategies to increase connectivity, improve
service and enhance accountability. According to an OECD report in 2017, 135 75% of the 23
countries it surveyed had developed comprehensive digital strategies, including Uruguay Digital,
Colombia’s Vive Digital and Mexico’s Agenda Digital.136
In Mexico City, Laboratorio para la Ciudad was a hub for civic innovation and urban creativity.
Formed in 2013, it used small-case experiments and interventions to improve specific
government services with the goal of a more transparent and responsive local government. It
directed an open government law for the city that encouraged residents to participate in the
design of public policy.
According to Forbes,137 the civictech sector had taken off in Latin American faster than in most
other regions. In 2017, the Avina Americas and Omidyar Network alliance announced a US$3.5
million fund to develop for and not for profit civictech ventures called the Latin American Alliance
for Civic Technology (ALTEC).
132 https://www.oecd-forum.org/users/80160-carlos-santiso/posts/29680-going-digital-restoring-trust-in-government-in-latin-
american-cities Jan 2018
133 https://www.forbes.com/sites/quora/2017/09/19/what-is-civic-technology/#5c79d4fa3ecc 2017
134 http://www.oecd.org/dev/PolicyNoteOnLatinAmerica_2019(2018).pdf
135 https://publications.iadb.org/en/publication/15675/panorama-de-las-administraciones-publicas-america-latina-y-el-
caribe-2017 2017
136 https://www.oecd-forum.org/users/80160-carlos-santiso/posts/29680-going-digital-restoring-trust-in-government-in-latin-
american-cities Jan 2018
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The goal is to invest in civic tech platforms that can deliver significant impact in
promoting civic engagement with the ultimate objective of improving the workings of
democracy.... It’s the next iteration of Accelerator Fund for Civic Innovation.
Launched in 2013 to kickstart the civic tech sector in Latin America, the accelerator
invested US$2.3 million in over three years in 26 platforms and apps in nine
countries in Latin America. Some examples: Caminos de la Villa, based in Argentina,
a platform to map slums in Buenos Aires, and A Tu Servicio in Uruguay, which
provides timely information about public health services.138
Another example was the Brazilian company SmartSindico that developed a tool to help social
housing condominium managers with the complex challenges they faced without hiring an
administrator. Running condominiums was manual, time-consuming and inefficient. By cutting
out the administrator, SmartSindico offered a complete condo-management platform with
services such as financial control, individual water reading, communication, educational content
and access controls. All management was by smartphone apps. In 2018, it served 20,000
apartments in 130 municipalities in 22 states.
This improved the quality of life, disseminating knowledge to condominiums,

facilitating management and social relations with friendly and transparent tools,
generating positive social impact on communities. It reduced delinquency and
improved quality of life of low-income condominium residents, with positive impacts
on safety as well.139
Challenges
The digital revolution opened up potential opportunities for Latin America countries to leapfrog
with innovation and have greater social impact, but could they deliver? To prosper from digital,
government had a key role in building the necessary ecosystem.
If governments want to make the digital revolution a priority, a forward-looking digital

strategy should be put forward that can effectively and positively shape the digital
agenda in each country as well as in Latin America. This means creating a clear,
transparent, predictable and business-friendly environment that allows growth in
terms of investment, innovation and productivity, thus leveraging the fourth industrial
revolution.140
Although basic services such as water supply and electricity had improved, the quality of roads,
urban transport and communication141 affected how the benefits of the digital economy were
distributed across society, in addition to impacting productivity and social inclusion. Despite the
number of technology companies striving to make an impact through digital, the majority were at
an early stage. Would they survive the digital revolution and increased competition?
140 The Mobile Economy Latin America and the Caribbean 2017, GSMA, 2017
141 OECD/CAF/ELAC 2015
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Would the challenges outweigh the opportunities and be a hindrance to progress, or could these
countries leapfrog their way to digital leadership? Albeit the digital revolution was well underway
in Latin America and the potential for social impact was huge, the question was could technology
help the region overcome its immense societal challenges?
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Exhibit 1
Key Data for Selected Latin America Countries
Country Total GDP per Urbanisation Internet Users Internet Users Active Social Active Social Mobile Mobile Active Mobile Active Mobile
population capita of population (millions) - penetration Media Users Media Users - Subscriptions Subscriptions Social Media Social Media
(millions) (US$)† (%)* (%) (millions) penetration (millions) vs Population Users Users -
(%) (%) (millions) penetration
(%)
Argentina 44.9 10045.1 92 41.59 83 34 76 60.51 135 31 69
Brazil 211.6 11026.2 87 149.1 70 140 66 215.2 102 130 61
Chile 18.27 15130.2 88 15.04 82 14 77 26.4 145 13 71
Colombia 49.66 7698.4 81 34 68 34 68 57.49 116 31 62
Mexico 131.5 10385.3 80 88 67 88 67 110.7 84 84 64
Peru 32.74 6453.9 78 24 73 24 73 39.08 119 23 70
*World Bank end of 2018 † Worldometer.info 2018 Source: Hootsuite, January 2019
GDP Growth in Latin America and the OECD (annual %)
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Note: Growth projections from the IMF for OECD countries and from ECLAC for Latin America. Source: OECD calculations (2018), based on IMF (2018) and ECLAC (2018)
Exhibit 2
PISA Results
Source: Pisa 2016
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Exhibit 3
Global Talent Competitiveness Index 2019
Source: Global Talent Competitiveness Index (GTCI) 2019
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Exhibit 3 (cont’d)
Brazil Global Talent Competitive Index (GTCI) score vs. the group of “competitors”
Note: the size of the bubble indicates the size of the country population
Source: Global Talent Competitiveness Index (GTCI) 2019, Brazil - Country Brief
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The evolution of the GTCI score for Argentina, Brazil, Chile and Mexico to Switzerland (ranked N°1) and
the USA (ranked N°3). The Latin American countries remain constant but the developed countries’ scores
are increasing.
Source: https://gtcistudy.com/the-gtci-index/#gtci-historical-view (2019)

Source: Global Talent Competitiveness Index (GTCI) 2019
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Exhibit 4
Global Ranking of Ease of Doing Business
Source: Bloomberg 2019
Key development traps that hinder higher inclusive growth in Latin America
Source: OECD/CAF/UN ECLAC (2019), Latin American Economic Outlook 2019: Development in Transition, OECD
Publishing, Paris.
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Exhibit 5
Definitions of ‘Digital Economy’
Source Definition Focus
Tapscot 1996: The Digital Economy: No direct definition called it the “Age Said to have first coined the term
Promise and Peril in the Age of of Networked Intelligence” where it is “digital economy”. Emphasised that
Networked Intelligence “not only about the networking the digital economy explains the
technology…smart machines…but relationship between the new
about the networking humans economy , new business and new
through technology” that “combine technology and how they enable one
intelligence, knowledge, and creativity another
for breakthroughs in the creation of
wealth and social development.
Lane 1999: Advancing the Digital “…the convergence of computing and Focused on e-commerce and the
Economy into the 21st Century communication technologies in the wider ramifications of the digital
(Assistant to the US President for internet and the resulting flow of economy around issues such as
Science and Technology) information and technology that is privacy, innovation, standards and the
stimulating all of electronic commerce digital divide.
and vast organizational changes.”
Margherio et al. 1999: The Emerging No explicit definition but identified First clear segmentation of the digital
Digital Economy (US Commerce four drivers: “Building out the economy. Emphasised foundations of
Department) internet… Electronic commerce digital economy more than economy
among businesses … Digital delivery itself.
of goods and services…Retail sale of
tangible goods.”
Brynjolfsson & Kahin 2000b: “…the recent and still largely Emphasised understanding the digital
Understanding the Digital Economy: unrealized transformation of all economy from various angles:
Data, Tools and Research sectors of the economy by the macroeconomics, competition,
computer-enabled digitalisation of labour, organizational change.
information.”
OECD 2013: The Digital Economy “The digital economy enables and Main content relates to competition
executes the trade of goods and and regulation in digital markets, with
services through electronic commerce additional discussion of network
on the internet.” effects, interoperability and open vs.
closed platforms.
European Commission 2013: Expert “…and economy based on digital Identifies characteristics of digital
Group on Taxation of the Digital technologies (sometimes call the economy companies:
Economy internet economy) • Innovation through new sources
of finance (venture capital)
• Importance of intangible assets
• New business models based on
network effects
• Cross-border e-commerce
British Computer Society 2014: The “The digital economy refers to an Key digital economy issues seen as
Digital Economy economy based on digital innovation rights, cyber-security and
technologies, although we digital literacy.
increasingly perceive this as
conducting business through markets
based on the internet and the World
Wide Web.”
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Knickrehm et al. 2016: Digital The digital economy is the share of Covers how to improve micro-and
Disruption (Accenture) total economic output delivered from macro-economic growth through
a number of broad ‘digital’ inputs. better used of digital economy
These digital inputs include digital foundations.
skills, digital equipment and the
intermediate digital goods and
services used in production. Such
broad measures reflect the
foundations of the digital economy.”
Dahlman et al. 2016: Harnessing the “The digital economy is the Emphasises the potential of digital
Digital Economy for Developing amalgamation of several general economies to deliver inclusive and
Countries (OECD) purpose technologies and the range of sustainable growth, but only if key
economic and social activities carried enablers are in place.
out by people over the internet and
related technologies. It encompasses
the physical infrastructure that digital
technologies are based on (broadband
lines, routers), the devices that are
used for access (computers,
smartphones), the applications they
power (Goggle, Salesforce) and the
functionality they provide 9IoT, data
analytics, cloud computing)
Deloitte n.d.: What is Digital Digital “...the economic activity that results Sees four main areas of digital
Economy? from billions of everyday online transformation: future of work,
connections among people, customer experience, digital supply
businesses, devices, data and networks and internet of things.
processes. The backbone of the digital
economy is hyperconnectivity which
means growing interconnectedness of
people, organisations and machines
that results from the internet mobile
technology and the internet of
things.”
Source: Extract from 2016 Global Industry 4.0 survey: Building the Digital Enterprise, PwC
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Exhibit 6
Factors in Digital Transformation
Internet Penetration per country in 2018 (in % of total population)
Source: Statista Digital Market outlook 2019
Global Mobile Data Traffic Forecast by Region, 2017 to 2022
Source: Cisco VNI Mobile 2019
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Exhibit 7
Platform Examples and Business Models
Source: various and Statista Digital Market Outlook, April 2017
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Exhibit 8
Global Social Media Statistics
Source: https://wearesocial.com/blog/2019/01/digital-2019-global-internet-use-accelerates Global review January 2019
Source: https://datareportal.com/reports/digital-2019-global-digital-overview 2019
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Source: https://www.statista.com/statistics/278341/number-of-social-network-users-in-selected-countries/ 2019
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Exhibit 9
Key Technologies Underpinning the Digital Revolution
The framework below shows how digital technologies are affecting all aspects of business and society.
Industry 4.0 Framework and Contributing Digital Technologies
Source: Industry 4.0: Building the digital enterprise, 2016 Global Industry 4.0 Survey, pwc.com
Advanced Robotics
Industrial robots had become more sophisticated, agile and flexible. Machinery could rely on relatively
simple algorithms to adjust production processes automatically. With the rise in affordable computing
power and the advent of low-cost sensor technology, the collection and sharing of operational data within
and even across factories had made “predictive maintenance” possible, thus preventing processing errors
or machine breakdowns. As robots become smarter and more agile, the scope for digital automation was
enhanced. Robots could replace some work previously undertaken by people, but they might also work
alongside workers to increase their efficiency and assist them. Through AI or machine learning algorithms,
robots were becoming increasingly sophisticated, with the ability to make “predictions and decisions in an
increasingly automated way, and at large scale”.
Artificial Intelligence
Artificial intelligence referred to the capability of machines to imitate intelligent human behaviour. This
might involve performing various cognitive tasks, such as sensing, processing oral language, reasoning,
learning, making decisions, and demonstrating an ability to manipulate objects accordingly (Intelligent
systems combine big data analytics, cloud computing, machine-to-machine (M2M) communication and IoT
to operate and learn. With AI software, robots could behave more from the decisions of their human
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creators and operators. The importance of AI was expanding in the world, and was already incorporated
into many products and services − from online search and translation services to real-time traffic
predictions and use in self-driving cars. There was wide scope for applying AI to supporting achievements
of the Sustainable Development Goals (SDGs). For example, IBM was using its AI solution, Watson, to
address development challenges in Africa in the areas of agriculture, health care, education, energy and
water.
Internet of Things: From Embedded Sensors to Smartphones

The Internet of Things (IoT) concerned the extension of connectivity beyond people and organizations to
objects and devices. Sensors were embedded at low cost, not only in robots and production equipment,
but also in operator wearable devices, industrial vehicles, buildings, pipelines and household appliances.
This was possible due to the falling prices of sensors that could continuously transmit small volumes of
data with very low power requirements. Wireless transmission allowed remote devices to easily link to
larger systems.
The use of IoT devices raised particular privacy and security issues. They silently listened, watched and
recorded location and activity in the household, the workplace, and/or in public places to assist individuals
with their lives or help companies or governments improve their goods or services or tailor
advertisements.
From Mainframes to Cloud Computing

The shift towards cloud computing could be seen as a step change in the relationship between
telecommunications, businesses and society as a result of massively enhanced processing power, data
storage and higher transmission speeds, accompanied by sharp price reductions. For example, the
average cost of a hard drive with 1 gigabyte storage capacity fell from more than $400,000 in 1980 to
$0.02 in 2016.8 thus enabling users to access a scalable and elastic pool of data storage and computing
resources as and when required.
Big Data Analytics: Making Sense of Chaos

Digitalization allowed data to flow from all corners of industry and society, not only from sensors built into
production lines, but also from electric meters, security cameras, customer service call logs, online clicks,
point-of-sale registers, status updates on social media, and post reactions (such as “likes”). Access to and
analyses of data were becoming crucial for the competitiveness and expansion of companies across
sectors. Manufacturers and exporters increasingly depended on data analytics, not only because they had
digitized their operations, but because they used support services that required access to data, such as
shipping and logistics, retail distribution and finance. This made the handling of data an economy-wide
concern. Big data was a radically new resource that opened new doors for analysis, value creation and
the application of AI.
Three-dimensional Printing
Three-dimensional (3D) printing was expected to significantly alter production and trade patterns. With
software guiding the printing process, 3D printing made it possible for items to be produced when and
where they are needed. 3D printers layered only as much material as was required. This “additive
manufacturing” process contrasted with the old, “subtractive” one of cutting, drilling and bashing metals
and plastic.13 The technology was likely to affect international trade, leading to an expansion of trade in
designs and software and less trade in final physical products. Some developing countries were already
using 3D printing in manufacturing. According to some estimates, 3D printing could generate up to $550
billion in economic gains across industries per year by 2025. The technology had the potential to lower
costs of materials, enable rapid prototyping and shorten supply chains; the 3D printing of parts, where
they were also assembled into final products, eliminated the time and costs of transportation, distribution
and inventory management.
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Digital Payment Systems
Digital payment systems referred to the use of debit and credit cards, online and mobile payments, and of
systems based on distributed ledger technologies, such as blockchain. In general, digital payments made
transactions faster, reduced frictions and lowered transaction costs, offering productivity gains and
enabling firms to engage in trade. They freed banks and merchants from the financial and non-financial
costs of manual acceptance of payments, record keeping, counting, storage, security, delays,
transparency of payment tracking, the risk of non-payment at cash-on-delivery, recipient security and
transportation of physical currency. They could also help developing-country governments address critical
challenges, including black markets and tax avoidance, as well as supporting the financial inclusion of
underbanked populations.
The Importance on Interoperable Systems and Platforms

A central feature of the evolving digital economy was the role of interoperable technology systems and
platforms. The complexity of the technologies and embedded products and services meant that no single
company (or country) could control all system elements. Over time, ICTs had become a group modules
and platforms, ranging from discrete functional elements (modules) to high-level tools, hardware systems
and software environments (technology systems), upon which developers could create a variety of higher
level goods and services for end users (product platforms). As these system elements could be altered
and upgraded without the need to redesign the entire ecosystem, there was no apparent limit to the depth
or complexity of the digital economy. A given product platform, such as a smartphone had been
harnessed as a mobile platform for the delivery of higher level product platforms, such as mobile social
networking and online retail. Platforms were also central to what was referred to as the “sharing
economy”.
Figure I.2. Module and platform layering in the digital
Source: United Nations Conference on Trade and Development – UNCTAD, Information Economy Report 2017.
Digitalisation, Trade and Development.
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Exhibit 10
Digital Overview
Source: www.gsmaintelligence.com 2019
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Exhibit 11
How Blockchain Works
Here are five basic principles underlying the technology.
1. Distributed Database
Each party on a blockchain has access to the entire database and its complete history. No single
party controls the data or the information. Every party can verify the records of its transaction
partners directly, without an intermediary.
2. Peer-to-peer Transmission
Communication occurs directly between peers instead of through a central node. Each node
stores and forwards information to all other nodes.
3. Transparency with Pseudonymity

Every transaction and its associated value are visible to anyone with access to the system. Each
node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that
identifies it. Users can choose to remain anonymous or provide proof of their identity to others.
Transactions occur between blockchain addresses.
4. Irreversibility of Records
Once a transaction is entered in the database and the accounts are updated, the records cannot
be altered, because they’re linked to every transaction record that came before them (hence the
term “chain”). Various computational algorithms and approaches are deployed to ensure that the
recording on the database is permanent, chronologically ordered and available to all others on the
network.
5. Computational Logic
The digital nature of the ledger means that blockchain transactions can be tied to computational
logic and in essence programmed. So users can set up algorithms and rules that automatically
trigger transactions between nodes.
Source: How Blockchain Could Help Emerging Markets Leap Ahead. Vinay Gupta and Rob Knight, Harvard Business
Review, May 2017.
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Exhibit 12
Latin America’s Unicorns
MercadoLibre, Inc. (means “free market” in Spanish) an Argentine company

incorporated in the United States that operates online marketplaces dedicated
to e-commerce and online auctions, including mercadolibre.com. It is Latin
America’s most popular e-commerce site by number of visitors (as of 2016, it
had 174.2 million users in Latin America) with operations in Argentina, Bolivia, Brazil, Chile, Colombia,
Costa Rica, Dominican Republic, Mexico, Ecuador, Guatemala, Honduras Peru, Panama, Portugal,
Uruguay and Venezuela. The company was founded in 1999 in Argentina by Marcos Galperin the current
CEO. In August 2007, MercadoLibre became the first Latin American technology company to be listed on
the NASDAQ under the ticker MELI. MercadoLibre acquired competitor DeRemate’s operations in and
Classified Media Group (CMG) in 2008. CMG established the Latin American e-commerce portals
tucarro.com and tuinmueble.com.
OLX is an Argentinian global online marketplace, operating in 45 countries and is the

largest online classified ads company in India, Brazil, Pakistan, Poland, Portugal and
Ukraine. It was founded by Fabrice Grinda and Alec Oxenford, in 2006 as a Craigslist
alternative for countries outside the United States. South African media group Naspers,
acquired a majority of OLX in 2010 and 95% of the company in 2014. The OLX
marketplace facilitates buying and selling services and goods such as electronics,
furniture, household goods, cars and bikes. OLX had 11 billion page views, 200 million monthly active
users, 25 million listings, and 8.5 million transactions per month in 2014. In 2014 approximately 54% of
OLX’s global traffic, then 240 million unique monthly visits, came from mobile in 2014.
Despegar.com,(Argentina, Decolar in Brazil) is Latin America’s

leading online travel agency, listed on the New York Stock
Exchange. The Despegar website was launched in Argentina in
1999, quickly expanding in the following years to Brazil, Chile,
Colombia, Mexico, Uruguay, Venezuela and the United States. It was only the third IPO since Argentina’s
President Mauricio Macri took office in 2015. Despegar.com, sells airline tickets, travel packages and
hotels in 20 countries around the region. Following its IPO it was valued at almost $2bn and known as the
Expedia of Latin America - Expedia, bought a 16.4 % stake in Despegar in 2015 for $270m. A key
milestone was in 2016 when they reached 50% mobile traffic and launched bus business and local
concierge product as part of destination services for its 4 million customers. The culmination of this
expansion into 20 markets and broad suite of travel products led to the successful IPO on the New York
Stock Exchange in September, 2017.
Globant is an IT and Software Development company operating in Argentina,

Colombia, Uruguay, the United Kingdom, Brazil, the United States, Peru,
India, Mexico, Chile and Spain. It was founded in 2003 by Martín Migoya,
Guibert Englebienne, Martín Umaran and Néstor Nocetti funded by their own
capital. Headquartered in Buenos Aires, it principally initially served clients in the United States and United
Kingdom. Globant opened offices in the city of La Plata, Argentina; and expanded its operations also in
the US (Palo Alto). Globant founded Fonalix with BGH, a company that provides IP Telephony Solutions
for small and medium business in Latin America. It also acquired Openware, an Argentine company
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specialized in Security & Infrastructure In 2010 Globant restructured and launched 8 studios, each one
specializing in a different vertical, practice or industry: Gaming, Big Data, Consumer Experience,
Enterprise Consumerization, Creative & Social, Cloud Computing & Infrastructure, Mobile and Quality
Engineering. The following year they acquired San Francisco-based Nextive a company specialized in the
development of mobile solutions. In 2012 Globant acquired Brazil-based TerraForum, company
specialized in Innovation and Knowledge Management Consulting, Digital Marketing & Social Media and
Software Development. In 2014: FastCompany featured Globant as one of the world’s top 10 most
innovative companies in South America. Globant announced that they will make a Google Play Like
dedicated hardware store for Project Ara forum.
B2W, headquartered in Rio de Janeiro, Brazil, is an online retail company in Latin

America, created as a result of the merger between Americanas.com and
Submarino.com in 2006. It has employees of over 2300 with Lojas Americanas are the
controlling shareholder, with 53.25% of the new company, while Submarino.com
controls 46.75%. The new company had a market share of about 50% of the online
sales industry in Brazil at the time of the merger, with plans to expand through multiple
distribution channels, aiming to compete with larger companies in traditional retail. B2W
operates through the websites Submarino.com, Americanas.com, Shoptime, Soubarato and
Ingresso.com. The company has operations in Brazil, Argentina, Chile and Mexico with plans to expand to
India, Uruguay, China and United States. It offers more than 40 categories of products and services
through the internet, telesales, catalogs, TV and kiosk distribution channels.
TOTVS S.A., is a major Latin American software company established in

1983 which supplies business intelligence, human resources, and supply
chain solutions. The company’s main software products are in the area of
Enterprise Resource Planning (ERP) for client services, finance, human
resources, management, manufacturing, and operations, among others. TOTVS also targets the public
sector and supplies specialized products and services to the education, government, health, and retail
industries. The São Paulo-based company has over 70 units and 15 R&D centers worldwide including
offices in Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Paraguay,
Peru, and Uruguay.
It is the leader in the SMB market in Latin America, with a market share of more than 50% in Brazil and
ranks as the 20th most valuable brand in the country in the Interbrand ranking. In 2016, its net revenue
was more than R$ 2.2 billion. It offers its solutions and is present in 41 countries.
Crystal Lagoons was founded in 2007 by scientist and

entrepreneur, Fernando Fischmann. The first project of the
company was San Alfonso del Mar, Chile. Crystal Lagoons is an
international company with 16 offices around the world, which has
developed and patented a state-of-the-art technology that enables crystal clear lagoons of unlimited sizes
to be built and maintained at very low costs, offering an idyllic beach lifestyle anywhere in the world. The
company is also a leader in innovation and technology, focused on improving people’s lives by helping to
solve some of the world’s biggest problems such as water scarcity, energy, pollution and lack of open
public spaces. The technology is patented in 190 countries and is transforming real estate markets. It is
also offered in the public sector, with its social concept that aims to transform cities into idyllic beaches,
offering paradisiac views steps away from the homes of thousands of people.
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KIO Networks is a company, founded in 2002 by Sergio Rosengaus, with 100%
Mexican capital that offers a broad portfolio of mission critical information technology
infrastructures and services, within the highest levels of quality and international
processes. The company has 32 data centres of high density and availability,
distributed in Mexico, the United States, Central America, the Caribbean and Europe.
KIO Networks Group consists of: KIO Networks, KIO Business Solutions, MásNegocio,
Sm4rt, Dattlas, redIT and Wingu Networks. The group is dedicated to providing highly
complex managed hosting services, cloud services, information security, applications on demand,
connectivity and Big Data, among other services. KIO is the Swahili word for mirror and symbolizes the
essential elements of duality and redundancy - core components of mission critical information technology
services.
Founded in 1982, Softtek is a global provider of process-driven IT solutions with 30

offices in North America, Latin America, Europe and Asia. With 15 Global Delivery
Centres in the U.S., Mexico, China, Brazil, Argentina, Costa Rica, Spain, Hungary
and India, Softtek helps improve time-to-business-solution, lower costs of existing
applications, deliver better engineered and tested applications, and produce
predictable outcomes for top-tier corporations in over 20 countries. Through on-site, on-shore and its
trademarked Global Nearshore™ service delivery models, Softtek teams with CIOs to constantly increase
the business value of IT. Softtek is the creator and a leader of the nearshore industry.
https://99app.com/ The popular transportation startup began in São Paulo in 2012.

Connecting users with taxi drivers and private drivers, It was founded by Paulo Veras,
Renato Freitas and Ariel Lambrecht. In January 2017, 99 received funding from DiDi, a
Chinese transportation network company allowing 99 to open more positions, and deal
with competitors. In May 2017, another round of investments, led by SoftBank, raised
US$100 million. On January 3, 2018, DiDi purchased the remainder of 99 for an
undisclosed amount, but rumoured to be at US$600 million, making it a unicorn valued at over US$1
billion.
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Pagseguro https://pagseguro.uol.com.br/ Created in São Paulo, in 2006 Pagseguro
developed innovative solutions for both users and companies for payments,
purchase automation, sales and transfers. The startup raised US$2.27 billion
through its NYSE IPO in 2018. The Brazilian fintech company was owned by
Brazilian media group Universo Online SA.142
Nubank originally began as Solucoes de Pagamento in May 2013. In less than

two months, it changed its name and began to seriously challenge traditional
banks with their bureaucratic processes. The Brazilian company acquired a value
of US$4 billion after selling a minority stake for US$180 million to Tencent
Holdings.
Rappi was created in Bogotá in 2015. Its marketplace application connects users
with drivers able to deliver almost anything. Its latest funding round was a US$200
million Series D led by DST Global with participation of Sequoia Capital, Andreessen
Horowitz and Endeavor Catalyst.
Ascenty began in 2010 in São Paulo and became the largest data centre in
Latin America. Currently, it has 17 data centres around the world. Ascenty
raised an undisclosed amount of money during its last investment round in June
2017. Its current majority stockholders, Great Hill Partners, bought a stake for US$1.8 billion.
Stone Stone Pagamentos began its payment processing services with debit and
credit cards in 2012. Following its IPO worth US$1.1 billion, earned an
estimated annual revenue of US$5 million. It recently filed for a follow-on
offering aimed at raising US$700 million.
Arco Educação a Brazilian startup, went public at the end of September 2018,
raising over US$220 million. The platform offers basic education programmes
for learning and development. Arco Educação’s technology and services are
also available to more than 425 million students and it’s present in
approximately 1,300 private Brazilian schools.
142 https://www.bloomberg.com/news/articles/2018-01-24/brazil-s-pagseguro-raises-2-3b-in-largest-nyse-ipo-since-snap
January 2018.
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iFood is food delivery platform started in May 2011 in São Paulo, Brazil. Its last
investment round, a Series G worth US$500 million, was in November 2018.
Out of the total amount, US$400 million were committed by Innova Capital and
Naspers to iFood’s holding, Movile, to further invest in the startup.
Since 2012, Gympass has been connecting employees from partnering

organizations with a hefty network of 30,000 fitness facilities. Nowadays,
Crunchbase is reporting more than 141,000 monthly app downloads across 15
different countries. Recently, the startup raised US$300 million from Softbank,
presumably at more than US$1 billion.
Prisma Medios de Pago facilitates online transactions, payments,

transfers, points of sale, online shopping, billing and money
management. Prisma launched in 2014 in Buenos Aires, Argentina.
It became a unicorn in 2019 with Advent’s capital infusion of US$700
million.
Auth0’s company motto is “Never compromise on identity” - it is a

cybersecurity and authentication startup from Argentina. It provides
holistic B2B solutions for corporations seeking to improve security
protocols.
Loggi - is a delivery app that seeks to secure next-day delivery

anywhere in Brazil with US$100 million from SoftBank. Loggi’s
“logistics-as-a-service” platform sends out delivery requests, which
automatically calculates the route and price.
QuintoAndar QuintoAndar makes it easier for people to quickly

find homes and for landlords to better manage their properties.
The company, founded in 2012, with the mission to connect
property owners and renters online manages the pre-contract rental processes - which include 86,000
monthly visits to the properties the startup handles - and the subsequent administration of real estate
across 15 Brazilian cities, the firm employs 570 staff based at WeWork's coworking space on Avenida
Paulista in central São Paulo.
Sources: Various company websites 2019
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Latin American Unicorns
Source: https://www.contxto.com/en/market-map/the-10-latin-american-unicorns-galloping-to-success/ 2019
Sources: MacroTrend; TechCrunch; YCharts; MarketWatch; Surfing Tsunamis; NXTP Labs; Bloomberg; CrunchBas via
Statista 2019
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Exhibit 13
Source Statista Report Social Media Usage in Latin America 2018
Source Statista Report Social Media Usage in Latin America 2018
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Exhibit 14
Global EdTech Startups Awards (GESA) semifinalists excluding Brazil
Colegium (Chile): A leading school management and pedagogical development company with a presence
in Chile, Argentina, Mexico, Colombia, Peru, Brazil, and Uruguay. Colegium aims to improve the overall
management of schools offering solutions for teachers, administrators, directors, officials, students and,
parents.
Digital House (Argentina): An educational organization that aims to improve the lives of people developing
their digital skills. It offers training under an innovative methodology based on practice, with campuses in
Buenos Aires, Argentina and in San Pablo, Brazil. Digital House offers numerous courses such as Full
Stack and Mobile Web Programming for iOS and Android operating systems, Digital Business
Management, User Experience Design (UX); Data Science, Data Analytics, Digital Marketing, and Artificial
Intelligence.
BabySparks (Colombia): A mobile platform that assists new parents to cover the needs of their children,
feeling like they have support from a team of early development experts. The program has three key
components: supporting, monitoring and evaluating development. BabySparks adjusts its program to each
child's specific development profile through intelligent adaptive technology.
Crehana (Peru): Crehana is an on-demand learning platform for creative and digital professionals. Its iOS
and Android apps have the purpose of reaching more people looking to learn skills such as graphic
design, digital illustration, motion graphics, and 3D modelling, in a fast and practical way.
Leaducate (Mexico): Leaducate helps students find their ideal university according to their profile, needs,
and preferences. At the same time, it assists higher education institutions in attracting students in a pay-
for-results model that minimizes management and risk.
Bedu (Mexico): Bedu is a mixed-learning academy for the development of digital programming and
business skills. In Bedu students learn through a blended model, studying the theory online and attending
classes to strengthen and apply the knowledge acquired.
Eidos Global (Argentina): EIDOS Global designs tailored, impact-oriented and scalable educational
solutions for governments and companies that need to train people with the skills and knowledge for the
jobs of the future.
Ludibuk (Chile): Ludibuk turns regular books into more engaging experiences. Ludibuk platform has a
digital library that offers a revolutionary reading experience for Spanish-speaking students, working to
improve their reading rates and level of comprehension.
Source: https://daluscapital.com/en/2018/12/02/the-eight-most-promising-latin-american-edtech-startups-in-2018/ 2019
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51
Source: https://www.finnovista.com/fintech-radar-brazil-may2018/?lang=en June 2018
Fintech Companies in Brazil and Mexico
Exhibit 15
Copyright © INSEAD
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52
Source: https://www.finnovista.com/fintech-radar-brazil-may2018/?lang=en June 2018
Copyright © INSEAD
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Exhibit 16
Distribution of Fintech Start-ups in Latin America by Country 143 as of 2018.
Source: Report on Fintech in Latin America 2018: Growth and Consolidation, IDB and Finnovista. 2018
143 Report on Fintech in Latin America 2018: Growth and Consolidation, IDB and Finnovista. 2018
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Exhibit 17
Fintech and Social Impact
Source Report on Fintech in Latin America 2018: Growth and Consolidation, IDB and Finnovista. 2018
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Exhibit 18
Ehealthcare Latin America
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Emerging Economies must avoid the traditional development path of health systems
Source: WHO, World Bank, BCG Ananlysis, May 2016 extracted from Health Systems Leapfrogging in Emerging Markets, May 2016 World Exono;ic Forum
Exhibit 19
Ehealth in Latin America
Source: Statista 2017
Source: Market Data Forecast 2018 via Statista
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IN1551

Digital Transformation in Latin America:

Leapfrogging – using the lack of existing infrastructure as an opportunity to adopt the

Connectivity to customers, suppliers and other stakeholders allowed organisations to turn

22 Statista Digital Market outlook 2017

We are at an inflection point as digital transformation efforts shift from ‘project’ or

Leapfrogging Opportunities in Emerging Markets

Broadband connectivity in developing countries (when available) tended to be slow, expensive,

Latin America – Leapfrogging and Social Impact

In emerging markets, digital technologies enable truly entrepreneurial businesses to

We are committed to making AI accessible and valuable to all individuals and

Latin America is witnessing the emergence and growth of a new species of

In a round that is considered massive by U.S. standards but is positively gargantuan

57 https://www.idgconnect.com/idgconnect/opinion/1020747/look-mobile-ecosystem-latin-america January 2018

The Future: 5G and Beyond

Edtech – Improving Education and Reaching a Wider Audience

We have solved the problem of educational communication by making it more

Fintech and Financial Inclusion in Latin America

84 Interview with Professor Fabian Salum, FDC, May 2019

92 Source: Interview with case authors September 2019.

Bruno Sayão – CEO and founder of IOUU, explained:

101 http://epocanegocios.globo.com/Empresa/noticia/2017/02/ate-onde-vai-o-nubank.html August 2017

Smart Cities – Improving Citizens’ Lives

108 Interview with Professor Fabian Salum, FDC, May 2019

118 Source: Interview with case authors September 2019.

Ehealth – Building Sustainable Health Systems

Dr Consulta targeted people without health insurance, locating clinics in low-income

This improved the quality of life, disseminating knowledge to condominiums,

If governments want to make the digital revolution a priority, a forward-looking digital

GDP Growth in Latin America and the OECD (annual %)

Source: Pisa 2016

Source: Global Talent Competitiveness Index (GTCI) 2019

Source: https://gtcistudy.com/the-gtci-index/#gtci-historical-view (2019)

Source: Bloomberg 2019

Internet Penetration per country in 2018 (in % of total population)

Source: Statista Digital Market outlook 2019

Global Mobile Data Traffic Forecast by Region, 2017 to 2022

Source: Cisco VNI Mobile 2019

Source: various and Statista Digital Market Outlook, April 2017

Source: https://wearesocial.com/blog/2019/01/digital-2019-global-internet-use-accelerates Global review January 2019

Source: https://datareportal.com/reports/digital-2019-global-digital-overview 2019

Source: https://www.statista.com/statistics/278341/number-of-social-network-users-in-selected-countries/ 2019

Industry 4.0 Framework and Contributing Digital Technologies

Internet of Things: From Embedded Sensors to Smartphones

From Mainframes to Cloud Computing

Big Data Analytics: Making Sense of Chaos

The Importance on Interoperable Systems and Platforms

Source: www.gsmaintelligence.com 2019

Here are five basic principles underlying the technology.

3. Transparency with Pseudonymity

MercadoLibre, Inc. (means “free market” in Spanish) an Argentine company

OLX is an Argentinian global online marketplace, operating in 45 countries and is the

Despegar.com,(Argentina, Decolar in Brazil) is Latin America’s

Globant is an IT and Software Development company operating in Argentina,

B2W, headquartered in Rio de Janeiro, Brazil, is an online retail company in Latin

TOTVS S.A., is a major Latin American software company established in

Crystal Lagoons was founded in 2007 by scientist and

Founded in 1982, Softtek is a global provider of process-driven IT solutions with 30