Venezuelan diaspora reaches 5.5 million or 17% of pre-crisis population

29 August 2018 Consultancy.lat

Venezuela is in the midst of a mass exodus which has seen almost a fifth of the entire population emigrate. The economic situation in the country has become so dire that a further one out of every two Venezuelans who remain in the country have aspirations to leave. Venezuela now rivals Syria – with 5.6 million fleeing the conflict – in terms of internationally displaced people.

A new report by Caracas based research and consulting firm Consultores 21 contends that the level of emigration from Venezuela is much higher than UN estimates. An article released this week by Quartz which contains data from the UN’s International Organization for Migration suggested that 2.3 million had left the country since 2014. 

"We are living the largest population exodus that Venezuela has ever known. To date, the diaspora represents more than 5.5 million Venezuelans,” the Consultores 21 report outlines. The majority of Venezuelans have fled to Colombia, with Brazil, Peru and Ecuador also taking in increasingly greater numbers. The crisis has had an effect beyond Venezuela’s neighbours as well, with Spain, the US, Argentina and Chile also receiving over half a million Venezuelans combined. 

“This is building to a crisis moment that we’ve seen in other parts of the world, particularly in the Mediterranean,” said Joel Millman, a spokesman for the UN’s International Organization for Migration. “A difficult situation can become a crisis situation very quickly and we have to be prepared.”

By June of this year, precisely 5,511,965 Venezuelans had emigrated. Of that total, the greatest exodus (31%) was seen in the western Zulia-Occidente region – which contains Maracaibo, the country’s second largest city. The Llanos and Andes region which further border Colombia on the country’s interior have seen the second highest number of migrants at 19%. According to the research, the capital, Caracas had also contributed 18% of all Venezuelan migrants. 

Where Venezuelans are leaving from

To make matters worse, the consulting firm’s report also analysed the current attitudes towards future emigration. Throughout the second half of June, the firm surveyed 2,000 respondents from around the country, with the majority saying that they would prefer to leave the country. There has however been a profound shift in the demographic of those intending to leave, which was predominantly composed of young Venezuelans of the professional middle and upper class.

It’s not surprising however, with the situation likely to further deteriorate with the re-election of Nicolas Maduro earlier this year. Maduro will continue the socialist policies laid out by his predecessor Hugo Chavez whilst tackling an inflation rate that is tipped to hit 1 million percent later this year. 

Maduro’s United Socialist Party of Venezuela (PSUV) are said to be champions of the lower and middle class in Venezuela, promising to tackle the social inequality in the country. The party’s traditional backers are now also fleeing the country with the belief that the situation will not become better for them in the near future.

“In the past, opponents were the political group that was the least affected by the departure of people from the country, but at present the highest growth rate of those who want to emigrate corresponds to people who support the government,” states Venezuelan newspaper El Pitazo.

According to the report, the highest percentage of people who are considering migrating abroad are within the age group of 18 to 24 years. Of the group of 25 to 44 years, 49% considered positive the idea of leaving the country. Among those over 45, only 38% want to leave the country.

Percentage of age bracket considering leaving Venezuela

Maduro responds 

President Maduro’s response to the exodus has been to let his citizens leave and he has been critical of his neighbours’ response to tighten security at borders. He has also been vocal of the treatment of Venezuelans in other countries, while noting that Venezuela took in six million Colombians during the civil war. “Out of every 10 deliveries there are two births which are to Colombian families," he said in a press release from the presidential office.

The press release was titled ‘Venezuelans wishing to return to their homeland will be greeted with love’ and celebrated the fact that 89 Venezuelans has boarded a plane from Lima to return home. “All Venezuelans who have left and wish to return from the economic slavery [abroad] to which they have been subjected, are invited to come and live and love their country again."

The President’s message is a warning to those who remain in the country – if you leave, the grass may not be as green as you think. “In Venezuela we have never had campaigns of xenophobia as there are in other countries of the oligarchy, this is a special country and we must learn to value it,” he said.

Massive brain-drain?

Maduro’s attempts to bring back citizens is significant as the country’s brain-drain sets in. Since 2014, the country has seen a flood of educated citizens and international talent flee the flailing economics of the Bolivarian Revolution. The report states that "it is difficult to predict what will happen in the long term, but for now, 3 out of 10 migrants warned their families that they do not plan to return.”

The plan is called ‘Return to Homeland’, which promises a flight on the government’s expense as well as assistance with finding a job in Venezuela. However, since the start of the year, an average salary has fallen from $45 a month to roughly $8 a month due to hyperinflation. The low rate of wages is forcing thousands to flee each day and will have a considerable effect on the country’s competitive ability into the future.

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.