Startups and digital SMEs are key to modernizing the States of Latin America, according to a report by CAF and IE University

This paper analyzes how cooperation between governments and the entrepreneurial sector based on data and digital technologies can contribute to more efficient, innovative and proactive public sectors

 -   CAF

CAF - Latin American development bank - and the IE PublicTech Lab of the IE School of Global and Public Affairs, an institution that is part of IE University, presented the report 'Govtech and the Future of Government', which analyzes the impact of govtech ecosystems in the region, as well as ways to strengthen them and recommendations to contribute to economic recovery. 

In a world where citizens' expectations point to immediacy and customization of services and where new digital technologies permeate most of our activities, govtech ecosystems present a new type of public-private partnerships for innovation in the public sector to experiment with new solutions before deploying and scaling them up. These partnerships provide governments with agility, flexibility, innovation, and specialized private sector capabilities. This is especially relevant at the local level and in sectors where the citizen is the end user. 

According to the report, govtech ecosystems in the world are worth around 400 billion dollars a year, so they represent an opportunity for governments to work more efficiently, while at the same time being a public policy to support economic development by boosting the digital micro and SME sector with high added value in the region.

"While the digitalization agenda of the States was important, it has now become indispensable. Therefore, we must put our States in a startup mode for recovery. It is not a matter of digitizing the procedures, but of rethinking the State by putting the citizen at the center, a citizen now digital," said Carlos Santiso, director of the Directorate of Digital Innovation of the State of CAF. 

For her part, Idoia Ortiz de Antiñano, director of IE PublicTech Lab, said that "govtech ecosystems have great potential in the region, where all the pieces are found and where the next step is to articulate them. This is precisely the objective of the report, which aims to be an easy guide for all those interested in activating the potential of govtech ecosystems in their territories".

The digital transformation of governments is finding a new ally in startups, scaleups and digital MSMEs with a public vocation. These not only seek financial returns, but also create public value and social impact. Their proposal is focused on their public impact through the improvement of services for citizens and companies, the increase of operational efficiency of public administrations, the consolidation of digital and data infrastructure, as well as the promotion of public integrity and corruption prevention. They also represent a powerful public policy instrument to encourage entrepreneurship and promote new growth segments by investing in innovative local companies.

In this sense, the document presents 30 specific recommendations to detonate govtech ecosystems, in three main lines of action: 

  1. Definition of govtech strategies and promotion of public demand for digital innovation
  2. Implementation of agile public procurement methodologies for innovation 
  3. Promoting the supply of startups and govtech SMEs.

The report includes a description of the current context of digital transformation and public innovation policies; the main public and private instruments that are being developed to promote these ecosystems and a diagnosis of the govtech ecosystem in Latin America.

The complete publication can be found at this link.