Central America’s smallest country, El Salvador, saw an increase in poverty following COVID-19’s global disruption, undoing years of progress in poverty reduction. The World Bank estimates the reversal at almost 4%. Despite this, efforts towards poverty eradication in El Salvador have recently seen economic growth with a spike of 11.2% in 2021 and a more moderate rate between 2.6% and 2.8% in the following years.

While poverty rates have not yet recovered to pre-pandemic levels, the economic growth has helped gradual progress with the most recent national rate settling at 27.5%. El Salvador made global headlines in 2021 by becoming the first and only nation to make bitcoin legal tender and presented ambitious plans surrounding the anticipated economic and commercial impacts. While progress has been slower than initially suggested, the country has still experienced economic growth and investment. This momentum has led to innovations in poverty eradication in El Salvador through digital transformation, geothermal energy and health care.

Digital Transformation

During Bitcoin’s launch as legal tender, the El Salvadoran government claimed that digital banking would improve accessibility to a larger portion of the population. Still, the adoption of digital banking has been slow, partly due to the lack of digital literacy. The government recognizes the challenges in digital literacy and produced the 2020-2030 Digital Agenda which identifies opportunities in digital transformation, particularly in innovation, education and competitiveness.

The Digital Economy for Latin America (DE4LAC) initiative is a part of the World Bank that aims to identify challenges and opportunities in the region. The initiative conducted a diagnostic in 2021 that provides further recommendations on improvement aligning with the government’s agenda. The increased focus on digital transformation received a boost in progress through Google entering an agreement with the nation in 2023. This partnership aims to drive innovation in government technology.

The public and private investments in digital transformation are continuing to create opportunities to boost the economy, create jobs and improve digital literacy as integral innovations in poverty eradication in El Salvador

Geothermal Energy

El Salvador has two geothermal energy plants that supply more than 25% of the nation’s electricity. The country’s innovation and commitment to this form of renewable energy has drawn support from the International Renewable Energy Agency (IRENA) which has provided technical guidance and funding for training facilities in the country. The state-owned company LaGeo owns both the Berlin and Ahuachapán plants and through its initiatives, it helps impoverished women by using geothermal energy to create and fuel their businesses and generate their income.

In addition to the publicly funded programs, Volcano Energy and Luxor Technology Corporation created a Bitcoin mining operation using the country’s natural resources. The 2023 agreement pledges that the companies will send 23% of their proceeds back to the El Salvadoran government. The increase in geothermal output is another example of innovations in poverty eradication in El Salvador and will make electricity more accessible to vulnerable populations, as well as elicit further financial support from the private and public sectors as the world continues to prioritize renewable energy sources.

Health Care

Health care accessibility is a challenge in El Salvador. The country achieved a major accomplishment in early 2023 as it reached 100% internet connectivity across hospitals. Overall accessibility is still an issue, but it is being addressed through the implementation of telemedicine. In September 2023, the Development Bank of Latin America and the Caribbean (CAF) provided a $77 million grant to create a telemedicine network benefiting 4 million El Salvadorans. This advancement in health care accessibility and broader investment in wellness are key innovations in poverty eradication in El Salvador.

El Salvador continues to have a large percentage of its population living in poverty, but its prioritization and investment in innovative solutions across different areas continue to create opportunities and combat the challenges facing its people.

– William Galante
Photo: Wikimedia Commons