Duque to win Colombia’s presidency predicts political risk consultancy Eurasia Group

12 June 2018 Consultancy.lat

Iván Duque is well on the way to becoming the next president of the Republic of Colombia, having won 39.1% of the votes in the first electoral vote since the infamous peace process came to its completion last year. Duque was miles ahead of the center/leftist opposition, although the vote was not enough to get him elected and a second round of voting will take place on June 17.

The 2018 Colombian presidential elections have been a stunning round of partisan politics, largely centred around Santos’ peace process. The culmination of Latin America’s longest continuous armed conflict has left the country deeply divided, which is reflected in the country’s two standing candidates after the first round of voting – conservative Iván Duque and far-leftist Gustavo Petro. 

Whilst this form of political polarization is being discussed around the globe – with Italy being the latest to experience a populist shift – Colombia’s struggles are influenced by it’s violent past as well as it’s neighbours’ socialist experiences. Both of the candidates present Colombian voters with a choice that will opens old wounds, and that leaves little room for reconciliation. 

The history of alignment between the two candidates and their respective positions within the Colombian conflict will decide the election. Petro represents the leftist faction of society, and is a former member of urban armed reformist rebel movement M-19 as well as a strong proponent of the peace deal. Duque is a hardliner and conservative who stands under the umbrella of ex-President Uribe, representing the large traditional political class and has been accused of exacerbating the conflict by standing with the paramilitaries.

Both have taken opposing sides, signifying the fragility of the peace process and whichever way the country votes, there is a potential for discernible chaos. Ian Bremmer, founder of the Eurasia Group, a geopolitical management consulting firm that specialises in political risk has shared his thoughts on why Duque is likely to win. Bremmer and the Eurasia Group identify a few key aspects which will influence voters who are only bound together by one common theme – resilience.

Iván Duque is likely to become Colombia’s next president according to Eurasia Group founder, Ian Bremmer

The first factor comes under the guise of a common trend, i.e. apathy towards the political elite. Last year, the political donation scandal which sent shockwaves throughout Latin America came to the surface in Colombia tarnishing the entire electoral system. Whilst the two candidates have ascended to their positions in an unlikely way, which has allowed them to give the scandal a wide berth, Duque’s recent move into politics from the private sector – where he held a position as a strategy consultant for the Inter-American Development Bank – has allowed “him to credibly claim he stands apart from Colombia's disgraced elite.” 

Secondly, Colombia is a conservative electorate and has never elected a leftist president. This has been the basis of the rise of Petro, who is the first leftist presidential candidate since Luis Galán was assassinated on the campaign trail in 1989. Those who supported the revolutionary cause, those who are anti-establishment or on the social-progressive side of politics have waited thirty years for this moment. However, as Bremmer describes “Duque is pro-business and a security hawk. He has the backing of former president Uribe, [who is] still a popular figure among Colombia's conservatives.”

Business is also at the heart of the election, currently struggling with a low peso brought about by a decline in oil prices back in 2014. “Duque has billed himself as the pro-business candidate and has vowed to cut corporate taxes and support oil and mining projects to spur growth, all while slashing “unnecessary” spending and fighting tax evasion to get Colombia's books in order,” said Bremmer. 

He continues; “That has raised fears of a looming revenue gap. Petro, meanwhile, has focused on the country's rampant inequality and promised big spending increases on education and healthcare, while also vowing to simultaneously wean the country off its oil (and coal) dependency.” 

Lastly, and perhaps most importantly, is the current state of affairs in Venezuela. Having recently descended into chaos and transitioned from a democracy into what global leaders are calling a dictatorship, Venezuela is a major source of fear rattling Colombian voters. Colombia has accepted over 200,000 refugees from Venezuela in the past year alone (fleeing hunger and poverty) and voters are worried that if a socialist-led government wins, then they may face the same scenario at home. 

Duque and his political cohort have capitalised on this sentiment and likened Petro to Chaves, who paved the way for today’s Maduro Government. “For a country that has never voted for a leftist candidate, the association with someone like Chavez is a heavy burden,” concluded Bremmer. 

Digitization could add $240 billion to Mexico’s GDP by 2025

22 January 2019 Consultancy.lat

New in-depth analysis by McKinsey & Company ranks Mexico 55th in digital maturity out of 151 countries. When compared to countries with similar economic output, Mexico is in good shape, but the country has “yet to achieve the kind of world-class digital transformation that fuels productivity and economic growth.”

Countries that have adequately transformed, such as Estonia and Malaysia, have incomes close to Mexico, but punch “above their weight” when it comes to digital maturity. Mexico is about halfway there. Taking steps to improve its global digital position, however, could increase the country’s GDP by  7-15% (approximately $155-240 billion) by 2025. Such an increase would be powered by increased productivity and employment in existing industries, new digital businesses, a broadened expanded information-and-communication-technology (ICT) sector, as well as the successful labor force transition into the digital world.

Mexico is the second-largest economy in Latin America, meaning it is in the unique position to set the regional standard for a “digitally enabled” government.

For their analysis, McKinsey & Company researchers Alberto Chaia, Gonzalo Garcia-Muñoz, Philipp Haugwitz, Max Cesar, and Andre de Oliveira Vaz defined digital maturity using four categories: government, foundations, economy, and society. The study also laid out steps that Mexico could take to improve its digital maturity. Of these four factors, Mexico has the most work to do in digital economy and digital foundations, categories in which its scores are just below average – and which are highly correlated.

Digital maturity of Mexico according to McKiney

The bad news first

Digital foundations essentially encompass the ability of citizens to participate in a digital society. This means internet access, mobile networks, and so forth. “In 2016, Mexico had just 13 fixed-line broadband subscriptions for every 100 inhabitants” the analysis found. “The rate of subscription to mobile broadband is higher, at 61%, but this still leaves a sizeable portion of the population unconnected and thus spending additional time and money getting to physical centers to access government services.” This lack of access causes Mexico to rank 93rd overall in the digital foundations category. 

Mexico’s digital economy, in turn, is hindered by its “shaky” digital foundations. It sits in 92nd place of all countries surveyed. There is a lack of access to high-speed internet, as stated, as well as an unreliable postal service and a lack of bank accounts among the population, with just 40% of citizens aged over 15 having an account. These factors decrease the country’s potential to develop an e-commerce industry that is widely and conveniently used. Exports of ICT goods, as well, account for an astonishing less than 1% of all exported goods and services.

And now for the good news

Mexico’s digital government, which ranks 39th overall, has made great strides in recent years. The creation of gob.mx, for example, provides "a one-stop portal that consolidates 34,000 databases from 250 government institutions and 5,400 public services. The platform is described as the “centerpiece” of Mexico’s digitization efforts, allowing citizens easy access to important legal documents such as birth certificates, as well as automating internal processes, making workplaces tasks run more smoothly for government employees.

Despite this – and the appointment of a national digital strategy coordinator who sits on the president’s staff - Mexico “receives low scores from its citizens on their overall satisfaction with the convenience and accessibility of government services.” Citizen experience was the worst-rated of those group countries surveyed (Canada, France, Germany, Mexico, the United Kingdom and the United States). There was also a largest perception gap between the private and public sector.

How digital can boost Mexico’s GDP

A digital society, according to the report, “can improve the quality of life for citizens by fostering greater civic participation, providing access to information, and offering new tools for health and education.” As previously shown, Mexico is pushing such platforms, including several subsections of gob.mx, on which citizens can participate in public polls and discussions, and present potential digital solutions to serious societal problems such as earthquake detection systems.

Mexico is well on its way to achieving a “good” or “very good” digital maturity rating (right now, the country is “acceptable”). According to McKinsey, “There are three basic initiatives Mexican government leaders could consider putting on top of their priority lists [to speed the transition into the upper echelons of digitization].”

First, the Mexican government must define a digital vision and strategy. Second, it must link that vision to policymaking. Entwining the two ensures that digitization acts as a “lever” to a policy’s success. “To establish a clear link between its digital vision and public value, Mexico’s incoming administration may want to consider revisiting the country’s "National Digital Strategy" for 2013 and aligning it with Mexico’s current and future needs, as well as with the new government’s priorities,” the report states. A “test and learn” attitude toward linking digital vision and policy will also be necessary, as the only way to avoid repeated mistakes is by closely evaluating those that have been made, then planning accordingly. Adopting this attitude, according to the report, will necessitate more flexible budgetary strategies.   

The third suggested initiative is all about power to the people. Successful digital transformations are those that are centered around the citizens, rather than the institutions that serve and govern them. This means service delivery is key, and centralization of digitalization efforts – initially, perhaps, in the form of a council that would oversee governmental transformation – could greatly aid government agencies in getting the people what they desire. As Mexico transforms, so would the ways in which ideas are generated and put into action. For instance, the United States has the US Digital Service, which works with the White House, and Singapore relies greatly on the Government Technology Agency, which reports to the country’s president and implements digital strategies.

Digital maturity benchmark

Filling in the cracks

Because Mexico ranks on the low end of the “digital foundations” category, it is obvious that the other four categories, which by nature fall under the “foundations” umbrella, are potentially negatively affected. As such, McKinsey offers five steps that could be taken to strengthen the country’s digital infrastructure. 

Private companies, for one, could be offered incentives to provide broadband internet to “marginalized” communities, such as those in Oaxaca and Chiapas. The study points to India as an example, where the government-created National Optical Fibre Network (BharatNet) “successfully brought broadband services to approximately 115,000 villages, aiming to deliver broadband connectivity to 250,000 villages overall.” 

Talent is also an issue. “In recent years, Mexico has made significant strides to boost the number of college graduates with degrees in science, technology, engineering, and mathematics (STEM),” the report states. In 2016, 25% of university graduates with a STEM degree. 

But degrees aren’t so much the problem as education in general. “Only 17% of Mexicans graduate from college, making the talent pool small.” Programs that keep primary and secondary school teachers in the loop are a must – as are “reskilling” programs meant to train a percentage of the workforce that is soon to be displaced by technology such as automation. 

Rounding out the five suggestions are a system that easily and simply explains new regulations regarding technology - an invaluable resource for startups; the development of cybersecurity units required to monitor the security of such a large, overarching transformation; and a streamlined, interoperable model for data sharing across multiple government agencies. 

It’s an investment

The challenges and obstacles in Mexico’s path to digital transformation are not inconsiderable, but are neither without long-term reward. “Going digital will require an investment of financial resources, extensive coordination among the multiple stakeholders and levels of government, and new regulations governing the growing e-commerce and fintech sectors. It most likely would entail participation incentives for the private sector, since governments should not attempt to 'go it alone.' In the end, both sectors of society stand to reap the value digitization will sow.” 

Related: Mexico leads Latin America in robotization, followed by Brazil and Argentina.