The Venezuela Revival is Underway: It Will Take Time

Venezuela is facing a historic turning point. After years of being sidelined by global investors, the January U.S. capture of Nicolás Maduro has triggered a tentative reopening of the nation’s borders and markets.

Over the past four months and with interim president Delcy Rodríguez at the helm, Washington has rebuilt a working relationship with the country, restored diplomatic ties and restaffed its embassy in Caracas. It has also lifted some sanctions and is allowing the return of the South American nation to the global financial system.

The main driver behind this change is oil. Venezuela sits atop the world’s largest proven oil reserves even when its actual production has declined for years, a combination of mismanagement, corruption, and lack of investment. A shadow fleet, made up of old tankers carrying false flags, was one of its lifelines until the U.S. intervention halted those exports to a handful of countries willing to buy sanctioned oil.

“The Trump administration has been pretty clear about the direction they want to go,” Jeffery Tobin, senior advisor at Pan-American Strategic Advisors, told Nearshore Americas. “Oil will likely be the way for a while … That will be the first domino to fall.”   

Rebuilding the crumbling Venezuelan oil industry will take many years and billions of dollars. But in this new context the country could progressively emerge as a promising frontier for industries adjacent to, or beyond, oil, provided that it is accompanied by a far-reaching institutional reform that can offer certainty to new investors and those at home.

Tobin said that while Venezuela is giving some firsts steps toward reopening its economy, the day-to-day reality in many parts of the country, like crippling insecurity and an unreliable power grid, is still not conducive to new businesses. And as long as Chavismo loyalists remain high up in the Rodriguez administration, change may be elusive.

Sectors like IT nearshoring, telecommunications, data centers, e-commerce and banking, could be among the first to benefit from the revival. As the United States loosens the sanctions grip and Venezuela becomes a de facto dollarized economy, the legal and financial hurdles that previously prevented contracting services from abroad may start to dissipate. For U.S. and European firms, this shift could mean an opportunity to access a service market with lower regulatory friction than in previous years.

The Venezuelan ecosystem still has senior professionals who have operated in a stealth capacity for years despite the country suffering a severe brain drain during the Maduro years. The United Nations Refugee Agency estimated close to 8 million Venezuelans, or near 20% of the population, left their country, with the majority of them staying in Latin America or the Caribbean.

A Glimpse of Hope

Raúl da Silva, founder of Well Made Software, has ridden out the worst years of the Chavismo and the Covid-19 pandemic and is still doing business from Caracas, where he develops software for startups and offers nearshoring services to foreign firms. He has worked with e–commerce, fractional trading and entertainment clients and is currently developing a project to address a common problem in Venezuela: finding and trading auto parts.

For him, it is not only the political and economic landscape that has complicated commercial opportunities in recent years, but the arrival of a much bigger challenger in artificial intelligence. Last year he lost four of his employees because of AI, but he is using it as a new opportunity to learn and reposition his business amid signs of recovery in his home country.

“I am optimistic,” he said about the future of Venezuela. “There is an opportunity for nearshoring, offering integrated AI.”

He is noticing openings in e-commerce, financial services like wallets and outsourcing, particularly in Maracaibo – the heart of a once booming oil industry – including machinery, drone operation and surveillance. “There is a lot of potential for IT there,” he said.

Venezuela’s fledgling entrepreneurial ecosystem is ready to roll up their sleeves too. Earlier this month, Caracas hosted its first Tech Week, an event aimed at re-establish the country on the international radar.

In an interview with Applicantes, Patricia Zárraga, CEO of the event, said that funds, family offices and members from the Venezuelan diaspora, particularly those in Spain and the United States, were looking for investment opportunities in the country.

“Venezuela could be an early-stage market, with significant needs for modernization, a competitive talent pool, and sectors where there is still room to build digital, financial, logistics, and service infrastructure,” she told the online publication, which focuses on app development, gaming and startups.

The Venezuela government launched in tandem the Renace Venezuela (Venezuela Reborn) website, which aims to be an initial touch point for potential entrepreneurs at home and abroad eyeing energy, mining, manufacturing, education, health and technology projects.

For Pan-American’s Tobin, the IT sector will likely be part of any labor conversation as Venezuela attempts to operate a more transnational country and shifts its economic reality. “Executives should change how they think about globally-connected systems which persist even under prolonged institutional stress.”

“Venezuela is one of the region’s most underappreciated countries,” he said.