European investments for a green, social and digital Central America

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In mid-July, the summit of heads of state and government between the European Union (EU) and the Community of Latin American and Caribbean States (CELAC) was held. Geopolitically, the result was a success: dialogue was recovered at the highest level after seven years of bilateral relations; A statement was issued that did not ignore sensitive issues such as the war in Ukraine; and a roadmap was approved with the call for a new EU-CELAC summit in 2025 in Colombia.

Progress on the economic and cooperation front was not short either: a new investment agenda was announced in Latin America and the Caribbean, through the Global Gateway, the EU’s global cooperation and investment platform. This agenda was born with an initial amount of 45 billion euros (about 50 billion dollars), contributed between the EU, its member states, the European Investment Bank (EIB) and other development financing institutions, and credit agencies. to export. 136 green, social and digital transition initiatives were also defined. The expectation is that these amounts will be articulated, nourished and increased with the participation of companies and development banks such as CAF, IDB and the World Bank.

Based on this positive balance, which allows us to imagine two blocks (EU-CELAC) collaborating more closely on environmental, digital, agricultural and migration issues, it is time to reinforce the new investment agenda in three dimensions.

First: there is untapped potential if Global Gateway is adapted to Latin America, particularly Central America, where, compared to larger countries, the impacts and demand are greater. Central America has certainly not been forgotten. Almost a third of the initiatives cover the subregion, from the preservation of the Five Great Forests of Mesoamerica, to support in the use of connectivity and 5G networks in Costa Rica and El Salvador, connectivity infrastructure in Guatemala; investments in a regional cyber-skills center in the Dominican Republic, and a Copernicus center and 100% connectivity in Panama.

Now is the time to complement them by focusing on the usage gap, given that of the 23 million Central Americans who do not use the Internet, only three million live in areas without coverage. The rest do not access the Internet, despite the service existing, according to GSMA (a global organization of telephone operators). This requires combining investment efforts in infrastructure with the development of a solid digital ecosystem, with skills for citizens to fully take advantage of the benefits of 5G technology, digital public services in all their stages, and commitment to the construction of smart cities in a subregion where 6 out of 10 people live in cities, according to United Nations data.

Second: Global Gateway must and can be stronger if it deepens the interaction of social and digital transitions. The announcements include financial and school digitalization initiatives in the Caribbean, and a generic mention of the circular economy in Peru, but they can go further in an eminently urban and young Central America. Today, the improvement of education or health cannot be understood without the use of new technologies in classes or with medical records. Nor the improvement of living conditions in cities without the Internet of Things by planning mobility or services. Nor financial inclusion without mobile payments. Nor the preservation of biodiversity and the fight against climate change without big data and Artificial Intelligence.

Third: in general, speed and effectiveness are required in the technical structuring of projects. It is urgent to secure European public funds and reinforce them with the resources and expertise of development banks and leading companies in the sectors. Focusing only on digital projects (20 of the 136 total), assuming that resources were distributed evenly, Global Gateway would mobilize about 7 billion euros (about 7.5 billion dollars) until 2027, approximately a third of what telecommunications operators they already invest each year in the region. And the analyzes are that almost ten times that figure would be needed to close the gap with higher-income countries.

The good news is that, after the European summer holidays, 60 European and Latin American and Caribbean Ministers of Economy and Finance will meet in Santiago Compostela next Friday, September 15, led by the Spanish Presidency of the EU and with the leadership of CAF – Development Bank of Latin America and the Caribbean (with which Tigo Millicom, a leading company in digital services in Central America, has a collaboration agreement). If there is a subregion where an investment that is not necessarily huge but well designed, delving into the symbioses between technology, environment and society, can have a great economic and social return, it is in small countries, particularly in Central America. We know that the Finance Ministers look at this before deciding. Let’s be optimistic and take advantage of this great opportunity.

Karim Lesina is executive vice president of Corporate Affairs and Institutional Relations at Millicom (Tigo) and Ángel Melguizo is a partner at ARGIA, Green, Tech & Economcis consulting.

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