Receiving a quality education can further an individual’s potential for success. In supporting those working toward a degree, communities can also boost economies, reduce poverty, and even expand societal views on innovations. Latin American countries have historically lagged when it comes to advancement in education. For instance, due to gender, social class and ethnic inequalities, many in the region have faced cultural, technological and/or socioeconomic barriers.
However, in the last half century, LatAm populations experienced a shift as a greater number of its youth enrolled in primary education courses. This uptick in educational opportunities helped lift many families to middle class status, opened the door for traditionally underserved communities and provided greater social advancements.
But following the COVID-19 pandemic, progress in LatAm halted. Now, these populations are facing an education crisis greater than ever before that is said to ‘set learning outcomes back by more than a decade.’
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The Pandemic Takes a Toll on Latin America Education Rates
During the pandemic, LatAm suffered the longest school shutdowns of any region in the world with closures reaching nearly 16 months in some areas like Guatemala and Honduras. During these closures, many students did not have access to digital learning options because less than 50% of the population has fixed broadband connectivity. Due to limited access, the only other alternatives for students to connect with teachers is through phone calls or text messages, which took a significant toll on comprehension and learning with studies reporting that fewer latinx students now meet capabilities according to their grade level. In addition to barriers in access, many families experienced financial difficulties throughout the pandemic that made education less affordable and forced younger generations to prioritize work over school. In fact, the COVID-19 pandemic is estimated to have increased the poverty rate from 47.8% of the population in 2019 to 52.4%.
As a result, the World Bank estimates that millions of children in Latin America may have left the school system because of the pandemic or economic hardships. More over, if students are still enrolled in school, many have not yet returned to classroom learning full time and are likely struggling to catch up.
Combatting the Education Crisis with Remittances
Inequalities within LatAm have sharpened with economies still experiencing setbacks post-COVID and millions of students dropping out of primary and secondary schooling in an attempt to work and make money to support their families. That’s where global remittances come into play. Industry leaders have noted a positive correlation between remittances and school attendance while supporting struggling economies.
Today, it is estimated that 75% of remittances are used to cover essential items including food, housing, medical expenses and school fees, allowing the people in developing countries to access education. In fact, surveys conducted in countries like El Salvador have revealed that children from remittance-receiving households have a lower school drop-out rate.
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FinTech Providing Education Support in Developing Countries
A recent World Bank report found that learning losses experienced by the pandemic will cost today’s LatAm students a 12% decrease in lifetime earnings. It is obvious that remittances have presented opportunities to provide foreign financial assistance to help fund education in LatAm, but more needs to be done within the fintech industry to make a true difference, specifically as it relates to affordability, like keeping remittance fees low.
Traditional financial institutions have long deprioritized LatAm communities by making it more difficult to open a bank account. Fintech companies have noted these struggles and many have repositioned efforts to help these underserved populations by providing easily accessible financial tools and services. As a result of their focus on financial inclusion within LatAm, fintech startups received the largest amount with $2.8 billion venture capital funding raised in the first quarter of 2022 in the region.
As digital financial options continue to become more readily available and accepted in LatAm, fintech companies must provide various options to help communities conduct fast, affordable and secure money management.
[To share your insights with us, please write to sghosh@martechseries.com]
