A Real Success Story of E-commerce in the Southern Cone of Argentina, Brazil, Chile, Paraguay, and Uruguay

The future holds further growth and greater opportunities for companies in Latin America and the Caribbean as they continue to consolidate their position as major players in global e-commerce

E-commerce in the Southern Cone

by Florencia Attademo-Hirt - Fabrizio Opertti

In recent years, a boom in e-commerce has swept the world, transforming how businesses operate and people shop. 

The Southern Cone countries—Argentina, Brazil, Chile, Paraguay, and Uruguay—are no strangers to this digital revolution.  E-commerce is becoming increasingly important in these economies, creating new opportunities for businesses to reach customers worldwide, diversify their export markets, and boost sales.  It’s also driving growth in logistics, payment systems, and financial services.

The spread of e-commerce is hugely significant.  According to the latest estimates, e-commerce sales in Latin America and the Caribbean will exceed US$117 billion by 2023 and are expected to almost double by 2028.  This growth could potentially lower the cost of products for Latin Americans by increasing efficiency, cutting out intermediaries, and reducing transaction costs.  It also gives consumers access to a greater quantity and variety of goods and services.

The region is still facing challenges: the data shows that domestic and cross-border e-commerce in Latin America and the Caribbean represent just 0.77% of GDP, one of the lowest shares in the world, compared to 3.11% globally.  There are also significant differences between countries: Argentina, Brazil, and Mexico alone account for more than 70% of the region’s e-commerce.

To better understand the progress made by companies in this field in the Southern Cone, a new IDB report takes stock of the current status of this form of trade.  The report is based on data on the adoption of e-commerce and online transactions, as well as a proprietary survey examining how companies in the five countries use e-commerce and the challenges they face in building their online sales.  It also discusses the outcomes of specific government policies and makes several policy recommendations to boost cross-border online sales.

The survey led to some interesting findings:

- E-commerce is widespread: almost half of microbusinesses use a marketplace as part of their sales operations to individual consumers, while that percentage is around 70% for medium and large companies.  Companies of all sizes, from small businesses to large corporations, are embracing the opportunity to reach consumers online.

- International expansion: One third of the companies surveyed that use marketplaces for sales report that they are expanding their operations internationally through e-commerce.  This approach enables companies to enter new markets, increase their opportunities for growth, and diversify their revenue streams.

- Greater customer acquisition, revenues, export opportunities, and lower costs: whether through marketplaces or their own online stores, sellers report that e-commerce brings significant benefits in terms of new customers, sales, and export opportunities.  They’ve also forged closer ties with local suppliers, which positively impacted their communities.  About one-fifth of companies selling through online marketplaces have hired new services in their home markets, and one-fourth have increased the services they use as a result of selling online.  In contrast, companies using social networks as a sales channel are less likely to see these benefits.  However, even these businesses say that they have gained new customers, improved the customer experience, and increased sales to existing customers due to using these channels.

- Logistics challenges: 60% of companies selling goods say that high domestic logistics costs have cost them growth, while 57% attribute this loss to the quality of international logistics and 56% to the cost of these.

- Data movement and cybersecurity challenges: the top challenges for services companies are moving data across borders (64% of respondents), the quality of internet connections (60%), managing market access rules (55%), and cybersecurity (54%).

The survey reveals that e-commerce is a real success story in the Southern Cone.  Businesses of all sizes are using this online revolution to expand their operations.  However, the private sector’s logistical, regulatory, and data security challenges should not be overlooked.

The future holds further growth and greater opportunities for companies in Latin America and the Caribbean as they continue to consolidate their position as major players in global e-commerce.

For these reasons, the IDB is deeply committed to strengthening e-commerce in Latin America and the Caribbean.  We firmly believe in creating and nurturing connections between Latin American and Caribbean companies and helping them find new business partners and export markets.  To achieve this, we build business networks, create spaces for dialogue, and facilitate matchmaking among companies in the region.  We also help generate empirical evidence to inform public policy.  For example, we’ve carried out studies on logistical barriers to e-commerce, financial tools for businesses, and the challenges of online payments.  We’ve also emphasized the importance of rules defining online intermediaries’ work and responsibilities and their impact on the digital economy, including creating and distributing third-party content used by platforms and access to this.

We also created ConnectAmericas, a regional and global platform that has become the region’s leading online network for entrepreneurs.  It has more than 800,000 registered users and received more than 14 million visits.  Online platforms like ConnectAmericas play a crucial role in reducing search costs, which makes it easier for companies to export.  A study of companies using ConnectAmericas found that their exports increased by 17% after joining the platform.

E-commerce is not only a critical export channel for the region, it’s also a potentially significant growth engine for businesses.

In light of this positive outlook, we at the IDB will continue to work closely with the private and public sectors to foster this momentum.  Our goal is to help build a more inclusive and developed region where e-commerce drives progress and prosperity for all.

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The Bahamas Government Announces Comprehensive Energy Reforms

Announcement of New and Comprehensive Energy Reforms across the Commonwealth of The Bahamas by Hon. JoBeth Coleby-Davis, M.P., Minister of Energy and Transport

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Our specific reforms include:

▪ Building of utility-scale solar power in the Family Islands

▪ Expansion of solar projects on New Providence

▪ Modernization of the Electricity Grid and Transmission and Distribution Network for New Providence, through a partnership between BPL and Island Grid

▪ Transforming Energy Generation through LNG Implementation in New Providence

and

▪ Equity Rate Adjustment. Reform

Reform 1: Building of utility-scale solar power in the Family Islands

In December 2023, the Government of The Bahamas and BPL launched a Request for Proposals (RFP) Family Island New Energy Generation via Micro- Grids, Clean Fuel & Renewables.

The goal of the RFPs is to create more independence in energy generation on all our islands, utilizing clean fuel and renewables.

We invited bids from respondents interested in offering renewable energy based Independent Power Producer projects for multiple systems in Abaco, Andros, Bimini, Eleuthera, Exuma, Long Island, San Salvador, and The Berry Islands.

The projects aim to regulate resource management, improve energy storage capacity, facilitate new generation capabilities, and enhance sustainability efforts.  The development of microgrids on these various islands will ensure consistent and reliable power output for its inhabitants, 24 hours a day.

Each project will be managed locally to minimize wastage, reduce generation costs, and will ultimately drive each island involved toward the goal of self-sustainability.

All proposals were thoroughly reviewed and scored by an Evaluation Committee, with broad experience in the public service, energy, and legal fields.

I am pleased to share that the recommended IPP for Abaco is Verdant and Consus, Andros is Providence Advisors, Eleuthera is Verdant and Consus, Exuma is INTI Corporation and Osprey Construction, and Long Island, San Salvador, and The Berry Islands is Wilkem Technologies and Roswall Incorporation.

Currently, we are negotiating the power purchase agreements.

Each island has unique energy requirements and geographical constraints, necessitating a customized energy solution.  To ensure the most suitable approach, each island's technical specifications were thoroughly reviewed for applicability.  We have finalized the design criteria in terms of agreement and selected both the microgrid controller and the communication profile.  Long lead time supply chain equipment has been identified and their specifications have been submitted to the respective manufacturers.  We anticipate that ground-breaking will begin by the end of 2024.

To ensure operational efficiency, every Independent Power Producer was required to submit a rigorous training programme for BPL staff.  This included operating and maintaining gas engines, utility-scale solar, battery energy storage systems, microturbines and biomass to electricity.  These leading-edge technologies will put BPL at the forefront of the global energy transformation.

Reform 2: Expansion of Solar Projects on New Providence

The New Providence RFP invited independent power producers to interconnect more renewable energy options to the national grid.

This initiative provides a green energy solution for the existing battery energy storage while adding renewable energy to the overall energy mix.

Approximately 70 MW of solar power and 35 MW of battery energy storage systems will be integrated into the existing grid.  25MW of the solar energy will be paired with the 25MWH of battery energy storage system at the Blue Hills Power Station.

I am pleased to share that the recommended independent power producer for New Providence are Eco Energy, INTI, and Compass.

The power purchase agreements are currently being negotiated.

Reform 3: Modernization of the Electricity Grid and Transmission and Distribution Network for New Providence, through a partnership between BPL and Island Grid

To understand reform 3, permit me to share a few irrefutable facts:

• BPL operates 29 power stations on 17 islands.

• In less than a decade, BPL/ BEC amassed almost $500M in debt.

• BPL has loan interest payments of more than $28M annually and a $122M pension liability.

• BPL has about 90MW of aged/obsolete generation assets teetering on the edge in New Providence and another 30MW in the family islands.

• To augment its generation needs in New Providence and the Family Islands, BPL relies on 145MW rental generation between New Providence and the Family Island costing about $42M annually.

• BPL’s T&D infrastructure is in desperate need of upgrades as much of it dates to the 1980s and early 1990s with few enhancements to reduce significant system losses.

• BPL’s present infrastructure is crippled by the effects of climate change with soaring temperatures and natural disasters having a detrimental effect on the company’s assets.

• Finally, BPL is not well positioned to complement the country’s growth projections for the next 5-10 years as generation projections call 340MW of power needed for New Providence and 100MW for the Family Islands.

The partnership with Island Grid will extend the infrastructure capabilities beyond BPL alone can do by bringing in a generation and T&D expert to pursue much-needed upgrades.

It is important to share that Island Grid has over 60 years’ experience in delivering best in class energy infrastructure.  The company’s projects included work on Walkers Cay, Grand Cayman, Grand Bahama, and Puerto Rico.

The partnership with Island Grid, will lower the fuel cost, and improve operating efficiency.

The benefit of this arrangement will be felt through affordable energy prices and fewer power interruptions.

Energy costs will be lowered through several mechanisms.  First is the shift towards generation options with lower-cost fuels or no-cost fuels in the case of renewable generation.  Second is the upgrade of the grid, which will bring about a more efficient delivery of power, so less energy is wasted getting the power from the generation plant to your home.  Third, a well-built and well-sized system will allow for lower ongoing maintenance costs than what we currently have today.  All these savings will be passed along to customers.

The T&D agreement will improve reliability on New Providence.

The T&D work is designed to improve reliability along several dimensions: the addition of a new switching station and a new transmission line and proper looping of the system, reconductoring work, substation protection upgrades and targeted distribution protection schemes and voltage regulation.  These are foundational to the reliable operation of any T&D system and are currently in urgent need of attention.

To maintain international standards and engineering oversight, ECF Consulting has been engaged as the Owner’s Engineer.  ECF, on behalf of the Bahamian people, will independently oversee all projects to completion, coordinating between various stakeholders, including contractors, suppliers, and regulatory authorities.

To the workers of BPL, I wish to categorically state that there will be no layoffs because of the 17 partnership.  There is no intention to offer a voluntary separation programme and current industrial agreements will not be impacted.

It is our expectation that exciting new roles and training opportunities will emerge that BPL employees will have early access to.

Meetings will be held with all employees of BPL to ensure that all questions and concerns will be answered.

Reform 4: Transforming Energy Generation through LNG Implementation in New Providence

Liquefied Natural Gas (LNG) is set to revolutionise energy generation in New Providence, significantly benefiting consumers and the environment.

By integrating LNG, we aim to reduce overall energy costs, enhance the efficiency of our generation assets, and minimise environmental impacts.  This initiative introduces LNG as a cleaner alternative to Heavy Fuel Oil and Automotive Diesel Oil.

LNG is being implemented for efficient generation in New Providence.  To reduce the overall energy cost to the consumer, improve the efficiency of the generation assets, and reduce environmental impacts, LNG is being brought to The Bahamas as HFO and ADO.

The bulk purchase of LNG will be sourced from Shell.  Other partners in the LNG implementation will include Bahamas Utility Company (BUC), as the independent power producer under a purchase power agreement.

By 2026, we will construct a state-of-the-art 177 MW Combined Cycle LNG plant at the Blue Hills Power Station.  This innovative facility will feature four natural gas units paired with two steam turbines, maximising efficiency by utilising excess steam from the gas units.

This combined cycle configuration will be the most cost-effective generation solution in the BPL fleet.  It will replace the 107 MW of rented generation capacity and address the 63 MW generation shortfall under contingency conditions, enhancing redundancy and resilience.

In addition to the new units, BPL will convert two of its original generators at the Blue Hills Power Station, completing the transition to a more efficient and resilient system.  BPL and its consumers are projected to save approximately $125.6 million annually through fuel switching and improved engine efficiency.

Reform 5: Equity Rate Adjustment

Beginning in July 2024, a new Equity Rate Adjustment will make bills more affordable for many Bahamian families now as we transition to a new era in energy.

With the existing tariff structure, residential customers and SMEs are presently subsidizing general service customers (high energy users).

The Equity Rate Adjustment is a reduction in the base tariff rate for residential consumers.  The adjustment creates a more equitable balance to the current tariff structure and encourages energy conservation.

All residential consumers with low and moderate electricity usage will benefit, as the base rate tariff for the first 0 to 200 kWh will be reduced to zero.  The upper bands will stay the same, but even if you are a resident with a bill of around 600kWh you will still benefit from the rate of your first 200kWh being reduced to zero.  Note that everyone will still have to pay for the fuel charge for every unit they consume.

The Commercial base tariff will drop slightly from 15 cents to 14.5 cents and the Temporary Supply base tariff, which particularly affects the Family Islands, will drop from 16.38 cents to 15 cents.  Again, they will both continue to also pay for their fuel charge.

We are also amending the fuel charge by reducing the charge for the first 800kWh by 2.5 cents and increasing the charge above 800kWh by 1.5 cents.  Consumers who use less energy will enjoy a lower fuel charge.  This is important as the more electricity used on the grid, the more BPL must utilize generators which are more expensive to run.

The new rates will be in effect until a comprehensive tariff review is completed, and new rates are approved by the government and URCA.

The General Service base tariff will rise from 8.7 to 10 cents for the first 900,000 units and from 6.2 to 9 cents for units above 900,000 units.  Currently General Service customers receive a subsidy of about $20 million from other BPL customers every year, but they will still be paying less than all other energy classes and will still benefit from a more modest subsidy.

The cost of energy should fall over time because of the efficiency upgrades at BPL includes:

- The installation of a new HFO Boiler at Clifton Pier to save $36 million dollars per year in fuel costs

- Installation of two new 30MW LNG burning units, which will save $30 million dollars per year in fuel costs, and

- Conversion of BPL’s USD debt to BSD.

I am so excited that we are all here to take part in the transformative energy journey – to be able to say that we did it.  I am very proud that with our solar solutions for New Providence and the Family Islands that all the successful bidders had at least 50 percent Bahamian ownership and many were in fact 100 percent Bahamian owned.

We are also delighted that opportunities for young Bahamians will be created through a partnership with The Bahamas Technical and Vocational Institute (BTVI).

The positive effect of what we are kicking off now will not only be felt by our children and our children’s children generation, but it will be noticed around the world.

Thank you.

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The Benefits and Pitfalls of Artificial Intelligence - AI

The Best Star-Wars Scenario for the Artificial Intelligence (AI) Revolution

AI and the Importance of Regulation from a Star-Wars Perspective

By Carlos Scartascini

While the uses and capabilities of artificial intelligence (AI) continue to grow at a fast pace, the head-long rush into new frontiers could have significant drawbacks.  As Anton Korinek, an AI expert at the University of Virginia, described in a recent blog, AI systems could soon replace relatively unskilled cognitive workers, like people who work in call centers or low-level accountants.  More disruptively, such systems could eventually learn to do more complex tasks, take over robotics and manufacturing, and displace manual laborers and highly skilled cognitive workers, causing wages to crash and inequality and hardship to deepen.

Such a dystopia would not be far from some of the scenarios depicted in Star Wars, that futuristic saga of events in a galaxy far, far away, where worlds of oppression and injustice co-exist with others aiming for a more perfect order.  And as Korinek indicates, a more perfect order is possible.  Indeed, the extent to which AI disrupts the labor market and how much it affects people, may well depend on the degree of regulation governments establish.  Consider as analogies, three different cases from the Star Wars universe.

Anarchic State: The Outer Rim Territories

In the Star Wars galaxy, the Outer Rim Territories often represent a rugged, lawless or less regulated area where the central government’s influence is weak and predators roam.  This can be likened to countries that don’t regulate AI, leading to a kind of anarchy where innovation is unbridled and the risks associated with unchecked AI development abound.  A lack of regulation can spur rapid technological advances.  But it can also lead to ethical dilemmas, misuses of technology, and harm to society, as happens in planets like Tatooine, which is controlled by wealthy and powerful crime lords, but where most inhabitants, including small-town residents and farmers, live in poverty or just scrape by.  Such an imbalance creates a stark contrast between the powerful few and the impoverished majority.  Unfortunately, many countries in Latin America and the Caribbean may end up in a similar equilibrium.  AI in such a scenario would grow, as would productivity and wealth.  But its fruits would benefit only those with access to the means of production, rather than the populace as a whole.

Authoritarian Regulation: The Galactic Empire

The Galactic Empire represents a highly centralized and authoritarian regime where control is exercised over many aspects of life, including technology and scientific advancement.  In this analogy, the Empire’s approach to regulation might create rents — privileges granted by the government in response to lobbying or other manipulation — in the same way that poorly implemented AI regulations could favor certain industries or companies.  This can stifle innovation in other sectors.  It can concentrate power and wealth, leading to inequality and potential abuses of power, akin to how the Empire benefits a select few while suppressing the majority.  Some countries in our region will try to prevent the negative effects of AI.  They will regulate what can and can’t be done with it.  For example, AI may be used to check legal documents, but a lawyer may still need to sign off.  It could be used to diagnose patients, but a doctor would still need to sign the prescriptions.  In other words, to preserve certain jobs, many tasks that could be done independently and unburdened by bureaucracy may still have to pass through physical hands.  Some people will benefit from these rents created by the government.  But those not so lucky to be part of a guild or pressure group may lack access both to the benefits of AI and the government-protected rents.

Balanced Regulation: The Galactic Republic

Before its fall, the Galactic Republic was a democratic union that governed a large portion of the galaxy.  It represents a more balanced and fair approach, striving to benefit all.  This would be akin to well-thought-out policies and regulations that aim to tax excess profits and ensure that the benefits of AI advancements are broadly shared across society.  Such regulation would ideally mitigate risks.  It would promote innovation and fairness, ensuring that AI serves the public good and doesn’t lead to significant societal disparities.  Governments would let AI flourish and achieve its massive potential for increasing prosperity and wealth.  But they would also find ways to redistribute the benefits in ways that maximize welfare.

Choosing the Best Star-Wars Scenario for the AI Revolution

Government decisions will be crucial in determining which of these scenarios characterize countries in Latin America and the Caribbean.  Anarchy and the Empire are not difficult to achieve.  Governments in the region, which have traditionally been known for introducing bad and distorting regulation could easily facilitate one of those two realities.  Becoming the Galactic Republic is much harder.  To reach that more enlightened state, governments have to invest resources to understand the benefits and pitfalls of AI, generate the conditions for its development, and control its excesses.  They also have to develop a strong social safety net, improve the way they levy taxes — when, where and on what — and make significant investments in public goods and infrastructure. Individuals, in the meantime, will have to find alternative ways of working so they can flourish individually and as a group.  Investing in government capabilities to deal with the new realities created by AI is long overdue.  Unfortunately, many governments may be too passive, delaying till it’s too late.  At that stage, there may be only two choices: that of the anarchic state or the state that benefits only the powerful few.

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In The Digital Economy and Culture - It is crucial to ensure that everyone can benefit from connectivity in an era of rapid technological advancement

The digital future is not guaranteed; it gets shaped through the collaborative efforts of all stakeholders involved

Nothing is Fated: Shaping an Equitable Digital Future Must be a Collective Endeavor

By Edgar Cabañas

As Karim Lesina, EVP of Millicom, correctly points out, in the ever-evolving landscape of technology and connectivity, the future is not a predetermined destination awaiting our arrival; rather, it is a realm we actively shape and build together.

The digital future is not guaranteed; it gets shaped through the collaborative efforts of all stakeholders involved.  This sentiment lies at the heart of major telecommunications companies, highlighting the crucial role of collective contributions in steering us toward a future that embraces efficiency, equity, and opportunity.

The indispensable role of collaboration among various actors within the digital ecosystem is a critical factor for success.  From telecommunications giants to policymakers, from innovators to consumers, investors, and development banks, each participant plays a vital role in shaping the trajectory of digitization.

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Additional reading

• Digital Connectivity: Oil for the 21st Century
• The Great Tech Revolution: Artificial General Intelligence & Multilateral Development Bank

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In recognizing this interdependence, telecommunications companies acknowledge that a shared vision is essential for harnessing the full potential of the digital era.

Efficiency and equity are the twin pillars upon which any successful connectivity policy must rest.  It is crucial to ensure that everyone can benefit from connectivity in an era of rapid technological advancement.

This requires deploying robust infrastructure and implementing policies that bridge the digital divide and empower marginalized communities.  By fostering an environment of inclusivity and accessibility, telecommunications companies pave the way for a more equitable digital future.

However, achieving these goals necessitates the concerted efforts of all stakeholders involved.  As key architects of the digital landscape, telecommunications companies bear a significant responsibility in this regard.

By endorsing initiatives prioritizing efficiency, equity, and collaboration, these companies demonstrate their commitment to advancing society's collective interests.

At its core, telecommunications companies reflect a recognition of the transformative power of connectivity.  In an increasingly interconnected world, digitization has the potential to revolutionize every aspect of our lives, from education and healthcare to commerce and governance.

Yet, realizing this potential requires more than technological advancement; it demands a shared commitment to fostering an ecosystem that values inclusivity, innovation, and social responsibility.

As we navigate the complexities of the digital future, we must do so with a collective mindset that transcends individual interests and embraces the common good.  By coming together to chart a course toward a more connected, equitable, and sustainable future, we can harness technology's transformative power to build a world that works for everyone.

The major telecommunications companies serve as a testament to the importance of collaboration in shaping the digital future.  By recognizing the shared responsibility, we all bear in this endeavor, we can work towards creating a more connected, inclusive, and prosperous world for generations to come.

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With Haiti “on the brink of disaster, quick and decisive action” is needed - “to bring the situation under control and to return the country to the Haitian people.”

“for the greater good of the Haitian people.”

PRESIDENT ALI URGES HAITIAN STAKEHOLDERS TO ‘GIVE A LITTLE’

(CARICOM Secretariat, Turkeyen, Greater Georgetown, Guyana) Chair of CARICOM, H.E. Dr. Mohamed Irfaan Ali on Monday [11 March 2024] called on Haitian stakeholder groups to “give a little” to reach consensus on the way forward, “for the greater good of the Haitian people.”

The President of Guyana was at the time addressing the High-Level Meeting on Haiti in New Kingston, Jamaica.

He said CARICOM convened the meeting following intense engagements on Haiti before and after the recent 46th Regular Meeting of the Conference of Heads of Government.

With Haiti “on the brink of disaster”, he said “quick and decisive action” is needed “to bring the situation under control and to return the country to the Haitian people.”

Noting the intense discussions with Haiti’s political sects, civil society and faith-based leaders, President Ali said,

“We’ve impressed upon all the stakeholders that they have a duty to their people to reach a consensus among themselves now…. to attempt to arrive at a consensus around an effective, inclusive transitional governance structure to take the country to general elections in the shortest possible time.”

For CARICOM, “the interests of the people of Haiti are a singular and primary concern,” the Chair said, underscoring the need for both immediate and long-term support to establish “building blocks for political stability and the long -term recovery and development of Haiti.”

On a note of gratitude, President Ali thanked the Meeting host, Prime Minister Andrew Holness for undertaking the good officers’ role in Haiti and facilitating critical talks for the second time in his country.

Describing the yeoman efforts of the other CARICOM Heads, the Chair said,

“I’m extremely proud of the selfless work I have seen personally over the last week, all hours in the night, all in the interest of the Haitian people.  This, I think, is most commendable and speak to the resolve of this Region to find solutions when we are faced with the greatest difficulties.”

The Eminent Persons Group which comprises former prime ministers Perry Christie of The Bahamas, Bruce Golding of Jamaica and Kenny Anthony of Saint Lucia also came in for high praise for their efforts in assisting to forge a path forward among Haitian stakeholders.  The international community too received praise from President Ali whom he said has demonstrated “selfless support” to the Haitian people and CARICOM, as the work continues “for the common good of the Haitian people.”

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How Is Our Biometric Facial Data Protected?

How is biometric facial data stored, and who has access to it?

Face ID: Is our biometric facial data being safeguarded?

By Fabricio Rodríguez

In a world where facial recognition technology (FRT) is rapidly expanding, its use has been increasingly applied in daily situations such as accessing a bank account through a mobile, registering attendance at the office, or authenticating our identity in airports.  Along with this widespread implementation, it also raises significant concerns about the safeguards of the biometric facial data that we provide (or not) to access different services or for other applications.  So, if our biometric facial data is increasingly being used, how is it being protected?

Similar to other biometric data like fingerprints, eye retina or iris, finger veins, or even ear canal recognition, facial recognition is a mechanism that can be used to identify a person, and together with fingerprint recognition, it is currently one of the most commonly used mechanisms of identification.  Facial recognition has experienced rapid growth in its applications and according to Deloitte, the market value of this technology is expected to increase from US$ 3.8 billion in 2020 to 8.5 billion in 2025.

How is biometric facial data captured?

As part of the process that uses facial recognition to authenticate whether we are who we say we are, there is an onboarding process that includes an enrollment phase.  For example, setting up facial identification in your phone.  During the initial setup process, it registers your biometrics, capturing in this case your facial data.  This data is subsequently used for future authentications, providing access not only to the phone but also to apps that might use this feature.

However, facial recognition is not only based on voluntarily provided data for identification.  Years ago, significant controversy arose around a company that collected billions of photos of people based on posts shared on social media to create a database later sold for identification purposes.  According to the New York Times, “Dozens of databases of people’s faces are being compiled without their knowledge”, and this data seems to be collected not only from social media and other websites but also from cameras placed in different places, such as restaurants, for example.

Nevertheless, this same technology has become very important in areas like citizen security, being an increasingly used tool not only by police departments but also in the justice sector by public defenders. 

How is biometric facial data stored, and who has access to it?

As mentioned before, facial recognition has become widely popular for accessing and unlocking mobile devices.  For instance, the iOS face identification system ensures that “Face ID data — including mathematical representations of your face — is encrypted and protected by the Secure Enclave.”  The Secure Enclave is a subsystem integrated into Apple System on chips (SoCs) and is isolated from the main processor to provide an extra layer of security for sensitive data.  iOS explicitly states that “Face ID data doesn’t leave your device and is never backed up to iCloud or anywhere else.”  Essentially, only the user owner of the phone is supposed to have access and can manage their biometric data use and permits.

However, in other cases where biometric facial data is collected (sometimes without prior knowledge), users may not be able to access information on how their biometrics are being stored and its potential uses.

In 2020, during one of the controversies regarding the sale of facial datasets and its impact on people’s privacy rights, Senator Edward J. Markey from the United States mentioned:

If your password gets breached, you can change your password.  If your credit card number gets breached, you can cancel your card.  But you can’t change biometric information like your facial characteristics…

Therefore, to protect the personal biometric data of citizens, including their “faceprint” from other images or videos captured with or without their consent, is not only important but absolutely necessary to ensure correct treatment of data and set limits to its use.  Protocols must be established to guarantee the appropriate handling of this very sensitive information, which, in the wrong hands, could lead to significant harm.

Is there legislation around biometric facial data protection?

While there is still a lack of legislation in many countries specifically addressing the protection of biometric data, some initiatives do exist aimed at defining rules for the treatment of this kind of data.  One of the most important laws in this space is the European Union’s General Data Protection Regulation (GDPR), which establishes a set of rules in this field.

The GDPR classifies biometric information (including facial data) as a “special category” of personal data.  Therefore, compliance with Article 9 is required, which, among other things, emphasizes the need for explicit consent from the data subject to process biometric data.  In 2023, the European Data Protection Board published the Guidelines on the Use of Facial Recognition Technology in The Area of Law Enforcement as an effort to provide relevant information to lawmakers and Law Enforcement Authorities for the implementation and use of FRT.

On the other hand, given that the United States has no federal law on data protection, the State of Illinois enacted a biometric privacy law in 2008.  The Illinois Biometric Information Privacy Act (BIPA) mentions that the subject should be informed in writing that a biometric identifier or biometric information is being collected or stored, and provide authorization.   Similarly, other states like Texas and Washington State have developed biometric privacy statutes.

In 2020, the National Biometric Information Privacy Act was presented to the Senate, as a proposal to regulate this field at a national level in the USA.  According to the US Congress website, this proposal mentions: “A private entity may not obtain an individual’s biometric data unless (1) the entity requires the data to provide a service or for a valid business purpose, and (2) the entity informs the individual in writing of the collection and its purpose and receives a written release.”  In Latin America, various countries have enforced data protection laws, and cases around data protection have arisen.  Some of these countries developed their laws based on the European model, including similar characteristics to those determined by the GDPR.  For instance, the Data Protection Law from Ecuador, adopted in 2021, establishes biometric data as sensitive data.  Therefore, among other rules, it determines that its use and processing are also forbidden without the explicit authorization of the data subject.

What might be done to safeguard people’s rights?

Biometric data, including facial data, will likely continue to expand its applications and use cases.  Therefore, it is necessary for countries worldwide to continue working on specific norms to regulate the way this data is captured, processed, and used.  Even though acts and specific protocols have already been developed in some countries, authorities need to work on strengthening their institutional capacities to guarantee adequate enforcement of these legal frameworks by promoting specialized guidelines, considering the rapid changes in technology, including artificial intelligence that uses facial biometric data as input.

Furthermore, it might be important for authorities to also consider working on FRT-based systems regulations.  This is necessary to prevent bias, discrimination, or other negative effects on citizens as a result of the application of this technology, as seen in various cases around the world.

A robust regulatory framework, coupled with effective enforcement and awareness campaigns, will protect citizens’ biometric data and, eventually, their right to privacy.  It will also establish an adequate environment to promote responsible innovation for the use and applications of FRT, as it can become a very powerful tool for the innovation and economic development when used appropriately.

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A Call on World Governments to Rapidly and Radically Reduce the Gap between the Super-rich and the Rest of Society

Billionaires of the world are $3.3 trillion richer than in 2020, and their wealth has grown three times faster than the rate of inflation 

Oxfam Report

Despite representing just 21 percent of the global population, rich countries in the Global North own 69 percent of global wealth and are home to 74 percent of the world’s billionaire wealth

The world’s five richest men have more than doubled their fortunes from $405 billion to $869 billion since 2020 —at a rate of $14 million per hour— while nearly five billion people have been made poorer, reveals a new Oxfam report on inequality and global corporate power.  If current trends continue, the world will have its first trillionaire within a decade but poverty won’t be eradicated for another 229 years.

“Inequality Inc.”, published today as business elites gather in the Swiss resort town of Davos, reveals that seven out of ten of the world’s biggest corporations have a billionaire as CEO or principal shareholder. These corporations are worth $10.2 trillion, equivalent to more than the combined GDPs of all countries in Africa and Latin America.

“We’re witnessing the beginnings of a decade of division, with billions of people shouldering the economic shockwaves of pandemic, inflation and war, while billionaires’ fortunes boom.  This inequality is no accident; the billionaire class is ensuring corporations deliver more wealth to them at the expense of everyone else,” said Oxfam International interim Executive Director Amitabh Behar.

“Runaway corporate and monopoly power is an inequality-generating machine: through squeezing workers, dodging tax, privatizing the state, and spurring climate breakdown, corporations are funneling endless wealth to their ultra-rich owners.  But they’re also funneling power, undermining our democracies and our rights.  No corporation or individual should have this much power over our economies and our lives —to be clear, nobody should have a billion dollars”.

The past three years’ supercharged surge in extreme wealth has solidified while global poverty remains mired at pre-pandemic levels.  Billionaires are $3.3 trillion richer than in 2020, and their wealth has grown three times faster than the rate of inflation. 

• Despite representing just 21 percent of the global population, rich countries in the Global North own 69 percent of global wealth and are home to 74 percent of the world’s billionaire wealth.
   
• Share ownership overwhelmingly benefits the richest.  The top 1 percent own 43 percent of all global financial assets.  They hold 48 percent of financial wealth in the Middle East, 50 percent in Asia and 47 percent in Europe. 

Mirroring the fortunes of the super-rich, large firms are set to smash their annual profit records in 2023.  148 of the world’s biggest corporations together raked in $1.8 trillion in total net profits in the year to June 2023, a 52 percent jump compared to average net profits in 2018-2021.  Their windfall profits surged to nearly $700 billion.  The report finds that for every $100 of profit made by 96 major corporations between July 2022 and June 2023, $82 was paid out to rich shareholders.

• Bernard Arnault is the world’s second richest man who presides over luxury goods empire LVMH, which has been fined by France‘s anti-trust body.  He also owns France’s biggest media outlet, Les Échos, as well as Le Parisien.
   
• Aliko Dangote, Africa’s richest person, holds a “near-monopoly” on cement in Nigeria.  His empire’s expansion into oil has raised concerns about a new private monopoly. 
   
• Jeff Bezos’s fortune of $167.4 billion increased by $32.7 billion since the beginning of the decade.  The US government has sued Amazon, the source of Bezos’ fortune, for wielding its “monopoly power” to hike prices, degrade service for shoppers and stifle competition.

“Monopolies harm innovation and crush workers and smaller businesses.  The world hasn’t forgotten how pharma monopolies deprived millions of people of COVID-19 vaccines, creating a racist vaccine apartheid, while minting a new club of billionaires,” said Behar.

People worldwide are working harder and longer hours, often for poverty wages in precarious and unsafe jobs.  The wages of nearly 800 million workers have failed to keep up with inflation and they have lost $1.5 trillion over the last two years, equivalent to nearly a month (25 days) of lost wages for each worker. 

New Oxfam analysis of World Benchmarking Alliance data on more than 1,600 of the largest corporations worldwide shows that 0.4 percent of them are publicly committed to paying workers a living wage and support a living wage in their value chains.  It would take 1,200 years for a woman working in the health and social sector to earn what the average CEO in the biggest 100 Fortune companies earns in a year. 

Oxfam's report also shows how a "war on taxation" by corporations has seen the effective corporate tax rate fall by roughly a third in recent decades, while corporations have relentlessly privatized the public sector and segregated services like education and water.

“We have the evidence.  We know the history.  Public power can rein in runaway corporate power and inequality —shaping the market to be fairer and free from billionaire control.  Governments must intervene to break up monopolies, empower workers, tax these massive corporate profits and, crucially, invest in a new era of public goods and services,” said Behar. 

“Every corporation has a responsibility to act but very few are.  Governments must step up.  There is action that lawmakers can learn from, from US anti-monopoly government enforcers suing Amazon in a landmark case, to the European Commission wanting Google to break up its online advertising business, and Africa’s historic fight to reshape international tax rules.”

Oxfam is calling on governments to rapidly and radically reduce the gap between the super-rich and the rest of society by:
 

• Revitalizing the state.  A dynamic and effective state is the best bulwark against extreme corporate power.  Governments should ensure universal provision of healthcare and education, and explore publicly-delivered goods and public options in sectors from energy to transportation.
   
• Reining in corporate power, including by breaking up monopolies and democratizing patent rules.  This also means legislating for living wages, capping CEO pay, and new taxes on the super-rich and corporations, including permanent wealth and excess profit taxes.  Oxfam estimates that a wealth tax on the world’s millionaires and billionaires could generate $1.8 trillion a year. 
   
• Reinventing business. Competitive and profitable businesses don’t have to be shackled by shareholder greed.  Democratically-owned businesses better equalize the proceeds of business.  If just 10 percent of US businesses were employee-owned, this could double the wealth share of the poorest half of the US population, including doubling the average wealth of Black households.

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