CAF Unveils Digital Transformation Strategy for Latin America’s Productive Sectors

The digital transformation of Latin American countries requires the digitalization of the production apparatus in all sectors ahead of the fourth industrial revolution and boosting the productivity of small and medium-sized enterprises (SMEs). The use of technologies, digital data and their interconnection to conceive new activities or bring about changes in existing ones has evolved from merely an option to a need, in order to consolidate sustainable growth, improve competitiveness of the productive fabric and create high-quality jobs.

The region’s infrastructures and technologies expected to usher in the fourth industrial revolution, on the other hand, are in a fledgling state of investment and use. The rates at which the region is adopting advanced digital technologies, a calculation based on patterns of investment in data center equipment and installed IoT infrastructure and M2M penetration, show far superior development in OECD nations, displaying growing gaps.

Due to the impacts of the COVID-19 pandemic, regaining the path of economic growth will heavily depend on the ability of countries to boost productivity and for different sectoral chains to adapt to new operating schemes featuring low contact, innovation and digitalization applied to collaborative methods of product design and input supply, smart production methods and transformation of distribution channels.

“CAF—development bank of Latin America—is driving projects aimed at digitalizing productive sectors as part of its efforts to help boost productivity in the region,” the institution’s digital agenda coordinator Mauricio Agudelo said during eLAC, a conference to improve the region’s digital development. “Its work places particular emphasis on productive chaining, the effort to insert companies into global value chains, and SMEs, since these are the backbone of the region’s industrial fabric.” Agudelo also said that among such projects is the development of a Strategy to digitally transform Latin America’s productive sectors and a concrete application to the agro-export and logistics chain in Peru.

The methodology developed by CAF, in collaboration with Deloitte, aims to select priority production chains to adopt digital solutions and to develop a roadmap guiding the implementation of initiatives. It has already been implemented in the agro-industrial value chain in Peru’s Ica region. The roadmap identifies actions to accelerate the digitalization of the value chain, benefiting all companies in the region through improvements in connectivity, training programs and innovation funding. The plan is also expected to be applied on two production chains or clusters in Ecuador.

The digitalization of Ica’s agro-export chain offers the opportunity to increase the sector’s turnover while avoiding losing market to international players due to lower efficiency, and—most especially—closing the identified productivity gaps. To this end, we are proposing solutions that make intensive use of new sensorization technologies (IoT), data storage and analytics and information security and traceability (blockchain).

The integrated management of the agro-export chain through activities such as estimating inventories and delivery times, as well as availability of logistics assets, are key to reducing times, losses or errors in such processes. Similarly, using sensors to regularly detect temperature, water and humidity conditions of the soil, in addition to automatically measuring the growth of produce, helps producers make decisions about the harvesting process, the use of pesticides and irrigation times.

The roadmap includes six objectives, distributed across 31 initiatives and grouped into 12 lines of action, including actions already in the design phase, such as financing private sector programs for the adoption of digital solutions by Innóvate Perú, promoting digital training programs to key players in the chain, and fostering 5G pilot projects, among others.

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