Updated: Sep 14, 2021
Bolivia’s economy rebounds amid ongoing pandemic
This year, Bolivia has recorded a trade surplus for the first time in 6 years. This US$ 1.090 million surplus, paired with a drop in unemployment to 6,4% in July, comes as very good news after the country registered 6 consecutive years of commercial deficit, due to the structural weaknesses of the Bolivian market and the management of its debt, as well as the fall of its exports after the 2014 shock and a high level of imports sustained over the years.
Global demand is boosting Bolivian exports
The reactivation of the global economy post-pandemic has caused a sudden surge in demand for raw materials and manufactured goods, which has in turn stimulated Bolivia’s export sector. Bolivia began to show signs of recovery in its economy since January 2021, mainly in sectors such as construction, mining, hydrocarbons, and manufacturing. In a statement in August, the Bolivian Minister of Hydrocarbons and Energy Franklin Molina announced an estimate increase of US$ 248 million in the sale of hydrocarbons compared to 2020. In addition, the production of metals such as zinc, tin, lead, gold and silver, fuelled by a heavy exterior demand, prompted a 54% overall growth of the mining sector. Although not as significant, the 2.5% increase of national electricity production (which had dropped to -7.7% in 2020) highlights the return of demand for energy to produce goods and services in Bolivia. Overall, this positive trend gives hope for a long-term recovery of foreign trade, which could support the reactivation of manufacturing and investments in the public sector.
An overlook of Bolivia’s promising start-up ecosystem
Bolivia has been considered one of the top performing economies in Latin America for the past few years – but with over 50% of unbanked people, high business informality and a 20% poverty rate. It is in this challenging environment, in the pursuit of solutions to better the everyday life of Bolivian people, that a handful of young entrepreneurs have created start-ups to take advantage of the numerous opportunities for innovation in the country, particularly in the banking industry. A few fintech start-ups have blossomed in the past years to tackle difficulties financial institutions and businesses are facing today.
6 creative start-ups that are offering innovative solutions in the fintech industry
One of them is Planifica, an online platform offering virtual financial guidance to help Bolivians make the right financial choices in their everyday life. Another one is Crowdi, a company focused on giving its clients access to the best investment alternatives, value reserves, and profitability all through crowdfunding. iZi has developed e-commerce management, invoicing and data analysis tech solutions for businesses while Intium provides tools to enhance the overall onboarding process of customers for financial institution. Another successful start-up called Click enables payments using QR codes and Blink has developed an innovative mobile ATM network using taxi drivers.
Despite the lack of resources and governmental support, these few rising start-ups have managed to make a name for themselves and are currently experiencing important growth. Bolivia has everything needed to be positioned as a generator of successful start-ups and these few established ones are already helping to pave the way for a thriving fintech start-up ecosystem in the country.
Lithium, Bolivia’s “white gold”.
Lithium, an essential to our battery-driven world
Lithium, sometimes referred to as the “white gold” or “white petroleum” of Latin America, has become the most indispensable metal in the manufacturing of all types of high-tech objects essential to our battery-driven world, and a key mineral in the energy transition towards a low carbon future. This “shift from a fuel-intensive to a material-intensive energy system”, as stated by the International Energy Agency (IEA) in May, means the demand for lithium will experience a boom, and the mining of this material will need to pick up speed, especially in Chile, Argentina, and Bolivia — together referred to as the “Lithium Triangle”.
A demand expected to grow eightfold by 2027
The demand for lithium has skyrocketed in the past 10 years and is expected to grow eightfold by 2027. Furthermore, the global market for EV (electric vehicle) batteries is expected to hit an unprecedented record of $1 trillion in 2030. Securing access to this valuable resource has never been as important - it has become a strategic investment for an increasing number of governments around the world – but most of all, it has highlighted one of the most promising cases for production and growth in the lithium industry: Bolivia.
President Arce’s neo-liberal approach to metamorphose Bolivia’s national production
President Arce’s government recently resumed the push towards the capitalization of Bolivia’s abundant resources, as the country is home to one of the largest lithium deposits in the world (21 million tons of lithium lie under the pre-historic lake beds of Salar de Uyuni). Unlike its predecessor Evo Morales, the current government has adopted a more liberal approach and has called in April 2021 for 9 international companies to develop a new extraction technology, in hopes of settling an efficient and geologically adapted industrial production of lithium.
In addition, the government has been supporting a vertically integrated lithium industry, to keep the raw materials exporting within bounds and favour a production within their territory. In 2019, the first domestic-made electric car was produced in Bolivia by the national company Quantum Motors. This was a major step in the development of a local lithium manufacturing industry and the promotion of sustainable transport in Bolivia. Although developing nationally owned infrastructure for lithium is the government's priority, they are also supporting companies importing or manufacturing electric vehicles or manufactured batteries with a series of incentives, such as banning tariffs in certain industrial free zones of the country. The new Bolivian government seems to be taking a more centrist approach, in hopes of negotiating balanced deals with foreign companies that benefit Bolivians and allow growth in the sector.