Citizens of Medellín among the most accepting of smart city technology in Latin America

22 June 2018 Consultancy.lat

The city of Medellín in Colombia may not be at the forefront of smart city technology adoption. The city lags behind its Latin peers when it comes to the deployment of overall applications of smart city technologies and has a below average level of infrastructure to facilitate the transition. But what Medellín lacks in established digital infrastructure, it makes up for in digital citizen experience. 

Medellín has the highest level of public adoption in Latin America, according to a new study done by McKinsey & Company. Citizen experience was named as one of three drivers for smart city progress in the consulting firm’s article ‘Smart Cities: Digital Solutions for a More Livable Future”, and is the combination of three attitudes towards smart city transition; awareness, usage and satisfaction. The other two drivers are a city’s technology base, and the applications which it has introduced.

The consulting firm ranks Latin cities including Medellín, Bogotá, Buenos Aires, Mexico City, Rio de Janeiro, Santiago and São Paulo in their smart city journey. Whilst the firm states that the list is not exhaustive, the assessment is aimed at showing a full sweep of activity globally in terms of smart city practices and implications to spur on momentum in the field. 

Each city on the list has shown great interest in promoting or adopting smart city technology and are independently ambitious in this goal. For instance; Mexico City has been previously ranked as the Latin city with the greatest potential for smart city adoption and Medellín has recently opened the doors of its Ruta N tech complex in aspiration of building on smart city technology.  

In Latin America, the percentage of people living in urban areas is set to rise dramatically and by 2050 approximately 90% of Latin citizens will live in cities. This number is significantly higher than the global average and is set to cause a number of management, planning, governance, security and mobility issues. Although these challenges cannot be dealt with by technology alone, Latin cities can be optimised by smart city technologies.

Citizens of Medellín are some of the most accepting of smart city technology in Latin America

Globally, the report states that cities in Europe, North America, China, and East Asia have the most developed technology bases, while those in Latin America, Africa, and India lag behind, particularly in installing the sensor layer. As the technology base is the most capital-intensive element of smart city adoption, high-income cities are leading the way. 

According to McKinsey, Asian cities are champions when it comes to public adoption of smart city technologies. Digitally native and open to change, Beijing and Shanghai top the list. “Given the shift toward more people-centric smart cities, it is important to take stock of how residents feel about the technologies already at work in their environment.”

A score out of 30 was given to each city analyzed and comprised of three elements including awareness, usage and satisfaction in regards to the smart city applications implemented in their cities. In Latin America, Medellín topped this list with a score of 17.8, followed closely by Santiago de Chile (17.3) and Mexico City (15.9). 

Medellín scored roughly the same for smart city public adoption and citizen experiences as New York City and digital natives Hong Kong and Singapore. Colombian smart-city rival and big brother Bogotá scored 15.5 which is on par with Cape Town and Barcelona, and bringing up the rear in Latin America was São Paulo, Rio de Janeiro and Buenos Aires.

The attitudes towards the technology and applications already available, even though less encompassing than elsewhere, ranked higher in Medellín than anywhere in Europe, where Moscow topped the list at 16.8 points. This indicates that while there may be a correlation between cost heavy digital roll-out and applications available, attitudes towards smart cities are not determined by high or low income.

Public adoption of smart city technologies sets a base for further technological investment as well as application roll-out. The results are based on a survey by McKinsey which asked respondents about their interactions and connections with smart city technologies, with the report concluding that “positive adoption and awareness appear correlated with having a young population.”

“While it is impossible to generalize about age, it seems that a greater share of the young population not only accepts a more digital way of doing things but expects it—and demands a seamless experience. Overall, people are most aware of and most likely to have used mobility applications, while applications related to utilities have less visibility.”

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.