Latin American SMEs face digital gap and economic strain

Small and medium-sized enterprises (SMEs) make up about 99% of firms and 60% of formal employment in Latin America and the Caribbean. While the region has improved internet connectivity, many SMEs lack the capacity to transform digitally, creating a productivity gap that could widen inequality. A CEPAL study identified 65 support instruments across six countries, focusing mainly on financing and training but with limited tax incentives and fragmented institutions. Effective policy would need tailored financing, tiered digital skills development, and innovation hubs to help the most constrained firms.

In Argentina, SMEs are confronting severe macro‑economic pressures. After a pandemic‑induced slowdown, the country experienced a 100% currency devaluation in 2023, hyperinflation, high interest rates, and rising utility costs. Recent fiscal measures such as the RIGI, RIMI and the pending Super RIGI have not sufficiently alleviated the strain, leaving many small firms unable to invest or maintain sales. The combined digital and financial challenges threaten the sector’s viability across the region.