Overshadowed by some larger and more prominent regional players, entrepreneurs may overlook some valuable opportunities to start their business in Bolivia.
Recently with the resignation of the former president, Evo Morales, Bolivia faces some political and social uncertainty, making it difficult to discern the conditions for doing business in Bolivia. However, despite this uncertainty, Bolivia has shown during this last decade an impressive economic recovery through important economic programs put in place. Now, Bolivia is one of the fastest-growing economies in Latin America.
Bolivia is willing to increase its attractiveness as a country full of new opportunities for doing business, as it is showing interest in foreign investments and partnerships in strategic sectors such as hydrocarbons, mining, natural resources exploitation, transport, and communication. Lately, the acting president of Bolivia, Jeanine Añez, announced the initiation of removing Bolivian agro-industrial exportation restrictions set up by Morales.
1. Unsaturated market offers opportunity for entrepreneurs to do business in Bolivia
Bolivia currently lags behind some neighboring countries in terms of development and entrepreneurship. However, Bolivia is bouncing back on the World Bank Doing Business 2020 ranking, sitting at 150 (improving 6 places from 2019).
There is great potential for foreign entrepreneurs to step into the gaps in this developing country’s unsaturated market.
Bolivia is demonstrating its willingness to become a more entrepreneurial and innovative nation in the business world. There is a growing community of young entrepreneurs helped and formed by different organizations. The goal is to give an impulse and promote innovative minds of young Bolivians to have a positive impact on their country, or ideally on the world.
2. Exporting and importing in Bolivia
Since the Bolivian government is initiating the reduction of exportation restrictions, Bolivia is going to become more present in the trade market, specifically in the agricultural industry. This would allow the country to generate increased revenues which will contribute to economic growth and also present an opportunity for the government to invest back into certain sectors. Moreover, Bolivian demand for Northern American products is high, opening an opportunity for higher import volumes as well. Here we can figure out that Bolivia is going to play big in terms of trade.
The main export product of Bolivia is petroleum gas, contributing to 32% of total exports. Zinc ore follows, with a total amount of 17% of the total Bolivian exports.
Bolivia’s imports are mainly cars with a percentage of 5.7% of their total imports. These are followed by the import of refined petroleum, which accounts for 4.4%.
Bolivia’s mining market feeds a significant demand for large construction vehicles. This demand can be a great opportunity for investors to invest in.
Bolivia is rich in non-renewable natural resources. Bolivia’s largest export sectors are mining and hydrocarbons. There is still a lot of potential in this market to grow. Next to the already mined minerals such as silver, lead, zinc, natural gas, and tin, Bolivia possesses the largest lithium reserve in the world, which is not currently being used to its maximum benefit.
3. Preference for Northern American brands
Doing business in Bolivia is made easier for Northern American companies as Bolivian consumer perceptions of North American products are generally high-quality and innovative. The American brand therefore carries a lot of influence in the Bolivian market.
Local governments use products and services from the United States because they are viewed as reliable due to warranties, high customer service standards, and maintenance plans.
4. Agricultural sector will continue to grow
The growing agricultural sector is the most important sector in Bolivia’s economy, contributing about 13% of GDP and accounting for just under 30% of total employment.
The need for new technology in the agricultural sector will also increase. As the knowledge in of technology is lacking in Bolivia, the growth of the agricultural sector in Bolivia is driving demand for greater international knowledge and technological sophistication.
Think about agricultural technologies that are already developed in the US or Europe. These technologies can be applied to the Bolivian market to improve productivity, efficiency, and even food security. Entrepreneurs looking to do business in Bolivia should consider their prospects in the market for technology and innovation.
5. Low costs of labor
Bolivia provides low cost labor for foreign companies doing business in the country. Bolivia’s workforce maintains an average salary of BS 2,122 (around US$310). Bolivia’s main labor cost advantages can be found in sectors such as manufacturing and customer service.
High-value employees are available on the market. Foreign companies looking to do business in Bolivia, therefore, have greater access to experienced staff at lower prices, keeping overheads low and improving chances of establishing higher profit margins.
Will Bolivia’s lithium market open up to foreign business?
At the moment, lithium exploration remains highly regulated. It’s important to keep an eye on mining developments and reform in the country, however, as the opening of this market will pose significant, multi-million dollar opportunities for companies.
With the growing demand for electric cars, the need for batteries is likewise increasing. Given that lithium is the key element in electric cars, the potential growth for the lithium market is very big.
While Bolivia’s lithium market has stagnated, its importance to first world economies like the US might yet improve due to the instability of the other triangle members Argentina and Chile. Argentina is going through one of its periodic economic convulsions. Chile has seen some riots on the streets of Santiago last year because of rising prices in public transportation. The many uncertainties in Chile and Argentina caused by events like this could encourage Bolivia to become a bigger player in the worldwide production of lithium than it has been previously.
Take advantage of the opportunities for doing business in Bolivia
Entrepreneurs considering doing business in Bolivia should work experienced, leading market entry and back-office specialists to start their expansion successfully.
At Biz Latin Hub, our team of seasoned expatriate and local professionals provide market-leading support across a whole host of sectors, like company incorporation and recruitment.
Reach out to us today here and we’ll get back to you with a personalized business strategy.
Learn more about our team and expert authors, and check out our short presentation below on doing business in Latin America.