Lags to riches

Poor connectivity holds back El Salvador.

El Salvador has the second worst internet connectivity in Latin America, behind Honduras, according to the International Telecommunications Union. While mobile penetration is high at 1.5 per person, internet penetration is just 45%, although this has grown rapidly from 37% in 2018.

Marcelo Cabrol, Manager of the Social Sector at the Inter-American Development Bank explains why this is a serious problem for the country, “Lack of connectivity not only imposes a technological barrier, it holds back access to healthcare, education, social services, work and the economy in general.”

“Lack of connectivity not only imposes a technological barrier, it holds back access to healthcare, education, social services, work and the economy.” 

Marcelo Cabrol, Manager of the Social Sector, Inter-American Development Bank. 

Such poor connectivity, especially in rural areas, has exacerbated social disparity during the coronavirus pandemic, as an educational policy expert in El Salvador explains, “We have seen a lot of desertion, education is no longer public and free, because the internet is private. People with limited resource cannot pay for the connectivity required for online education.”

The government is aware of the problem and have been attempting to find solutions. The Ministry of Education reported that around 25% of students due to sit the national Avanzo exams this week have problems connecting to the internet.

In response, The Ministry of Education, the Ministry of Innovation of the Presidency, the General Superintendency of Electricity and Telecommunications signed a co-operation agreement with Tigo, Claro and Movistar to allow students to navigate between providers at no cost in order to take the exam.

This is just a sticking plaster though, to fix the structural barriers to widespread internet coverage investment must be promoted.

We spoke to an executive at Liberty Latin America, “El Salvador is a commercially interesting market but there is a stagnant economy, low margins and it is very competitive. You need to be very efficient to survive. There is also the problem of violence which is scares foreign investment.”

“El Salvador is a commercially interesting market but there is a stagnant economy, low margins and it is very competitive.” 

Executive, Liberty Latin America 

The same source continues to outline problems with the market, “Regulation has been politicised. Also, the Superintendency of Competition (SC) is very strong and has prevented consolidation that would drive efficiencies.”

The SC stopped a proposed acquisition of Digicel by Claro (América Móvil) in 2012 and last year América Móvil announced it was cancelling a deal to acquire Telefonica Moviles El Salvador, due to conditions imposed by the SC – thought to be related to spectrum reallocation, social remedies, pricing and quality guarantees.

El Salvador is being held back by its poor internet connectivity; the government must encourage private investment with a long-term perspective. We will continue to monitor the situation.

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