Summary:
Ecuador has made significant progress in the adoption of digital technologies over the past decade, with 60 percent of households now having access to the internet, a 28-percentage point increase from 2014. Although the government of Ecuador is committed to driving digital transformation, as reflected in the Digital Transformation Agenda 2022–2025, challenges remain. A new country diagnostic supported by the World Bank Group's Digital Economy for Latin America and the Caribbean (DE4LAC) initiative provides insights into the current state of digitalization, key challenges and policy priorities to accelerate the country’s digital transformation.
Challenges:
• Low and unequal internet penetration and affordability obstacle. Around a third of Ecuadorians do not use internet and only 38 percent of rural households have access to fixed internet compared to 60 percent across the country. In addition, 71 percent of the unconnected in Ecuador mentioned internet prices as the main obstacle to being online.
• Low adoption of digital public services. Less than 1 percent of the country’s internet users have used the internet to carry out procedures with public entities or government agencies. In addition, Ecuador ranks 13 out of 33 LAC countries as measured by the UN’s E-Government Development Index.
• Low adoption of digital financial services. 47 percent of adults made or received digital payments in 2021, below LAC’s average of 66 percent.
• Limited digital businesses. Ecuador has a small number of digital businesses relative to GDP and population, below regional peers like Belize, Brazil, Chile, Honduras, Jamaica, and Uruguay.
• Lack of measurable policy frameworks for digital skills development. Ecuador’s digital skills development frameworks lack specific measures and policy instruments to assess and guide students' progress. Ecuador ranks 98th out of 141 countries on the World Economic Forum's digital skills index, highlighting the lack of necessary skills to benefit from the digital economy.
• Unpreparedness for potential cyberattacks. The country lacks systematic cybersecurity enablers and safeguards, such as a national cyber crisis management framework and a national incident response team. ITU’s 2020 Global Cybersecurity Index ranked Ecuador 119th out of 182 countries and 19th in the Americas region, underscoring the country's vulnerability to potential attacks.
Policy priorities:
1. Digital Infrastructure: Invest in fixed and mobile infrastructure and international bandwidth in remote areas and leverage regulatory tools to lower internet prices.
2. Digital Public Platforms: Streamline services with whole-of-government standards to ensure interoperability and provide a comprehensive digital transformation framework for end-to-end citizen use.
3. Digital Financial Services: Expand DFS adoption by promoting the market entry of fintech companies, investing in fast and interoperable payment infrastructures, and digitizing government payments.
4. Digital Businesses: Update digital market regulations for new digital business models and identify ways to increase the availability of venture capital financing for digital start-ups.
5. Digital Skills: Create a comprehensive framework to guide and measure student progress in digital skills from primary to higher education.
6. Trust Environment: Strengthen the country’s incident response management and production of critical information infrastructures through the implementation of the national strategy.