By any measure, e-commerce is big business. It also represents a major change in the way that trade is conducted and offers great potential to contribute to the United Nations’ Sustainable Development Goals.
And yet, developing countries are not taking full advantage of this opportunity. For instance, best estimates put the current share of African enterprises in this international trade below 2 per cent: a share which could be much higher.
Field experience of the International Trade Centre (ITC) in developing and least developed countries indicates that additional support is required to help small enterprises overcome the many practical barriers to trading effectively through online channels and marketplaces – whether the trade is in products or services. These barriers are not necessarily new or specific to the Internet age, but several take on a higher importance when transactions become digital.
The demand for pragmatic support is high: we encounter many examples of small and medium-sized enterprises (SMEs) desperate to access the opportunities of e-commerce marketplaces in developed countries and are ready to take ill-advised shortcuts to get there. Some bypass foreign ownership or payment restrictions by relying on banking arrangements of family or friends.
Many ship their products with no regard to fiscal or legal requirements in the target market. These shortcuts result in disappointingly short-lived trade as public authorities and platforms move to shut down the business, and customers reject goods delivered with unanticipated taxes and duties, destroying any profitability and reputation the small firm may have had.
‘E-solution’ modules to overcome challenges
To address these and other identified needs, ITC has developed and piloted a series of modules – in the form of training and specific technologies as well as partnership agreements – that can address most of the barriers. Taken together, these modules provide ‘e-solutions’ to the challenges of conducting international trade through digital channels. Piloted in Côte d’Ivoire and Morocco, we are now extending these solutions to facilitate e-commerce in Africa and beyond.
E-solutions help enterprises (and in particular SMEs) successfully take part in digital trade by acquiring necessary capabilities that are not readily accessible, affordable or understood by smaller enterprises in developing or least developed countries. To deliver these solutions, ITC has engaged in partnerships with the private sector, leading vendors in transportation, payment solutions and marketplaces that are helping us deploy and scale the approach.
At #WSIS: How can e-commerce accelerate development?
ITC is highly active in a number of fora to raise awareness on these issues and their potential resolution. Taking next month, May 2016, as an example, we will lead a review at the World Summit on the Information Society (WSIS) Forum 2016 on 2 May on how the trade of least developed countries can be boosted through e-commerce together with the United Nations Conference on Trade and Development (UNCTAD) and the Universal Postal Union (UPU). At the World Economic Forum on ‘Connected Africa’ on 11 May, we will launch an e-commerce initiative with the Rwandan Government with our partner DHL, the international transportation and logistics firm. On 29 May, ITC will contribute to the organization of the China Beijing International Fair for Trade in Services (CIFTIS) with a workshop on e-commerce, bringing together private-sector representatives and policymakers.
Our vision is one where small firms in developing and least developed countries have access to advanced solutions and can sell through international marketplaces transparently and efficiently, and one where they are able to retain a significant part of the international value creation in the country of origin and in so doing contribute to the Sustainable Development Goals, including those related to employment, opportunities for youth and women’s economic empowerment.
James is Senior Adviser at International Trade Centre (ITC), leading advisory work on marketing and e-commerce in the Enterprise Competitiveness section of ITC. He is the programme manager for ITC’s ‘e-solutions’, which enable small enterprises from developing countries to better access international e-commerce. Prior to joining ITC, James led a Brussels-based advisory firm in international marketing strategy after a career in logistics and transportation (DHL), investment banking (JP Morgan), chemicals (Dow Chemical Company) and consulting (ZS Associates).