Chapter 6. Affordability, government charges and digital inclusion

This chapter focuses on good practices aimed at increasing the affordability of broadband services and digital inclusion. It outlines mechanisms that help reduce the costs of services and devices, taking into consideration taxation and government charges. It also examines how to promote further digital and financial inclusion, by using ICTs to overcome barriers resulting from such factors as affordability or for people with special needs.

Information and communication technologies (ICTs) and specifically broadband are general-purpose technologies that can be applied to a wide range of economic and social activities. Their positive effects on development have been well documented. More widespread use of ICTs translates into more social development and general economic growth. Given the large economic and social positive externalities of ICTs, governments should promote their use. This role requires, among other things, making the adoption and use of ICT affordable. Policies should aim to reduce the “affordability gap”, defined as the number of people or households who do not access ICT services because they are not able to cover such expenses.

As competition generally results in more investment, better quality, increased supply and lower prices, the creation of a competitive framework is the single most important initiative that authorities can take to increase affordability. The difference in consumer demand that theoretically exists between any given market structure and a fully competitive market is usually described as the “market gap”. It can be efficiently addressed with comprehensive policies that promote competition and lower barriers to entry. Yet, even in a perfectly competitive market, certain market failures may prevent areas or groups from being reached commercially without some form of intervention, commonly referred to as the “access gap” (Navas-Sabater, Dymond and Juntunen, 2002).

The recognition that some areas or groups, because they are located in isolated zones or because they cannot afford certain services, are not able automatically to benefit from competitive markets has prompted government intervention, including policies for universal service and community access (as discussed in Chapter 5). This chapter focuses on the particular market failure caused by the affordability dimension of the “access gap”, a major challenge to the urban poor in Latin America and the Caribbean (LAC) in particular.

Apart from community access, universal policies and retailing innovations, affordability is also influenced by taxation and other charges imposed by governments, as this chapter will show. Such factors can refer to charges imposed by different levels of government at different stages of the value chain (among them direct sales tax, spectrum usage, rights of way and other fees levied on the deployment of communications networks, import duties, labour taxes, universal service funds, regulatory levies and fees). The taxes different government agencies impose throughout the production chain in order to provide telecommunication services are an important cost factor in the sector, and directly influence affordability. For mobile communications, the GSMA (for GSM Association) estimates that total tax and fee payments as a proportion of mobile revenues were on average 31.9% for a sample of 26 countries, of which seven countries are in the LAC region (GSMA and Deloitte, 2015).1 The price of smartphones with greater functionality may also bar certain disadvantaged groups from enjoying the benefits of digital inclusion, although this is being rapidly addressed by market forces, as was the case with feature phones.

Closing the access gap and promoting digital inclusion requires more than simply ensuring that services are available and affordable. It also requires that these services be relevant and accessible for disadvantaged groups. While the Chapter 1 addresses Sustainable Development Goals (such as targets for the digital inclusion of women) and Chapter 5 delves into the issue of connecting rural populations, this chapter will analyse issues related to digital inclusion, for example, financial inclusion and accessibility to people with special needs. This discussion should include the efforts to resolve other important “demand-side” issues, such as skills (Chapter 9), digital local content (Chapter 10) and consumer trust (Chapters 13, 14 and 15).

Key policy objectives for the LAC region

The main policy objective should be to encourage more people, businesses and governments to increase their use of ICTs. This is easier said than done: penetration still lags behind in LAC countries, businesses have not fully incorporated ICTs into their processes, and usage is still low by international standards. This general objective can be broken down into more specific goals:

Expand connectivity. Policy makers should promote the widespread adoption of ICTs by tackling the obstacles to growth. Such actions could include the promotion of competition, skills for effectively participating in the digital economy, a neutral taxation system, the development of local content, and incentives to promote ICT usage in the private and public sectors (addressed in Chapter 10 on business uptake and in Chapter 12 on digital government, as well as in Chapter 11 on e-health and Chapter 9 on education and skills for the digital economy).
Increase affordability. Governments should aim to increase affordability, not only through expansion of services but also through more specific policies and regulation that have a positive influence on lowering pricing of services and devices, and through targeted redistribution mechanisms aimed at tackling market failures.
Encourage financial inclusion. The use of mobile telephony and broadband for mobile banking can bring poor people into the formal financial system at a relatively low cost, even though challenges related to privacy and security still need to be addressed (Chapters 14 and 15).
Promote the inclusion of those with special needs through the use of ICTs. The use of ICTs helps reduce many of the obstacles faced by people with special needs, helping to fully include them in economies and societies. ICTs have a major contribution to make in integrating those with special needs.

Tools for measurement and analysis in the LAC region

ICTs are a rapidly changing industry involving constant innovation, and today’s cutting-edge technologies quickly become outdated. Governments need to constantly track and benchmark progress towards a set of measurable indicators. This, in turn, will aid the timely development and modification of national policies to better meet connectivity goals.

Affordability is a relative concept that does not lend itself to precise indicators. Market prices should be evaluated periodically to evaluate trends. Specifically, average and minimum available prices should be collected and compared with the distribution of income. This allows for precise measurement of how many people and households need to spend more than an acceptable share of their income to acquire broadband services. International price comparisons are also a useful measurement tool.

Taxation, at least partially, can be measured through estimated total taxes levied on total cost of ownership (TCO) and total cost of use (TCU), the difference between both indicators being the inclusion in TCO of upfront payments (activation and terminal equipment). Other fees along the value chain (as explained below) can be benchmarked with international data. As a reference, the GSMA has been publishing annual statistics on taxation of mobile services for over a decade.2

Progress in gaining access to information and communications technologies (ICTs) among people with special needs can be measured by general indicators that track what percentage of members of such groups have adequate access, and that track the infrastructure that supports such access. The ICT Consultation in support of the High-Level Meeting on Disability and Development at the 68th session of the United Nations General Assembly (ITU, 2013) proposes a full set of indicators for monitoring and promoting the needs of people with disabilities/special needs, but effective implementation of this measurement agenda is not yet complete.

On the one hand, access to ICTs for people with special needs is based on the technology available for each type of impairment the availability of accessible ICT products and services across markets, and affordability. However, progress towards broader enabling conditions also has to be measured. This might include reference to ICTs in disability legislation; the rate of awareness of people with special needs of the use of ICTs; the share of GDP spent on research and development on ICT-enabled solutions for those with special needs; and total patents filed or awarded for ICT-enabled solutions for people with special needs. Other more specific indicators relate to health care, education, professional and lifelong learning, employment, independent living, government services and participation in political and public life. Finally, financial exclusion can be measured based on data showing the percentage of the population who use traditional as well as mobile and online banking.

Overview of the situation in the LAC region

Affordability

A crucial aspect of broadband uptake in the LAC region is affordability. Affordability is a relative concept that should be measured against income. It reflects the financial resources that households and businesses need to access services. In the OECD-IDB questionnaire, when asked about the main barriers to online and ICT services in middle- and low-income groups, LAC countries ranked “high prices for devices/services” as the greatest obstacle (Figure 6.1).

As a rule of thumb, prices that exceed 5% of disposable income substantially reduce demand (Galperin, 2012). Wide income inequalities exacerbate the situation, given that low-income households tend to have income that is disproportionately lower than the average. In Brazil and Mexico, the bottom of the pyramid (defined as those households located in the bottom three income deciles) has an average household income of around 30% of the national average. As both national averages stand at around USD 1 400 PPP per month, a 5% maximum expenditure in telecommunications services would translate to around USD 20 PPP. This would severely limit access.

High-income households (in the two top deciles) whose use of telecommunications services is generally above 90%, tend to account for around 50% to 60% of total household spending on telecommunications. As a percentage of disposable income, the amount spent in these groups is usually well below the 5% threshold. The bottom of the pyramid accounts for only 5% to 10% of total telecommunications revenues. On average, household spending is well below the 5% threshold, due to the fact that ICT penetration is spotty. Of those households that actually spend on ICTs, the average spending significantly exceeds the threshold (Box 6.1).

Box 6.1. Distribution of use of ICT services in Mexico

Use of ICT services in Mexico is extremely uneven. On average, the wealthiest 20% of households (2008) accounted for 47.1% of total household telecommunications spending, which represented 5.75% of total household expenditure. At the other extreme, the lowest three deciles accounted for only 7.6% of total telecom spending, which represented 2.55% of their expenditures. Nevertheless, for those households that reported having paid for the service, 6% of expenditures was spent paying for fixed telephony services, 4% for mobile services, 10.5% for broadband and 2.5% for pay television. Paying for ICTs thus consumes a significant proportion of disposable income (see Figure 6.2).

Mobile telephony charges have decreased steeply in recent years, but this is not the case for fixed telephony and broadband. Mobile operators have invested in and developed service innovations in LAC by introducing prepaid services and daily tariffs for mobile broadband. As a result, more affordable services are now offered, and at least 80% of mobile access in the region is on a prepaid basis (GSMA, 2015).

Nevertheless, in terms of affordability, average products in the market do not tell the full story. A much better picture of the situation can be obtained by reviewing the least expensive option available in each market, on the assumption that access is important to the user even if consumption amounts are capped (and usually very expensive on a per-unit basis). In the second quarter of 2015, the cheapest available prices for fixed broadband plans ranged from USD 14.92 PPP in Brazil to more than USD PPP 50 in Argentina and Venezuela. For mobile broadband (1 gigabyte plans), plans ranged from USD PPP 3.35 in Costa Rica to more than USD PPP 30 in Venezuela and Ecuador (Figure 6.3).

For fixed broadband, in the five years to 2Q2015, prices for the cheapest plans did not change substantially in the LAC region. Three countries (Nicaragua, the Plurinational State of Bolivia [hereafter “Bolivia”] and Honduras) saw large decreases, but they are still three of the most expensive countries. Nine countries saw marginal increases, whereas seven saw marginal decreases. The average cheapest regional price went down by less than 10% (excluding Venezuela) in the same period (Figure 6.4).

In relative terms, six countries had fixed broadband minimum prices of less than 2% and six above 5% of GDP per capita. For mobile broadband, all countries except one offer plans priced under 5% of GDP per capita, with ten of them at under 2% (Figure 6.5). Roughly speaking, these numbers translate into around half those percentages in terms of income per household. As households buy other telecommunications products (mainly voice services), these minimum expenditure percentages are affordable for the average consumer, but an almost unsurmountable burden for the bottom of the pyramid.

Affordability is still an important hurdle for broadband adoption in the LAC region, as prices are still high when compared to income levels and wealth distribution, especially for the most economically disenfranchised segments of the population. A number of LAC countries have started to address this issue. Many operators in the LAC offer “social” service plans (“popular” in Brazil, “social broadband” in Costa Rica). Some governments have subsidised access devices (tablets for students in Colombia and Mexico, while Costa Rica offers a subsidy for families assessed to be living in poverty to buy a computer with Internet access).3 Most countries have free Internet access in certain public places (in Costa Rica, four programmes financed by the Fondación Nacional de Telecomunicaciones (FONATEL) pursue this objective – Connected Communities, Equipped Public Centres, Connected Public Spaces and Solidarity Broadband). Some countries increase affordability by reducing taxes on plans for those with low income (as in Brazil and Colombia’s Vive Digital). Though not specific to telecommunications services, most countries have income redistribution policies that also increase affordability of ICT services.

Taxation and other government-imposed charges

Taxation is necessary in any economy to finance current government spending, support public investment and redistribute income among citizens. That being said, taxation affects supply and prices, influencing demand and reducing affordability. The fiscal regime that applies to the ICT sector must thus be put in perspective with other national goals. Government intervention also needs to consider spending programmes, including income support for low-income households.

ICTs are general-purpose technologies with a positive measurable effect on growth and productivity. From a theoretical perspective, because these technologies have positive economic externalities and generate other social benefits, governments may consider them as goods and services that are potentially useful to promote, including by reducing the tax burden on their supply, adoption and usage. A neutral tax structure that allows for positive externalities can lower barriers to affordability and increase investment. This can result in economic and infrastructure development, increasing productivity and employment and benefiting education, health care and overall development, which in turn can promote growth and additional tax revenues.

In practice, however, many governments impose additional and sometimes substantial industry- specific taxation on telecommunications services. Revenue collection may be carried out efficiently and at a low cost, as the sector is a significant part of the economy, concentrated in a handful of large formal corporations. For example, the two largest telecommunications companies in Brazil accounted for 6.3% of the revenues collected from the 20 largest taxpayers in 2014 (11.2%, if Petrobrás, the state-owned oil company, is excluded). In the short term, higher tax revenues collected by a small number of large taxpayers may often win out over the longer-term potential economic and social benefits for development and may entail other detrimental effects, where they are, for example, not neutral (e.g. favour one technology over another).

This creates a dilemma, because overtaxing the sector to generate revenue conflicts with a more neutral taxing approach (or, at least, applying the general taxation regime), which potentially has a more positive, less distorting effect on the economy going forward. Most LAC countries have chosen the first option. Most studies that argue for neutral taxation, however, stress the value of the second option.

There are many ways to develop a taxonomy of taxes. This report groups them into three almost non-overlapping categories. It is important to stress that many payments to governments are not strictly considered taxes, but since their effect is similar to that of levying a tax, they are included in the following classification.

The first are general taxes, broad-based taxes that usually apply to all activities in the economy and should be considered the basis for evaluating how much distortion special taxes cause. These taxes on consumers comprise value-added taxes (VAT), sales taxes or their equivalent. On companies, these are regular taxes that are imposed on profits, as well as non-recoverable taxes on investments (e.g. product-type VAT). Labour contributions (social security, payroll taxes, etc.) and other taxes that apply to all players in the economy also belong in this category. Of course, broad-based taxes often have numerous exemptions and exclusions for distributional, administrative or political reasons.

The second, special taxes or fees to consumers, which are levied on the sales price and take several different forms, all have a negative effect on demand:

On overall spending on a specific product or service. This is usually an additional percentage on a consumer’s bill, in addition to VAT. For example, Mexico applies a 3% “special tax” on all telecommunications services except Internet and public and rural telephony. It was imposed in 2010 with other tax rate increases (VAT and income tax). Since 2003, Colombia has applied a 4% differentiated VAT on mobile services. This tax finances sports at the national and state level. The Dominican Republic charges a 10% excise tax and a 2% tax to finance the regulator and projects for universal service. In El Salvador, at the end of 2015, the government approved the imposition of a 5% tax on telecommunications services to finance security plans.4
On usage. Special taxes on usage can either be charged at the actual price (sometimes at different rates for different services – calls, SMS, data) or on a per-event basis (calls, SMS). They are sometimes defined as a percentage of price, sometimes as a fixed amount. For example, Jamaica imposes a surcharge of around USD 0.4 cents per mobile voice minute.
On terminal equipment and handsets. A terminal device is indispensable for access to telecommunications networks. These devices (modems, handsets, dongles, cable boxes, tablets, computers and so on) are expensive and represent an important overall percentage of the total cost of access to ICTs, even though they could potentially be financed or subsidised by operators (usually at the cost of raising switching costs or charging more for services). Taxes on such devices become a barrier to access (especially for people with lower incomes) and can hinder adoption of newer services and technologies. These taxes can take several different forms (e.g. higher VAT rates, “luxury tax,” constant amount per unit, higher import duties). Some countries have gone even further, applying different rates for different types of devices (e.g. feature phone vs. smartphone, or even exemptions, if the price is under a certain amount) or even different origins (e.g. imported vs. locally manufactured). For example, in 2010, Argentina imposed a 26.63% import duty on mobile phones, LCD monitors and PCs; it has recently been reduced to 20.5%. Ecuador imposes quotas on the import of smartphones. Many of these taxes are driven by the need to increase government revenue or influence the international balance of payments, but others are used to give incentives to local production or to address current-account imbalances.
On activation or on installed base in service. Some countries impose a one-time fee per new connection. For example, Jamaica has a 0.8% surcharge on the value of the Subscriber Identity Module (SIM). Brazil charges BRL 26.83 (around USD 8) per new connection. Some countries in the LAC region apply yearly fees for active users; for example, Brazil has imposed this fee (of BRL 13.42, or around USD 4, per connection per year) for many years.

The third and final classification are special taxes/fees to network and service providers. Operators and service providers pay a myriad different government charges. Some of these payments are explicitly labelled as taxes, while others are linked to permits, the use or exploitation of publicly owned resources, or to special regulatory conditions. This category can be grouped into five types:

Special taxes on revenues, profits or market shares. Certain countries apply a tax as a percentage of revenues on network and service providers. Brazil, on top of the Universal Service Fund (USF) contribution, imposes a levy of 0.5% for a technological development fund. El Salvador, imposes a tax of 5% of total incomes for entities with incomes above USD 500 000 per year. Sometimes, a different tax rate applies to profits from telecommunication service providers. Panama applied different rates until 2013. Ecuador applies certain fees based on the market share of operators.
Regulatory contributions:
- Universal Service Funds contributions. As shown in Chapter 6, on the extension of broadband access, operators are sometimes obliged to make payments for funds aimed at increasing universal service. These payments take several forms, but they are usually calculated as a percentage of revenue, such as Brazil’s 1% Telecommunications Services Universalisation Fund (FUST) contribution.
- Licensing and permit contributions. Most regulators charge administrative fees for issuing permits and licenses to operate. In many countries, these fees are either for processes that could be considered unnecessary or are above the cost of providing the license.
- Inspection fees. Some countries charge a fee (either on a per-event basis or on a yearly basis) to inspect and verify networks. Through Fistel, Brazil charges a telecommunications inspection fee (Taxa de Fiscalização de Instalação [TFI]) for verifying installation and an annual payment for inspection (Taxa de Fiscalização de Funcionamento [TFF]).
- Other regulatory levies. Some regulators impose a charge to support regulatory activities. Certain countries impose charges for other goals, such as Brazil’s Technological Development Fund (FUNTTEL), which receives 0.5% of revenues to encourage innovation in the sector, or Costa Rica’s FONATEL contribution, which can range from 1.5% to 3% of the gross income of operators, depending on the projects to be financed each year.
Exploitation of publicly owned resources. The deployment of telecommunications networks entails the use of many publicly owned resources, such as buildings, rights of way, public spaces and land, poles, towers, ducts, etc. Governments usually set charges on these resources, sometimes well above costs. Although strictly speaking these are not taxes, they do have similar effects on the production function. Many of these levies represent a substantial part of local income for cities and municipalities, so setting them close to true costs might prove politically difficult. As a general rule, it is recommended that government levies for these concepts be set at the true costs (the so-called Diamond-Mirrlees Efficiency Theorem) (see Hammond, 2000). Of course, when publicly owned resources are scarce (as the appropriate public space for deploying towers can sometimes be), other mechanisms to reflect scarcity should be used instead. See Chapter 4, on competition and infrastructure bottlenecks for good practices in this area.
Spectrum fees. The rights to use spectrum are the ultimate example of exploitation of publicly owned resources, and as such, deserve to be treated separately. Spectrum can represent a significant cost of building and operating a telecommunications network. Chapter 3 addresses the most important aspects of efficient spectrum management. The OECD recommends using auctions as the most efficient way to charge the right price and let spectrum be assigned to those who value it the most. Whereas some countries license spectrum with only an upfront payment, others have opted for a two-part fee, composed of an initial payment (usually the amount offered by the bidder during the auction process) and annual spectrum usage fees. Assuming the cost of capital is the same for public and private funds, in terms of net present value, these two amounts are theoretically equivalent. Nevertheless, such annual government charges impose costs incurred by all players and thus most likely trickle down to final prices; they could also affect competition, because on a per-unit basis, spectrum that is more heavily used pays a lower spectrum unit fee. This is an important consideration for smaller players, which on a proportional basis, pay higher spectrum annual fees than larger players.
Special import duties and custom taxes. In most LAC countries, a significant percentage of network equipment (hardware and software alike, such as switches, base stations, computer systems) is imported. These taxes affect the production value-chain and, as such, should be carefully considered;5 they could even distort certain decisions, such as using more spectrum instead of installing more radio base stations. Import duties could also translate into underinvestment, compromising quality and supply (especially in remote areas and less profitable deployments).

There is an additional tax that does not fit into the taxonomy described above, because it chiefly affects directly consumers living abroad. Especially in highly regulated environments with monopolistic provision of services, some countries apply high surcharges on international incoming traffic. Such measures can have negative implications for the provision of international telecommunications services (OECD, 2009).

While less prevalent in the LAC region than in Africa and some parts of Asia, the practice of applying surcharges to the termination of incoming international calls can also lead to market distortions. In some cases, they entail additional costs for the state, due to enforcement (e.g. where an arbitrage opportunity is created, such as in the case of so-called SIM box fraud) (OECD, 2014). In addition, this can lead to double taxation for consumers in the country making the call, including in the LAC region. The end result is higher prices and supressed demand, often affecting the diaspora (who tend to be less well off in the countries where they are living) when calling family and friends in the countries applying the surcharges.

With so many different taxes and charges applied to telecommunications services, a straightforward cross-country comparison is extremely difficult. An aggregate comparison can be made by evaluating how much tax is levied on handset acquisition and service costs over the expected life of the service contract (total cost of ownership [TCO]). Though this approach reveals how substantial the additional charges are, it does not help assess the level of distortion caused by the different charges.

According to the GSMA, which periodically assesses taxes in the mobile sector worldwide, LAC countries on average charged 20.1% on TCO in 2014. For the set of countries analysed in previous studies,6 from 2010/2011, total tax on TCO increased from 17% to 18.4% (Figure 6.6). For the 27 OECD countries tracked by the GSMA (excluding Turkey, which currently taxes mobile services at 38.32%), total tax went from 20.0% to 20.95% in the same period.

Most LAC countries apply some sector-specific taxes along the production chain. Most of these taxes end up affecting end-user prices, which in turn decrease demand and affordability. These charges also have implications for the deployment of networks, which have a negative effect on supply, quality and coverage. They can also distort choices if not applied in a technologically neutral manner, something that is particularly important in an industry dependent on dynamic technological change.

Financial inclusion

While communication services have become widespread in the LAC region (109% penetration of mobile telecommunication services, for example, according to GSMA), a large proportion of low-income populations are still largely excluded from financial services. Average banking penetration for high-income OECD countries is 94%; in the LAC region, an average of 51.3% of the adult population has accounts in financial institutions (e.g. banks) (World Bank, 2014).

Although there has been considerable growth (around 10 percentage points) in account ownership in financial institutions in the region (World Bank, 2014), some population groups remain at the top of exclusion levels in the use of financial services – women who are not heads of households, youth, pensioners, students, people of lower income and education levels, and the rural population (Garcia et al, 2013).

ICTs, especially mobile telephony and broadband, are becoming key enablers of financial inclusion. Online banking, payment and transfers are increasingly used to access financial services world wide. Mobile services have played a central role in connecting lower-income populations. Mobile financial services are bringing financial services to millions of unbanked and under-banked people. As of 2014, more than 250 services had been deployed in 89 countries, most in the sub-Saharan region, where M-Pesa has had considerable success, but LAC has also seen its share of mobile financial service deployments, with around 50 currently active (Table 6.1) (GSMA, 2014).

Table 6.1. Mobile financial services available in the LAC region
	Financial services providers
Argentina	Sicom (m, s)
Bolivia	Tigo (Millicom) (m)
Brazil	Vivo (Telefónica) (m)	Oi (m)
Colombia	DaviPlata (m)	BanColombia (s)
Dominican Republic	Orange (m)
El Salvador	Tigo (Millicom) (m)
Guatemala	Tigo (Millicom) (m)
Guyana	Guyana Telephone and Telegraph Company (m)
Haiti	Digicel (m)	Haitipay (m)
Honduras	Tigo (Millicom) (m, i)
Mexico	eZuza (m)	Telcel (América Móvil) (m)
Paraguay	Tigo (Millicom) (m, i, c)
Note: m: Mobile money; i: Mobile insurance; c: Mobile credit and s: Mobile savings. For further details on each service, GSMA (2016), Mobile Money Deployment Tracker, is available at www.gsma.com/mobilefordevelopment/programmes/mobile-money-for-the-unbanked/insights/tracker.
Source: Adapted from GSMA (2014), Mobile Taxes and Fees, A Toolkit of Principles and Evidence, www.gsma.com/publicpolicy/wp-content/uploads/2014/02/Mobile-taxes-and-fees-A-toolkit-of-principles-and-evidence_fullreport-FINAL1.pdf.

Despite having a mobile financial accounts penetration of only 2.1% (World Bank, 2014), the LAC region has witnessed the highest growth of mobile financial services subscriptions in the world, with the number of financial accounts growing by 50% between December 2013 and December 2014, and reaching 14.9 million registered accounts (GSMA, 2014). It should be noted, though, that the number of active accounts is less than half that figure, at 6.2 million, and small by comparison with the 61.9 million accounts in sub-Saharan Africa.

The LAC region is unusual in having a high percentage of people using accounts to receive government transfers (9%). Among other regions in the world, it lags only behind high-income OECD countries, with 17.2% of people receiving transfers in this fashion. The LAC region is also ahead of other regions, with the exception of the OECD countries, with respect to the use of credit and debit cards, at 18% and 27%, respectively (World Bank, 2014).

Given the LAC region’s more developed financial sector and use of financial services, the implementation of government programmes of cash transfers has probably been an important force in bringing people into the formal financial sector, minimising the demand for mobile financial services by comparison with other regions of the world. Governments can play an important role in harnessing ICTs, mobile telephony and broadband to spur more inclusive development.

Individuals with special needs

While methodologies among countries may vary, the prevalence of individuals with special needs in Latin America and the Caribbean has been reported to range from 2.9% in the Bahamas to 23.9% in Brazil (CEPAL, 2013). Around 12%, or 66 million individuals, in Latin America and the Caribbean live with at least one disability, such as visual and mobility limitations, hearing and speaking disabilities and intellectual and developmental limitations. This last group, which includes people with mental or cognitive disabilities, includes those, according to CEPAL, who face the greatest challenges in integrating themselves in social and economic activities in the LAC region.

A key challenge in the LAC region is collecting basic statistics on people with disabilities. Gathering disaggregated data on their specific limitations, gender, income and use of technology is an even more difficult task for certain countries. The lack of knowledge of the conditions such individuals face contributes to the fact that people with special needs continue to be remain in low-income groups. In tackling the issue of digital inclusion, initiatives that target both the affordability and the accessibility of ICTs are crucial to help the entire population benefit from the digital dividends.