Cost of living in Latin America: Providing affordable access to smart devices
The cost-of-living crisis is being felt across almost every part of the world – including Latin America – where the Russian invasion of Ukraine and the global rise in food and fuel bills is putting a strain on thousands of households across the region.
Indeed, one third of the region is predicted to meet poverty criteria, which is defined as living on $1.90 or less per day.
These economic changes have resulted in a wide financial gap within Latin America, which is already one of the most unequal regions in the world. Figures from the World Inequality Database show the top 10% of earners in Latin America capture 54% of the income.
These factors, combined with soaring inflation, mean that the buying power of households is significantly reduced. This not only impacts many residents’ ability to fund daily necessities, but also broadens the digital divide.
What Is a Digital Divide?
As people around the world continue to embrace technology, digital services continue to expand at speed. Digital education, healthcare, and economic services are becoming increasingly popular and a critical way to access information.
The rise of digitalisation has been accelerated further by the recent global pandemic. While an increase in the availability and access to such apps and services is largely a positive thing, many people are still unable to access basic digital services.
This lack of smartphone access affects those living in poverty the most. A fact reinforced by Pew Research, which reports that a median of 76% of people across 18 of the most advanced economies have smartphones, and by comparison, only an average of 45% of people in emerging economies, such as Mexico and Brazil, have equivalent access.
Such disparities create inequality in society – particularly when you consider that as more services become digitised, the living standards of those without access will not accelerate. Therefore, not only is bridging the gap important to improving the quality of life in the region, but also for giving a much-needed boost to the Latin American economy.
Why Is Tackling the Divide Essential?
As physical services, like banking, become less financially feasible – given the shift in technology and the investment that it requires – it is likely that access to ‘bricks and mortar’ offerings will reduce.
It is vital that people are not left behind. Furthermore, it is important that jobs and educational opportunities do not become scarce due to a lack of knowledge or visibility of what is on offer.
This is a real threat in the South American region. With its large rural population, where only 23% of those living in rural areas have access to the internet.
Arguably, it is these people who are set to benefit the most from being able to access 4G and 5G smartphones. Not only would access enable access to key services, like digital healthcare, it also allows consumers to purchase goods online, work remotely, and engage in distance learning to enhance their skills.
All of this is crucial for countries that wish to remain prosperous and to cultivate a happy, productive, and functioning society. This is demonstrated via a recent report by the Broadband Commission. The report revealed if just 10% more people in Africa were able to access high-speed networks, it would lead to an average of 2.5% in GDP growth.
Broadening the use of smartphones inevitably offers greater opportunities for mobile operators too. An increase in connected smartphone users across the region drives increased data service revenues.
Driving Down Costs
Latin American governments are aware of the need to bridge the digital divide and have been working on meaningful strategies to allow equal access for all. For example, Colombia, Argentina, Chile, and Peru have introduced laws to increase free internet access.
Colombia has also introduced legislation to define the internet as an ‘essential public service’. While this helps to highlight the importance of technology, establishing these policies may be an expensive feat. For example, the International Telecommunications Union reports the cost of providing adequate connectivity across the region by 2030 will reach $50 billion USD.
However, as smartphone connections amount to 74% of the Latin American population, as of 2021, the outlook for mobile operators and users looks promising. There is still a way to go to ensure most of its citizens have access to devices that enable internet connection and achieve the GSMA’s prediction of 400 million mobile internet subscribers by 2025.
Should these numbers be achieved, a world of information will open up to people living across the region.
How Trustonic Can Help
Trustonic is working hard to ensure that smartphones can be affordable for people across Latin America and beyond, in turn improving rates of digital inclusion. With the Trustonic Telecoms Platform, mobile carriers, retailers, and financiers can reduce their risk of bad debt when offering financed smartphones.
This provides benefits to those who would ordinarily struggle to purchase a smartphone, while encouraging better payment behaviours by reminding customers when it is time to pay their bill. It also has the capability to lock their device should payments continue to be missed.
Furthermore, our Telecoms Platform is equipped to tackle fraud prevention and revenue assurance, giving operators and retailers peace of mind and protection when providing customers with credit.
This straight-forward, yet impactful approach has the potential to improve the digital economy. It will also generate the funds required to work on technological improvements to services that will further benefit society.
Ultimately, providing better access to smartphones will unlock a world of information and improve the prospects of millions across the Latin America region.