Unlocking digital opportunities: Promoting e-commerce for inclusive trade growth

• Digitalisation offers many opportunities to developing countries but a number of issues need to be addressed before they can be harnessed.
• ACP, small-island and land-locked economies face the challenges of a weak private sector, high trade costs and lack of proper technology and trade data in order to bolster opportunities for SMEs traders and intra-regional trade.
• Digital infrastructure must be developed to allow young Africans the full potential offered by the internet.

Synopsis

Where do developing countries stand in terms of digitalisation and are they ready to develop e-commerce strategies? These two questions need to be answered to ensure these countries harness the potential that digitalisation offers in terms of growth and job creation. The current situation is that there is a decline, or at best a stabilisation, of the share of the African, Caribbean and Pacific (ACP) countries in international trade. In Africa, 300 million people live more than 50 kilometres from a fibre or cable broadband connection. It is also a challenge to ensure that trade is inclusive in terms of the redistribution of trade revenues. This longstanding issue is one that is complicated by digitalisation and the increase in the digitalisation of the trade nexus. Yet on the other hand, the latest statistics show that e-commerce sales in 2016-17 were worth USD 29 trillion. Selling online allows dropping the middleman, offering a fantastic opportunity to small African producers. Research also shows that SMEs are benefiting from e-commerce in niche areas while the internet, as gender-neutral, offers opportunities to women entrepreneurs. The list of benefits offered by the internet is almost endless but 50 % of the world’s population does not have access. Bridging the digital divide is one issue that developing countries need to address. Others include the need to develop a legal regulatory framework offering consumer protection, fiscal legislation, e-signature and payment systems as well as cyber security systems. Without at least a minimum system in place one cannot think of doing international trade. In addition, the currency exchange situation across Africa is cumbersome with every currency having to be changed into dollars before being converted into another currency. Fragmented markets are another issue: while a pan-African free-trade agreement has recently been signed, it is not yet in place. The problem of infrastructure across Africa is an issue that needs to be addressed urgently if the continent is to benefit from a unified market with free trade and services. There are millions of young Africans with ideas waiting to transform them into reality. What they need is an enabling environment, training and funding, provided perhaps by the private sector working with development organisations

Insight

There are many examples of young Africans successfully harnessing the potential of digitalisation. For example, an entrepreneur in Benin started an e-commerce platform called ‘export-unity’. Another entrepreneur involved in agriculture developed drone technology to monitor his crops and he has now taken this technology to Singapore.