Latin America: Opportunities in Emerging Markets

13 September, 2017
Maria Alfonzo, General Counsel - Latin America
Maria AlfonzoGeneral Counsel - Latin America

Latin America (LatAm) comprises 21 countries with a combined population of approximately 628 million, which is predicted to soar to around 800 million by 2050 (source: UN World Population Prospects). For Earthport, LatAm offers considerable potential and growth opportunity due to the region’s high volume of inbound and outbound payments.

For instance, LatAm is one of the world’s leading recipients of remittances both by volume and in per capita terms. Furthermore, even though LatAm has often been characterised by political instability, corruption and economic volatility – witness current events in Venezuela and Brazil – the economy in the region is expected to expand by 1.2% in 2017, followed by 2.1% in 2018 (source: World Bank).

Earthport’s priority markets in the region are Brazil, Colombia, Peru, Uruguay, Paraguay, Chile and Argentina. Chile has been one of LatAm’s fastest-growing economies in recent years, while Paraguay has seen extraordinary growth in the past few years due to a sound economic base, a solid financial system and significant poverty reduction policies. Peru’s economy has also been on a positive trajectory over the past ten years.

We currently have a local entity incorporated in Paraguay – Earthport Paraguay S.A. – which gives us the springboard we need to broaden our footprint and demonstrate Earthport’s objective of increasing visibility in the region. Additionally, we have bank partners offering an offshore model in Brazil and Colombia.

Due to increased global activity and more rigorous international financial regulations, one of the biggest challenges from a regulatory compliance perspective facing the financial sector in LatAm countries is adapting their financial regulations and infrastructure to the accelerating technological changes driven by mobile devices and innovative non-financial institutions.

Even though countries in the region share socio-economic similarities, in terms of regulations, legal structures, business practices and protocol, technology and general economic development, these markets pose different challenges and present varying levels of opportunities. For this reason, an in-depth analysis of applicable regulations and consultations with the local regulator is often needed in order to reach an accurate determination of Earthport’s operational model in the jurisdiction.

LatAm regional economic integration is crucial for cooperation. The World Bank has long advocated the need for greater collaboration between countries, arguing that it will make the region more competitive across its capital and labour markets, while helping to foster the long-term economic growth needed to reduce poverty. Integration could also harmonise regulations in the banking sector, thereby contributing to financial inclusion in the region and eventually facilitating the movement of funds and increasing e-commerce.  

Due to complex FX controls in some countries and a heavily regulated landscape, Earthport’s presence in LatAm requires investment, expertise and patience but we are committed to building on our position in the region.

By understanding the potential of LatAm and identifying key emerging markets, we expect to have a significant presence in the region in the near future. This will enable us to offer routes into complex markets and further expand our global network.

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