Infrastructure’s goal is boosting productivity and addressing the connectivity gap

By Hernan Pareja

When people think of infrastructure in Latin America and the Caribbean (LAC), most people’s minds tend to run to the large, traditional construction projects – roads, railways, ports, and airports, as well as large power plants and vast transmission lines.

Historically, this has been the more visible work of the IFC’s infrastructure team in the region. And, while we can be proud of our record across all these categories of projects, our strategy also focuses on addressing one of the critical challenges in LAC: low productivity and connectivity.

Boosting productivity and connectivity in LAC is one of the key aims of the IFC’s strategy. For IFC’s infrastructure team, this means investing in mobile connectivity, towers, broadband, data centers, emerging digital technologies, and other digital infrastructure. This core infrastructure is at the forefront of development and represents the foundations needed to unleash the benefits of the digital economy. It connects people to jobs, education, health, and other digital services, providing opportunities to improve their quality of life and foster economic growth. After all, not every village can have a doctor, but with e-health solutions, not every village needs one.

Digital infrastructure has now become a necessity. Governments, businesses, and individuals cannot properly operate without digital connections. Yet, in LAC, there is still a significant digital divide, with about 30% of the population lacking access to the internet. Significant gaps and inequality across the region prevent it from fully realizing the benefits of the digital economy, including:

1. A mobile market with only about two-thirds of the population having 4G connection and still limited 5G deployments.

2. A fixed broadband market with about one-third of households in LAC not having access to these services, and, for those who have access, approximately only half of them enjoy fiber-based speeds.

3. A limited data hosting capacity compared to more developed regions.

IFC is working to reduce these connectivity gaps and boost regional productivity. During the past eight years, IFC has committed over US$1.7 billion to LAC’s digital infrastructure, representing around 25% of total IFC’s infrastructure investments in the region. Recent investments include, for example, IFC’s debt financing to Telecom Argentina to expand connectivity services and reach underserved areas, IFC’s debt financing to Odata and equity investments in Scala and Kio Networks that increased data center capacity in the region, IFC’s debt investment in Phoenix Towers do Brasil to expand mobile coverage, among others.

Now more than ever, the IFC sees the importance of its role in supporting private sector investments in LAC to enable essential digital infrastructure that meets the needs of the next generation.

For more information about any of these topics, please drop me a message.

Hernan Pareja is IFC’s Senior Investment Officer and LAC Telecom Lead