Expansion of internet services boosts ICT's economic weight in Colombia

Using technology to improve social inclusion has become an important element in promoting economic development, especially in Colombia’s rural areas. A key element of this strategy has been the expansion of internet access. The number of internet connections in Colombia rose from 3.3m in the first quarter of 2010 to 10.7m in the same period of 2015, according to the Ministry of Information Technologies and Communications (Ministerio de Tecnologías de la Información y las Comunicaciones, MINTIC). Internet kiosks have sprung up in some of Colombia’s more isolated villages, and the government has underlined the need to link every corner of the country.

In addition to the intricate social and economic benefits, Colombia’s digital strategy has underscored the fact that internet access can improve the way small businesses compete with established companies. In this sense, the expansion of internet services is helping strengthen the country’s economic fabric.

Covering Ground

With the government fulfilling its plan to achieve 100% internet coverage, 2015 was a hallmark year. The efforts that led to the rapid expansion of internet access across the country can be traced back to the Vive Digital plan (see overview), and have helped solidify Colombia’s position among its neighbours. In 2014 internet users per 100 people reached 52.6 in Colombia, according to the World Bank, compared to 43 in Ecuador, 44.4 in Mexico and 40.2 in Peru. With 26.5m internet users in 2014, according to eMarketer, Colombia is fourth-placed regionally in absolute numbers, behind Brazil, with 107.7m users, Mexico with 59.4m and Argentina with 27.1m. If the level of expansion is maintained Colombia could reach 31.4m users by 2018.

SMES

The impact of growing internet access has been especially visible in the private sector, and more importantly among small and medium-sized enterprises (SMEs), which account for over 90% of businesses in Colombia, according to government figures. A MINTIC report showed that by July 2015 74% of formal SMEs had been linked to the internet, up from 7% in 2010. This has enabled small firms to access cost-effective tools to improve operations, promote products and reduce customer acquisition costs.

The focus on improving internet connectivity within Colombian businesses has been a critical element of government policy. The MiPyme Vive Digital programme has channelled public and private financing towards increasing IT and internet usage among Colombian SMEs. A total of 44 initiatives since 2010 have helped link 34,000 SMEs to the internet. Government support to upgrade IT infrastructure and establish internet links has resulted in expenditure of COP86bn ($31.6m), of which COP56bn ($20.6m) was channelled by the government, with the balance provided by the private sector in co-financing schemes.

Government support is continuing, with the goal of further increasing internet usage among businesses. In mid-2015 MINTIC announced new grants under a programme established in conjunction with Innpulsa, Colombia’s innovation agency. The scheme has set aside COP11.6bn ($4.3m) in co-financing grants to encourage the use of e-commerce among firms. The government estimates that the proportion of Colombian businesses using e-commerce in 2014 was 2%. Sector authorities aim to take that up to 30% by 2018.

Speed

Added coverage has also brought improved connection speeds. In the first quarter of 2015 the number of broadband connections in the country had risen by 1.19m, or 13.4%, from the same period in 2014, according to MINTIC. As of August 2015 the authorities announced that 50% of Colombian homes had some form of internet access. Furthermore, seven out of 10 connections in the country had speeds of over 2 Mbps as of the first quarter of 2015.

As more and more companies and homes in Colombia become connected, the economic and social benefits of internet access will continue to accumulate.