Inter-American Development Bank looks to Miami for help with tech vision for Latin America

Miami Mayor Francis Suarez is not the only one who sees “the Magic city” as the next big tech hub. The head of one of the leading financial institutions in Latin America and the Caribbean is also touting Miami’s potential, given its gateway to the region.

Inter-American Development Bank President Mauricio Claver-Carone, who is from Miami, wrapped up a visit to his hometown this week where he was highlighting the digital business investment opportunities between Miami and Latin America and the Caribbean during the IDB hosted Miami-LAC 2021 in Wynwood.

“At the end of the day, this is where the entrepreneurs are, this is the gateway,” Claver-Carone said about Miami. “I think Mayor Suarez has done a commendable job in setting it up nationally as a capital for that flight of technology and institutional investors, and now what we want to do is partner up.”

While the bank is known for lending approximately $15 billion to $17 billion a year to governments, it also has a private sector arm, IDB Invest, that lends to companies whose investments promote development, and IDB Lab, which provides grants and seed investments for technology startups that have a development impact in the region. Those two arms, Claver-Carone said, can play a critical role in the recovery of the region, one of the worst hit from the ongoing COVID-19 pandemic.

“Ironically, the pandemic has created this huge awareness that nothing else would have created in regards to the importance of digitalization,” he said. “The pandemic has now forced everyone to recognize that the winners or losers are going to be defined by those who are connected, those who have access, who have competitive pricing and who have the best quality of connecting.”

Despite the pandemic and its impact on the region’s business climate, Claver-Carone said the IDB saw nearly $17 billion in venture capital investments in innovation companies in Latin America and the Caribbean last year. Already in 2021, in the first half of this year, they have seen private equity deals have also increased and venture capitals are up almost 60% in the region.

“We’re seeing this transformation of what originally were the brick and mortar infrastructure companies, now being surpassed by the technology companies, and all of them have a footprint in Miami,” he said. “So then how do we as the IDB come in and help ferment that and how do we help, once we scale it, do our job which is to fulfill the development needs in the region to increase connectivity, to create disruptors that are going to bridge some of the inequality gaps, some of the poverty gaps that we see in the region.”

He said due to the pandemic there is an increasing need from governments to have IDB help take their ministries online, and helping them improve connectivity among farming, rural and vulnerable populations that have little to no access.

“There’s opportunities, and those opportunities, we got to take advantage of them,” he said. “I’ve said that the success of the region over the next decade is going to be based on PPPs, but which PPPs? If they are based on public-private partnerships, then the region is going to succeed. If they’re based on politics, patronage and populism, the region is doomed to continue doing the same things over and over again and failing at it... Countries of the region have to invest on infrastructure.”

A study published this week by the IDB said Latin America and the Caribbean could create over 15 million direct jobs, boost regional economic growth by 7.7% and increase productivity by 6.3% if they were to improve broadband penetration in the region.

“Delays in improving connectivity and digitalization in Latin American and Caribbean countries have dramatically exacerbated the economic and social impact of COVID-19. But this reality also offers a historic opportunity to reduce inequality, and create jobs and sustainable economic growth,” Claver-Carone said.

The investment requires not just dollars, but political will and private partnerships — none of which are easy in a region where many governments still function with pen and paper, and the average citizens spend more than 20% of their income on broadband services, an amount way larger than the 3% recommended by the International Telecommunications Union.

The IDB estimates that Latin America and the Caribbean will need about $68.5 billion to close the digital connectivity gap with more advanced countries,

Claver-Carone said the IDB is taking steps to drive a digital ecosystem that will help the region attain investments, design national broadband plans, and create the public-private partnerships needed to expand coverage for all citizens.

Miami, he said, is very much part of those plans and he wants to set up a permanent footprint in the city to help with investments.

More than 4,000 people from 77 countries participated in the three-day Miami-LAC conference, while at least 960 businesses engaged in matchmaking sessions that led to $16 million in business deals, the IDB said at the closing of the event. Over 200 participants also said they expect additional deals to come from the meetings.

“This is the capital for business in Latin America,” Claver-Carone said. “All the companies from Latin America and the Caribbean, and all the companies from here that have a presence in Latin America and the Caribbean, have a presence here in Miami... and what we want to do is create a footprint of the IDB through IDB invest and through IDB Lab, right here in Miami.”