Innovation in the Andes: Peruvian CEOs Demonstrate Improved Business Sentiment

View the OBG Business Barometer: Peru CEO survey infographic

Our latest OBG Business Barometer: Peru CEO Survey shows solid foundations in a country that needs leadership to invest in innovation.

At some point we’ve all heard that Rome was not built in a day. On the contrary, the Roman Empire, like other successful civilisations throughout history, was built slowly, with dedication and rigour.

After having read what dozens of top businesspeople think in the Andean country, as I processed the results of the OBG Business Barometer: Peru CEO Survey, I was struck by this lasting comparison: Peru is not being built in a day, but its foundations are steadily becoming stronger.

The new CEO survey results arrive six months after our last barometer in Peru. At that time, the country was striving to get away from the stain left by the Odebrecht scandal, a work still in progress for the nation.

However, just this month the IMF agreed to consider the work on Line 2 of the Lima Metro and the expansion of Jorge Chavez International Airport as part of the projected GDP for this year, which demonstrates their confidence that these projects are moving ahead. This follows the green light given by the Ministry of Transport and Communications to continue both projects.

The survey proves that not only does the IMF have trust in Peru, the country’s CEOs do even more vigorously. Six months ago 61% of companies were likely to make an investment in the next 12 months; that figure has now increased to 69.8%.

Perhaps this is a wave of optimism? Potentially, as optimism is characteristic among the Peruvian business community: 79% of the consulted CEOs projected that Peru’s GDP would expand by more than 3%, while the IMF forecast growth of 2.7%.

Within the barriers that have traditionally limited growth in Latin American economies, there are three that I believe are particularly pertinent for Peru.

The first, and perhaps the most representative – as it entails numerous elements of business activity, including the degree of formality, the liquidity of financing institutions, the maturity of regulations and, to a large extent, the health of the entire economy – is access to credit.

In economies that have a broad base of the pyramid, such as Peru, access to finance is as important as oxygen.

I was pleasantly surprised when I read that 64% of the respondents considered access to credit to be easy or very easy.

At the end of June Oxford Business Group organised a roundtable on innovation in Lima. The guests, all toptier CEOs, agreed on something our CEO Survey again puts into focus: Peru needs more leadership and innovation. It is no coincidence that 45% of respondents said so.

Peru has fallen to the penultimate position in a ranking by the Switzerland-based International Institute for Management Development, which conducts studies on digital competitiveness. According to the index, Peru is only better positioned than Brazil and Venezuela in the region. The most competitive Latin American country is Mexico, in 48th place.

At our roundtable meeting in Lima, Gonzalo Villarán, director of innovation at the Ministry of Production, spoke of the country’s precarious position in this regard. I heard promising initiatives from his institution, including tax incentives for those investing in tech start-ups. I was also eager to hear from Miguel Ucceli, local head of Scotiabank, about their ambitious R&D projects.

Hopefully, if public institutions keep taking the lead on innovation development, and if private entities follow the path of Ucceli and other local gurus, our next CEO Survey won’t showcase innovation as a missing skill, but rather identify it as a tool that is initiating change.