June 21, 2021Costa Rica
Costa Rica Fintech ecosystem
Costa Rica is considered one of the most developed countries in the last 25 years, thanks to outward-oriented growth strategy and trade liberalization. This has also helped reduce the poverty rate to 10.6%, one of the lowest in Latin America. However, the pandemic had a negative impact on the economy of the country, counting GDP at 4.6% in 2020 (World Bank, 2021). Nevertheless it is expected that the economy will recover in 2021, with a 2.5% growth in GDP (OECD, 2021)
SMEs role in Costa Rica economy
The SMEs in Costa Rica represented 97.5% of the business sector in 2017. Likewise, they contributed 34.5% in job growth and contributed 35.7% to GDP (Meic, 2021). Regarding government support, there are currently various programs and institutional initiatives in Costa Rica run by different entities that seek to support the development of SMEs. However, there is still a certain financing gap for entrepreneurs and SMEs. In fact, it is estimated that 89% of MSMEs in Costa Rica use their own resources to finance their most important needs, while 10.5% did so through credit cards; 7.5%, through personal loans; and 7.6%, through suppliers
Fintech in Costa Rica
Costa Rica has been characterized by having a rapid adaptation to the use of financial technology services in recent years. In fact, only between 2017 and 2019 it had a growth of 400% in terms of the number of Fintech (Step from 4 to 25 companies). As of 2019, technology companies for financial institutions occupied the largest number of companies with 40% of the total, followed by payment solutions with 32% and alternative financing with 12% (IDB, 2019)
This growth occurs even when there is no specific law for Fintech and many bureaucratic obstacles. Likewise, more and more companies are coming to the country to invest. On the other hand, the capital is the province with the highest number of FinTech with 90%
The increase in mobile penetration has also helped with the growth of the use of Fintech as mobile penetration in Costa Rica increased from 33% in 2006 to 170% in 2016
Costa Rica is still developing it´s Fintech ecosystem and it’s going in a good way. This sector will definitely help SMEs and reduce the lending gap. It is noted that there is still not a big number of Fintech companies, so it also opens door for new Fintech or foreign companies that want to start working in Costa Rica
