Mexico has a productivity problem; Sheinbaum might have unlocked a solution
A man scans a list of passport requirements in a government building, Mexico City. Photo credit: Gregory Bull.
President-elect Claudia Sheinbaum has announced the creation of the Digital Transformation Agency (DTA). The agency will be led by José Merino. Merino worked for Sheinbaum as head of Mexico City’s Digital Agency for Public Innovation. This is cause for optimism. Merino helped Mexico City become what Bloomberg describes as a global digital pacesetter.
The DTA’s creation marks a strategic shift for Mexico. Previous administrations focused on broadening internet access. What they didn't do was improve public service delivery through robust Digital Public Infrastructure (DPI).
Digital inefficiency in Mexico is a major barrier to economic and social progress. Improving it will be key to meeting Sheinbaum’s economic growth ambitions. It takes 6.9 hours to complete a public service transaction in Mexico, according to the OECD. The Inter-American Development Bank found Mexico’s government spends US$9 per in-person procedure. About 360 million federal and state level procedures happen each year. That's 23% of the federal education budget. Mexico ranks 114th out of 190 countries in terms of ease of paying taxes. All of this contributes to Mexico’s lagging productivity rates. Mexico needs a fresh digital strategy, focusing on user experience and ease of use, not just access.
The contrast with Mexico's private sector is stark. BBVA is the country's largest consumer bank. Its customers completed 1,074 million digital transactions in the first six months of 2023. That's 64% of total transactions. This highlights a digital-first expectation among Mexican consumers. The government isn't meeting expectations.
The focus for Sheinbaum must go beyond “Internet for All." Mexico needs to build resilient DPI, with seamlessly integrated services. Examples all over the world exist, from India to the UK. Brazil's National Bank designed pix, a digital payment system that outperforms its Mexican counterpart, CoDi.
Mexico boasts one of the largest e-commerce market growth rates in the world. It should leverage that fact. Digital service delivery in Mexico's public sector needs to reflect its users' digital savvy.
The DTA's mission is to reimagine citizen engagement with government. This could make government more accessible, transparent, and responsive. Inefficient bureaucracy breeds corruption, affecting poor people most in the process. Merino can shift government to a more agile, service-focused mindset. The prizes is a big one: unlocking millions of wasted hours each year, boosting worker output and productivity. In doing so, the DTA can build trust and transparency. It might also boost tax take, thus stabilising Mexico’s increasing debt-to-GDP ratio. It could also help address Mexico’s lacklustre economic performance. Watch this space. The DTA might just end up being a key element in Sheinbaum's economic strategy.
Kassim Vera served as Policy Advisor in the Mexican Senate, and was Head of Design in Jalisco state’s Ministry of Culture. He is currently finishing a Master of Public Administration in Innovation, Public Policy and Public Value at the UCL Institute for Innovation and Public Purpose, studying Digital Public Infrastructure deployments at a global level.