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2016 ADVISING, EMPOWERING & INSPIRING TRADE

FORUM
Issue 2 INTERNATIONAL TRADE
The digital
economy
MESSAGE FROM

Transforming lives
through e-solutions
ARANCHA GONZÁLEZ, Executive Director, International Trade Centre

E
ver since the World Wide Web was estimated to be well below 2% suggesting
conceived at CERN on the Franco- there is a vast untapped potential in this area.
Swiss border and released into the The International Trade Centre’s (ITC)
public domain in 1993, the internet has work in this area addresses the policy dimen-
continued to spin out new opportunities sions of e-commerce, the infrastructure
for information and commerce. News has needed to make the digital economy work,
become instant, we can stream films and and supporting on the ground e-solutions
music, and in many parts of the world we transactions. E-commerce – B2C and B2B conditions: all of which appears at first
can buy whatever we want from online – will play a key role in eliminating poverty highly opaque and beyond the capacity of
retailers. and achieving Goal 1 of the 2030 Agenda small firms operating out of developing
Online retailing – or e-commerce – for Sustainable Development. E-commerce countries. And yet once these compliance
has become a huge market, with global makes it easier for small and medium-sized issues are solved the world of e-commerce
business-to-consumer (B2C) transactions enterprises (SMEs) in developing countries begins to open up: financial transactions
expected to total more than US$ 1.5 trillion to trade across borders. become easier and accounts can be opened
in 2016. The global business-to-business Easier, however, does not equal per- on the world’s biggest marketplaces.
(B2B) e-commerce market is even big- fect. Many challenges remain. A recent Through this exercise we are building
ger, and is expected to be worth close to ITC report, Bringing SMEs onto the e-Com- trust between potential buyers and sell-
US$7 trillion by 2020. merce Highway, identified four major chal- ers. By allowing people to touch, feel and
While some of the most celebrated lenges for developing countries to succeed taste products, and confirm they are of high
e-commerce successes are based in devel- in the world of online retail: establishing an quality, these customers and sellers become
oped countries, companies in developing online presence for business, international ambassadors for greater online trade from
countries are rapidly catching up. Alibaba, e-payments, international delivery and after- developing countries.
the Chinese online retailing giant, was sale services. Step by step, we are tapping the poten-
founded just over a decade ago and is today To help developing countries and their tial of e-commerce to ensure that SMEs in
eclipsing many of the traditional online SMEs improve their e-commerce capacities, developing countries can play a greater part
retailers in terms of sales (see pages 16-17). ITC has teamed up with a range of partners, in this sea-change in global commerce.
In all developing countries, e-commerce including large players such as eBay and Bringing developing country SMEs onto
holds tremendous promise for spurring eco- DHL, as well as smaller specialised firms the e-commerce highway will also speed up
nomic growth and creating new opportuni- in related fields, such as legal advisory ser- development and bring us closer to eliminat-
ties. One only has to look at how Rwanda vices. In the past year we organized a series ing poverty.
is working to create digital platforms to mar- of pop-up stores – dubbed e-Com Souks – in
ket and sell products ‘made in Rwanda’ to Switzerland and Rwanda to raise awareness
understand that the size of economy of land- about goods made in developing countries
locked countries need not hinder moving in such as Cote d’Ivoire, Ethiopia, Morocco,
the direction of digital solutions. By 2018, Senegal and Syria (see page 31-32). And at
Latin America B2B e-commerce is expected the end of June, we organized an e-Com-
to grow to around US$ 90 billion and Afri- merce Caravan that travelled from these
ca’s B2C e-commerce market is destined to countries to Geneva and Zurich.
hit US$ 50 billion. Despite those figures, A major challenge is to overcome the
Latin America’s is just over 4%, and Africa’s complexities of handling duties and taxes
share of the global e-commerce market is and complying with local fiscal and legal

FORUM ISSUE 2 | 2016  | 3


Contents
International Trade Editor
Forum focuses on trade Jarle Hetland
promotion and export
development as part of Writers
ITC’s technical Susanna Pak
Co-operation programme Marcos Vaena
with developing countries Matthew Wilson
and economies in
transition. Copy editor GLOBAL VIEW
Michael Kelley
Published quarterly since
1964 in English, French Design, illustrations NEWS BRIEF....................................................................................................6
and Spanish. and art direction
Kristina Golubic WHY TRADE MATTERS FOR BETTER LIVES...............................................10
See the online version at Iva Stastny Brosig Erik Solheim, Chairman, Development Assistance Committee,
tradeforum.org
Printer Organisation for Economic Co-operation and Development
Sign up for e-mail headline ITC Digital Printing
alerts at tradeforum.org/ NO COUNTRY IS AN ISLAND.....................................................................12
alerts Disclaimer Neven Mimica, European Commissioner for International Cooperation
Views expressed in Trade
Subscriptions Forum are the contributors’
and Development
forum@intracen.org and do not necessarily
coincide with those of ITC, AGENDA........................................................................................................37
Print subscription UN or WTO. Designations
US$ 60/year (free to employed do not imply the
trade support institutions expression of any opinion on
and firms in developing the part of ITC concerning
countries) the legal status of any
country, territory, city or
ISSN: 0020-8957 area, or of its authorities
or its boundaries; or the
Address endorsement of any
International firm or product.
Trade Centre
Palais des Nations Publisher
1211 Geneva 10 The International Trade
© EC / Seyllou Diallo

Switzerland Centre is the joint agency of


the World Trade Organization
t +41 22 730 0111 and the United Nations.

| 12
f +41 22 733 4439
intracen.org Cover photo:
ITC / Shutterstock.com
Reprints
Articles from this
magazine may be
freely reprinted, with
attribution to the author
and to International Trade SPECIAL REPORT
Forum, ITC. A copy of
the reproduced article
would be appreciated. MAKING E-COMMERCE WORK FOR ALL ...............................................14
Copyrighted photos may Marcos Vaena, Chief, Enterprise Competitiveness, International Trade Centre
not be reproduced.
CROSS-BORDER E-COMMERCE HELPS SMEs
REACH GLOBAL MARKETS .......................................................................16
Shi Dongwei, Vice President, Alibaba Group

CREATING AN INCLUSIVE DIGITAL ECONOMY IS VITAL


TO ACHIEVING THE SDGs........................................................................18
Houlin Zhao, Secretary-General, International Telecommunications Union

WHY LABOUR-INTENSIVE BUSINESS IS THE FUTURE.........................20


Marianne Haahr, Director of Global Opportunity Initiative, Sustainia

HARNESSING THE FORCES OF


E-COMMERCE FOR DEVELOPMENT........................................................22
Fabian Staechelin, Manager, Business Development, eBay

DIGITAL ECONOMY UNLOCKS DOORS FOR WOMEN


ENTREPRENEURS IN AFRICA....................................................................24
ITC EMPLOYMENT Jennifer Freedman, International Consultant, International Trade Centre
ITC is recruiting qualified professionals within different
areas of expertise. If you would like to contribute your
AFRICA’S DIGITAL AGRICULTURE REVOLUTION.................................25
skills to increasing export competitiveness for developing Jarle Hetland, Editor, International Trade Forum
economies, and are motivated to work in an international
environment that promotes diversity, please check our THREE WAYS TECH WILL UNLEASH AFRICA’S
jobs website, which is updated weekly:
ECONOMIC POTENTIAL.............................................................................26
www.intracen.org/about/jobs Francis Gatare, CEO, Rwanda Development Board

HOW WILL DIGITALIZATION CHANGE AGRICULTURE?.....................28


Achim Walter, Professor of Crop Science, ETH Zurich

4  | FORUM ISSUE 2 | 2016


PHOTO FEATURE
© Cecilia Viscarra Moser

|8
THE FACES BEHIND THE PROJECTS

Behind every effort to create value there is a person


aiming to untangle a path to markets and opportunities.

ANALYSIS
© Shutterstock.com

UNLOCKING FDI DEVELOPMENT GAINS


THROUGH FACILITATION..........................................................................33
James Zhan, Director of Investment and Enterprise,
United Nations Conference on Trade and Development

ITC IN ACTION

| 22
SRI LANKA SWEETENS ITS OFFERINGS OF FRUITS,
VEGETABLES FOR EXPORT.......................................................................35
Susanna Pak, Staff Writer, International Trade Centre
© Laurena Arribat / ITC

© Susanna Pak / ITC

| 33 | 35
SPECIAL REPORT PUBLICATIONS

IN LINE WITH GOING ONLINE: USING E-COMMERCE RESOURCES ON TRADE AND EXPORT DEVELOPMENT......................38
TO TAP NEW MARKETS..............................................................................30
Susanna Pak, Staff Writer, International Trade Centre

HOW THE DIGITAL ECONOMY IS IMPROVING WOMEN’S ACCESS


TO GLOBAL MARKETS................................................................................32
Cynthia Balogh, National Program Manager, Women in Global Business

FORUM ISSUE 2 | 2016  | 5


GLOBAL VIEW

News Brief

OECD says new approach is needed to tackle productivity, inequality challenges


A report by the Organisation for Economic A cyclical factor highlighted in the report
© OECD
Co-operation and Development (OECD) was the persistently low investment in physi-
finds that declining productivity growth cal capital, and on the structural side the
and rising inequality are some of the increased dispersion between ‘frontier’ firms
biggest obstacles to improved economic and companies lagging behind in their pro-
performance. The Productivity-Inclusiveness ductivity performance. The OECD also noted
Nexus notes that a mix of cyclical and struc- that increased inequalities of income, wealth,
tural factors act as hindrances for compa- well-being and opportunities in the majority
nies wishing to implement technological of countries around the world further slowed
advancements that would lead to higher the effort to improve individual well-being and
productivity growth. undercut economic productivity potential.

Business leaders call for WTO to address pressing issues for business community
Business leaders on 30 May met with the World on trade-related matters. The Trade Dia-

© WTO
Trade Organization (WTO) at its Geneva logues event brought together over 60 busi-
headquarters to discuss how to better address ness leaders to discuss the challenges and
current needs of the global business commu- opportunities they face in conducting trade
nity. Among several things, they urged the operations and to discuss how the WTO can
WTO to look at how to improve e-commerce, help in dealing with them. The attendees were
establish rules to better facilitate services and from small and large enterprises, from devel-
investment flows, and enhance the support for oped and developing countries and from a
micro, small and medium-sized enterprises. variety of sectors. The event was held at the
The event was a part of Trade Dialogues, request of the International Chamber of Com-
a new WTO initiative aimed at providing merce (ICC) and the B20 group of leading
stakeholders from the business community independent business associations from G20
with the opportunity to discuss their concerns economies. It was facilitated by the WTO.

Kenya to host 14th UNCTAD ministerial conference


The 14th Ministerial Conference of the United Nations Conference on Trade
© UNCTAD

and Development (UNCTAD XIV), themed ‘From Decisions to Actions,’


will be held in Nairobi, Kenya, on 17-22 July. Up to 7,000 participants are
expected to attend the event, including heads of state and of government,
ministers and other prominent players from the business world, academia,
students and civil society.
The event will be the first key United Nations ministerial confer-
ence since the adoption of the Addis Ababa Action Agenda and the 2030
Agenda for Sustainable Development. During the five days several minis-
terial debates and high-level roundtable discussions will focus on how to
achieve an inclusive and equitable global economic environment for trade
and development. Four other events will be held on the sidelines of UNC-
TAD XIV: the World Investment Forum, the Global Commodities Forum, the
Youth Forum and the Civil Society Forum.

6  | FORUM ISSUE 2 | 2016


Aid for Trade continues to attract funding but

© ITC
commitments are down
While support for programmes targeted at for LCDs, with 55% now being offered in the
assisting poorer countries to expand their form of loans rather than in grants. An expla-
participation in global trade continues to be nation for the drop in commitments could
provided, funding for trade facilitation and be that several donors are in the process
least developed countries (LDCs) fell in 2014, of revising their Aid for Trade strategies.
according to the Organisation for Economic The European Union will not have a new
Co-operation and Development (OECD). strategy ready before the beginning of 2017.
The OECD said during an Aid for Trade On the other hand, actual disbursements
session of the Committee on Trade Develop- of total aid commitments have had continued
ment on 25 May that contributions for trade growth every year of between 5% and 10%. doing so due to the United Nations Sustain-
facilitation support fell from US$ 613 million Aid commitments for private sector develop- able Development Goals, which encour-
in 2013 to US$ 362m in 2014, a decline of more ment, in particular for energy generation and age partnerships with the private sector.
than 40%. The OECD also said the terms of productive capacity building, have risen the The OECD said that LDCs still receive the
support had become less accommodating last couple of years and are likely to continue highest amount of aid per capita.

United Nations calls for LDCs to be at the forefront of sustainable development


of Action (IPoA) for the Least Developed Risk Reduction and the Paris Agreement on
© United Nations

Countries (LDCs) that took place in Turkey Climate Change. New initiatives such as the
in late May. establishment of a governing council for the
The three-day meeting, co-organized Technology Bank for LDCs to support their
by the Government of Turkey and the United access to and increased use of science,
Nations Office of the High Representative for technology and innovation were launched.
the Least Developed Countries, Landlocked Other initiatives and programmes focused
Developing Countries and Small Island on enhancing LDC access to duty-free and
Developing States, reviewed the progress of quota-free markets and offer favourable con-
48 LDCs in sustainable development since ditions that ensures that more exports items
the adoption of the IPoA in 2011. qualify for preferential treatment. Increased
A call for greater support and concrete Several of the suggestions for new imple- commitments to boost Aid for Trade and
actions for the world’s most vulnerable mentations were based on actions items from enhance the role of the UN in supporting
nations were among the outcomes of the the 2030 Agenda, the Addis Ababa Action LDCs to attract higher inflows of foreign
Midterm Review of the Istanbul Programme Agenda, the Sendai Framework for Disaster direct investment were also emphasized.

Africa’s economic transformation hinges on


© Shutterstock.com

unlocking potential of cities, report says


Africa’s future growth and development need of sufficient urban planning poli-
depends on how it urbanizes, according to cies and investments. The combination
the African Economic Outlook 2016. The of rapid urbanization and an unprece-
annual publication of the African Develop- dented demographic boom is putting an
ment Bank also argues that the continent’s extra pressure on the role of urban policy
economic performance remained resilient planning to unlock the cities’ economic
against global tumors and regional shocks potential and to secure the continent’s
in 2015. sustainable development. As of now, two-
The report warns that future eco- thirds of the needed urban infrastructure
nomic growth and potential could be investments up until 2050 is still lacking,
hindered by inadequate attention to the the report says.

FORUM ISSUE 2 | 2016  | 7


PHOTO SPECIAL

The faces behind the projects


MATTHEW WILSON, Chef de Cabinet, International Trade Centre

© Cecilia Viscarra Moser, all photos.


Development aid works best when it gets up close and personal

A t its very heart, trade-related assistance is about investing in


four Ps: people, processes, policies and productivity. Behind
every intervention, every project, every dollar spent, there is
developing IT products; Mafi in Ethiopia is creating international
fashion designs. Supporting them are hundreds of people and their
families. The long-term impact may be challenging to quantify but
a human face. investing in them today is to create change agents for the future.
With Aid for Trade levelling out, traditional aid budgets These photographs are examples of some International Trade
strained and some questioning the impact of assistance in build- Centre projects on the ground. They portray projects having
ing trade capacity, it is important to remember that face. To be impact on the lives of people by untangling the path to market,
truly sustainable, Aid for Trade has to do more than propose quick providing opportunities and building resilience.
fixes. It has to get to the knot of the problem and untie that which
creates inefficiencies or stifles productive potential. Sometimes 1. Adding value to cashew nuts in Benin. 6. Ethical fashion to the fashion market.
the outcome is immediate, but more often the impact is long term 2. Preparing pineapples for juicing in 7. Adding value to the Caribbean
and sometimes generational. Benin. coconut industry.
Behind every project there is a face. There is Marey in Papua 3. Freshly pressed pineapple juice, Benin. 8. Streamlining the agri-processing value
New Guinea working on bilum bag weaving; there is Odion from 4. Hub of the Ethical Fashion Initiative chain in Fiji.
Benin harvesting cashew nuts; there is Awino in Kenya working (EFI) in Nairobi, Kenya. 9. Improving quality of pashmina in
on climate resilient tea farming; there is Chanda in Cambodia 5. Thread spools used by Palestinian Nepal.
weaving silk using traditional methods; Farhana in Bangladesh is women designers.

8  | FORUM ISSUE 2 | 2016


FORUM ISSUE 2 | 2016  | 9
GLOBAL VIEW

Why trade matters for better lives


ERIK SOLHEIM, Chairman, Development Assistance Committee, Organisation for Economic Co-operation and Development

Trade plays a major part for any country that wants to raise
its standards and lift its population out of poverty

O penness to trade and investment is


a key ingredient for generating eco-
nomic growth and ultimately leads
the sector. A range of trade agreements now
offer trade benefits and Ethiopian enter-
prises have better access to regional and
launched an industrial relations project aim-
ing to improve the development of a socially
sustainable textile and garment industry in
to better lives for men and women across global markets as a result. Ethiopia. It is the outspoken goal of the Ethi-
the globe. We have seen it happen in many Today Ethiopia is rapidly becoming an opian government to be a ‘leading country
countries the past decades, for example in attractive location for textile manufactur- in light manufacturing in Africa, which will
China and South Korea. Today Ethiopia is ing as a result of competitive labour costs, lay the foundation for heavy and high tech
among the countries going through a similar government incentives, and low energy industries by 2025’.
experience. costs. Companies such as Swedish retailer Increased trade plays a big part in the
The country’s first textile mill was Hennes & Mauritz (H&M), British super- development of any country. China has lifted
established nearly 80 years ago but, until market firm Tesco and American companies more than 600 million people out of poverty
recently, it has not been able to develop a such as Gap, Belk and Wal-Mart are now since it opened up in the late 1970s and
viable textile export industry. However, sourcing textile products from the coun- surged ahead to become the world’s larg-
with a growing workforce and the need for try. In fact, H&M, the International Labour est exporter. Young South Koreans are 390
new jobs, the Government of Ethiopia has Organization and the Swedish International times richer than their grandparents were,
taken major steps to promote investment in Development Cooperation Agency have the emergence of global companies such as

© UNIDO

10  | FORUM ISSUE 2 | 2016


Increased trade plays a big part in

© Wu Zhiyi / World Bank


the development of any country.
China has lifted more than 600 million
people out of poverty since it
opened up in the late 1970s and
surged ahead to become the world’s
largest exporter.

automaker Hyundai and electronics giant


Samsung explaining some of the growth.
There is still much progress to be made.
Global incomes could be increased by US$
400 billion annually simply by improving trade
rules. High trade costs prevent a large number
of developing countries from fully exploiting
opportunities the global market offers.

MARGINALIZED
Landlocked, remote and small economies
are marginalized by costs that tend to reflect
geography, not capacity. Producers in low- The total amount of development aid Chinese-funded project will cut transport
income countries are often competitive at reached a new high in 2015. Despite con- costs in half, increase regional trade and
the farm and factory gate but are usually tinuing economic woes in many OECD improve access to port and global trade for
priced out of the international market. More countries and the refugee crisis in Europe, four landlocked East African countries.
often than not this is a result of cumbersome total aid reached US$ 131.6 billion. Addi- The same factors that contribute to
border procedures, poor infrastructure, tional development aid from China, Arab higher trade costs also inhibit regional
a lack of finance and complex standards. states and Latin American countries helped integration. In just five years, exports from
It was in response to these issues that make that achievement possible Colombia, Mexico and the Central Ameri-
the Organisation for Economic Co-operation can countries increased by 50% as a result
and Development (OECD) and the World FOREIGN DIRECT INVESTMENT of regional efforts to improve infrastructure
Trade Organization (WTO) launched the Aid At the same time foreign direct investment and regulatory frameworks.
for Trade initiative 10 years ago. Its impact is five times greater than development Trade initiatives are most effective
of has been largely positive: firms have been assistance. However, even more private when developing countries work together
enabled to develop new products, increase investments are needed for clean energy, and donors support their efforts. Cutting
exports and cut costs. manufacturing plants and greener agricul- costs through trade facilitation and Aid for
Aid for Trade has helped create jobs, ture. Some US$ 20 billion is expected to be Trade will contribute to better and faster
improve workers’ skills and working condi- invested around the world every year over development.
tions, and led to improved environmental the next 15 years. No doubt, billions of dol- Building capacity for trade is an ongo-
performance. A 2013 OECD study showed lars spent on development assistance each ing process. We are the first generation in
that US$ 1 invested in Aid for Trade gener- year will have a greater impact if coupled human history with the knowledge and
ates US$ 8 worth of trade for all developing with private investments in green develop- resources to end poverty and promote sus-
countries and US$ 20 for low income coun- ment and trade in poor countries. tainable development. We need to make
tries. The same study showed that female Almost a million Africans join the sure that aid money is invested in develop-
workers are empowered by trade liberaliza- labour market every month and only private ing countries in a sustainable way. But the
tion, which often leads to more work places investment can provide the jobs needed. best thing we can do for people and the
for women. These are impressive returns on Development assistance can be used to planet is to identify and copy policies that
investment. reduce risk and mobilize private invest- actually improve lives.
Development aid is also an important ments. Guarantees, soft loans and equity
Note: Since this article was written, Erik Solheim has
source of funding for least developed coun- investments funded by development aid can
been appointed Executive Director of the United
tries. However, economic growth alone will help attract investors to Ethiopia’s growing Nations Environment Programme.
not be enough to eradicate poverty even if textile industry.
all African countries grew Chinese-style at The beginning of a new railway con-
10% for the next 15 years. To end poverty necting landlocked Burundi, Rwanda, South 1. Ethiopia is rapidly becoming an attractive location for
we need specific policies targeting the most Sudan and Uganda with the Kenyan port manufacturing as a result of competitive labour costs.
vulnerable countries and people. town of Mombasa is a great example. The 2. Shanghai seen at night from the Huangpu River.

FORUM ISSUE 2 | 2016  | 11


GLOBAL VIEW

No country is an island
NEVEN MIMICA, European Commissioner for International Cooperation and Development
© EC / Seyllou Diallo

The win-win of strong trade partnerships between the European Union


and developing countries

A
t a time of globalization and rapidly jobs in developing countries and making sustainable development. Through Trade for
changing economies, the European it a vital ally in the fight against poverty. All, the EU seeks to support development
Union (EU) can only be as strong as its The EU has been assessing how it by enabling countries to better integrate into
partners, which is why well-founded trade can improve its trade relationships with regional and global value chains.
relationships are of crucial importance. countries worldwide and engage the pri- The new strategy will allow us to revisit
However, if we want to continue to alleviate vate sector. To address this challenge, the trade negotiations and to develop the means
poverty, eliminate hunger, improve work- European Commission in October 2015 to put those principles into practice. It allows
ing conditions and boost economic growth launched a new trade strategy – Trade for new initiatives and opportunities in Africa,
worldwide, we need to direct our focus to for All – a new approach to make Euro- the Asia-Pacific region and Latin America.
developing countries. pean trade policy more effective and more European cooperation is crucial in
Leaving no one behind is at the core transparent. improving trade in developing countries.
of the Sustainable Development Goals and As the biggest economy, trade player and
this objective can only be achieved if we TRADE FOR ALL investor in the world, it is critical that the
fully use the potential of trade to support For developing countries, the strategy EU continues to support developing coun-
sustainable economic growth. The pri- aims to transform trade agreements and tries as partners on their path to sustainable
vate sector is a driving force for economic trade preference programmes into efficient development, economic success and inde-
growth, providing approximately 90% of tools to promote fair and ethical trade and pendence.

12  | FORUM ISSUE 2 | 2016


The EU’s trade-related development

© EC / Fiona Goodall
cooperation is funded by a number of
sources. Up until 2011 its Aid for Trade
commitments amounted to some €18.7
billion (US$21.2 billion). These funds
have been allocated through geographical
instruments such as the European Devel-
opment Fund (in the African, Caribbean
and Pacific countries), the Development
Cooperation Instrument (in Asia, Latin
America and South Africa), and the Euro-
pean Neighbourhood and Partnership
Instrument (in the neighbouring regions
of the EU).
In addition, a number of thematic pro-
grammes have been implemented which
focused on addressing issues other than geo-
graphical cooperation. In short, the EU and
its member states remain collectively, and
by a large margin, the world’s most signifi- Sri Lanka is another country with which
cant Aid for Trade donor. The EU’s trade support for developing the EU has longstanding development coop-
countries goes beyond sheer financial eration. This was reinforced by announcing
PREFERENTIAL ACCESS aid. There is a long and fruitful new support programmes. One of them
The EU’s trade support for developing
tradition of granting preferential will be a €8m trade-related technical assis-
access to exports from developing
countries goes beyond sheer financial tance project to stimulate inclusive trade-
countries to European markets.
aid. There is a long and fruitful tradition led growth and regional integration. Such
of granting preferential access to exports assistance will facilitate Sri Lankan integra-
from developing countries to European The EU has a long-term cooperation tion into regional and global trading systems
markets. This encourages specific types of with the African, Caribbean and Pacific and help the country develop more efficient
exports, stimulating economic activity and (ACP) countries, which received total of trade policies, improve competitiveness and
development. €247 million for trade and private-sector comply with international standards.
This approach has proven beneficial development through the 10th European These projects represent but a quick
to developing countries, according to the Development Fund (EDF). EU collaboration look behind the curtain of long-lasting EU
2015 study ‘Assessment of economic ben- with ACP countries continues under the trade partnerships and commitments to
efits generated by the EU trade regimes 11th EDF, through which the EU supports developing countries. Supporting develop-
towards developing countries’, which regional programmes with €3.3 billion, ing countries on their path to sustainable
looked at the economic benefits generated largely targeted to support regional eco- economies is not only a matter of financial
by the EU trade regimes for developing nomic integration. Another €600m are set assistance, it is a solid pillar in consolidating
countries. The study confirms that the EU aside for intra-ACP support to private-sector partnerships that will benefit both sides for
market is crucial for developing countries, development and investment. years to come.
with 42% of total imports from develop- A telling example is Paraguay. The EU The ongoing preparations to revise
ing countries to the EU27 in 2012. It also will support the South American country the European Consensus on Development
reveals that the EU is the largest market for with €168m in the 2014-2020 period, of Policy and to redesign our relationship with
imports from the least developed countries which €20m were allocated to private-sec- the African, Caribbean and Pacific countries
(LDCs), with 60% of total imports from the tor development and trade. This support is offer an opportunity to further improve the
LDCs going to the EU. meant to increase economic diversification coherence between development and trade
The study reveals a double positive and foster inclusive growth, in particular policy. We should seize this opportunity to
impact of EU trade policy towards develop- to support government efforts to create keep what is working and change what can
ing countries, which showed a significant a competitive private sector by support- be improved.
increase in their exports as well as in their ing small and medium-sized enterprises
economic diversification. It comes perhaps with strong export potential. In addition,
as no surprise that this is even stronger for we are also assisting Paraguay’s economic 1. A youngster hones his electrical skills at an EU-funded
LDCs, one of the reasons the EU’s Agenda integration to improve its external trade project for street children in Dakar, Senegal.
for Change targets the most needy countries performance by simplifying customs pro- 2. European Commissioner for International Cooperation
while focusing on sectors with the biggest cedures and overcoming technical barriers and Development Neven Mimica visits Vanuatu
potential impact. to trade. Agricultural Research and Technical Centre.

FORUM ISSUE 2 | 2016  | 13


SPECIAL REPORT

Making e-commerce work for all


MARCOS VAENA, Chief, Enterprise Competitiveness, International Trade Centre

Pooling resources, logistics can help small and


medium-sized enterprises expand their reach

T
he rise of affordable and accessible shortcuts. Some attempt to bypass foreign
technology has transformed con- ownership or payment restrictions by rely-
sumer behaviour in recent years. ing on banking arrangements of family or
Engaging in online transactions is today friends. Novice firms often ship their prod-
commonplace across the world. From ucts with no regard to fiscal or legal require-
checking your bank account balance ments in the target market.
to paying bills and ordering groceries, These shortcuts result in disappoint-
e-commerce has transformed the way ingly short-lived trade as public authori-
consumers and businesses engage with ties and platforms move to shut down the
each other. For the citizens of developed business and customers reject goods deliv-
countries e-commerce is becoming busi- ered with unanticipated taxes and duties,
ness as usual. Online retail is estimated by destroying any profitability and reputation
the Centre for Retail Research to account the small firm may have had.
for 13% of consumer spending in the These apparently simple barriers are
United States of America, around 10% in compounded by a lack of affordable technol-
Europe and much more in some countries. ogies, services and affordable international
Business-to-business sales are estimated to transportation, resulting in the low levels
be as much as fifteen times as large. of presence of African firms in international
By any measure e-commerce is big e-commerce.
business. For example, by 2018 Africa’s A recent publication by the Interna-
e-commerce market is projected to soar to tional Trade Centre (ITC), International
US$ 50 billion from US$ 8 billion in 2013. e-Commerce in Africa: The Way Forward,
It also represents a major change in the provides additional references on the com-
way trade is conducted and offers great mon concerns faced by African SMEs as
potential to contribute to the Sustainable well as key recommendations on actions
Development Goals. However, developing by both the public and private sectors to
countries are not yet taking full advan- help overcome some of these barriers.
tage of this opportunity. For instance, best
estimates put the current share of African STRONGER TOGETHER
enterprises in international e-commerce Working individually, small enterprises are
below 2%, a share which could and should at a cost disadvantage. By bringing them
be much higher. together it is possible to eliminate or alle-
viate a number of barriers. We have seen
E-COMMERCE instances where this has been used very
MISPERCEPTIONS effectively to open up new possibilities for
Contrary to the perception that all e-com- vendors in Africa: ITC is supporting the
merce markets are open, African small and establishment of collectively owned and
medium-sized enterprises (SMEs) are often managed structures as a foundation of our
© Shutterstock.com

simply barred from listing products or sign- work to promote greater participation of
ing up to payment solutions on international SMEs from developing countries in cross-
platforms. Many therefore take ill-advised border e-commerce.

14  | FORUM ISSUE 2 | 2016


Working together, enterprises can

© Shutterstock.com
share international transportation
costs by consolidating outbound
shipments and gaining leverage
for negotiating more attractive
transportation rates..

First, transportation costs must be


addressed. Many of the African goods that
could find a natural market among consum-
ers in Europe, such as handicrafts, decorative
and fashion items, and health and cosmetic
products, typically have unit sales prices
which do not justify the costs of direct inter-
national transportation. International express
transportation is under-developed and costly
and postal services remain relatively expen-
sive and are perceived as unreliable. within the reach of small enterprises in transformation rate – the share of website
Working together, enterprises can share developing countries thanks to advances in visitors who purchase goods.
international transportation costs by con- digital tools and increased affordability of With the initial promising results
solidating outbound shipments and gain- related services. achieved by the Made in Morocco model,
ing leverage for negotiating more attractive current discussions are underway to repli-
transportation rates. In addition, a greater E-SOLUTIONS cate this model in other African countries
volume of goods opens other possibilities To address these needs, ITC has developed including Rwanda, Senegal and Ethiopia.
in the target market, such as the potential and piloted a series of modules in the form
to use fulfilment services, which can offer of training and specific technologies as well THE WAY AHEAD
the consumer next-day delivery and handle as shared services delivered by partners There is a growing consensus among devel-
issues such as returns. that can address most of the barriers. Taken opment actors that a greater level of coordi-
Customer service – and especially the together, these modules provide e-solutions nation and support is urgently required for
ability to handle requests in foreign lan- to the challenges of conducting interna- SMEs to benefit from the opportunities of
guages – can be a particular problem. It is tional trade through digital channels. e-commerce.
an easily overlooked requirement that con- The full suite of services was deployed Further, UNCTAD, ITC and a number of
sumers on the internet expect a merchant in Morocco in 2015. In January, a group other international agencies and private-sec-
to handle requests in their native language of Moroccan SMEs using e-commerce to tor partners have worked together to produce
and to react quickly and positively. This may sell products domestically got together and a call for action on ‘Aid for eTrade’, which
not be easy for an African vendor with lim- formed an export cooperative called Made aims to unite efforts in a mission to facilitate
ited resources and experience of conducting in Morocco. The firms, whose wares ranged greater participation in digital trade.
trade with international consumers. from olive oil and cosmetics to books and Aid for eTrade is a multi-stakeholder
One solution is to pool resources music, asked ITC for help boost access to initiative that aims to improve the ability of
between enterprises – and to implement – and competitiveness in – foreign markets. developing countries to use and benefit from
outsourced customer service handling – as A multi-pronged approach was taken. On e-commerce by scaling up collaboration. It is
a shared cost. This is entirely possible in the the payments side, a formal commercial pres- a demand-driven mechanism in which lead-
age of offshore cloud-based solutions: out- ence was established in Europe, the United ing development partners cooperate with
sourcing is not the unique preserve of mul- States of America and the United Arab Emir- the private sector to pool capabilities and
tinationals and in this instance can be at the ates to enable the cooperative to correctly resources.
service of SMEs from developing and least handle import duties and domestic taxes. The rise of e-commerce presents a
developed countries. On logistics, ITC worked with global pro- unique opportunity to make trade work for
Equally, by working together enter- vider DHL to work out the most cost effec- all. Our vision at ITC is one where small
prises can share the costs of registering and tive method of international transportation. firms in developing and least developed
managing foreign business entities, enabling Following this intervention, several countries have access to advanced solutions.
transparent and efficient repatriation of members of the cooperative have sold goods That way they can sell through international
earnings while opening up the possibility to in Europe for the first time. The collective market places transparently and efficiently
list their products on new marketplaces. is growing and now includes more than and are able to retain a significant part of the
Techniques developed to support the 400 SMEs. Made in Morocco has sharply international value creation in the country
globalization of large firms are increasingly increased export sales and has tripled its of origin.

FORUM ISSUE 2 | 2016  | 15


SPECIAL REPORT

Cross-border e-commerce helps


SMEs reach global markets
SHI DONGWEI, Vice President, Alibaba Group

© Christopher Penler

Changing the face of cross-border trade by prioritizing small


and medium-sized enterprises

J
unpu is a small village of 3,000 resi- through more than 3,000 online stores oper- 10% of the population is engaged in online
dents in China’s southern province ated from the village. The village also has retailing and generating at least 10 million
of Guangdong, which was very poor a ‘Taobao Academy’ providing training to yuan (US$ 41.5 million) annually in online
before the fast development of e-commerce aspiring young people who have just started sales. E-commerce has brought tremendous
in China. Today, more than two-thirds of their online businesses. changes to these rural areas, many of which
the residents make their living on Taobao, This phenomenon is not limited to were previously isolated from urban markets
China’s largest e-commerce site, selling Junpu. By the end of 2015 China had some because of the lack of channels to advertise
local produces and other popular products 780 Junpu-style ’Taobao villages’ across the and deliver local products to consumers.
to domestic and international customers country, which is defined as any place where Through Taobao’s integrated solutions, the

16  | FORUM ISSUE 2 | 2016


© Maxxa Satori
To help overcome challenges of
access to finance, Alibaba provides
SMEs operating on its e-commerce
platforms with microloans.

untapped potential was matched with the


demands from domestic and international
markets, bringing revenue and growth to
once economically underprivileged areas.
Just like Taobao’s e-commerce helped
millions of village residents to connect to
urban customers, cross-border e-commerce,
an emerging form of international trade
facilitated by e-commerce and big data, may
provide greater opportunities for companies
and individuals in developing countries and
least developed countries to connect to the
customers beyond their national borders.

UNDERESTIMATED MARKET
Cross-border e-commerce is perhaps the
fastest growing segment of global trade, Trade Platform, or e-WTP, in the context
growing from practically zero two decades As market conditions and regulatory of the G20 to facilitate the public-private
ago to an estimated US$ 1.92 trillion glob- framework improve, cross-border dialogue with the policy makers for better
ally by the end of 2016. This is only a frac- e-commerce has the potential business environment for SMEs engaged in
tion compared with the size of the domestic to become a prominent form of cross-border e-commerce.
international trade.
e-commerce markets in many countries. For As Jack Ma, the founder of Alibaba
instance, online retail now accounts for 13% Group, has said, the company only does well
of consumer spending in the United States provides SMEs operating on its e-commerce when the SMEs on its platforms do well. As
of America and around 10% in Europe. In platforms with microloans. To help increase the group globalizes, it is taking its commit-
China, domestic e-commerce was estimated trust between suppliers and buyers, the com- ment to SMEs growth beyond China’s bor-
at US$ 2.8 trillion in 2015. As market con- pany launched a free product called Trade ders. Junpu’s Taobao Academy now regularly
ditions and regulatory framework improve, Assurance. According to the previous authen- receives delegations from foreign countries to
cross-border e-commerce has the potential tic trade records, Alibaba could provide an provide trainings to SMEs around the world
to become a prominent form of international amount of assurance up to US$ 1 million for on how to do business on Taobao. The group
trade, particularly for the consumer prod- the Chinese suppliers on its platforms. If the has recently launched a SMILE (small and
ucts with diverse demands. supplier fails to ship the products on time or medium industries leveraging export) plat-
the product quality does not meet the stand- form in India that provides trading solutions
EASY BUSINESS ards set in the contract, Alibaba will directly such as financing, logistics, inspections and
Alibaba Group, which owns Taobao, oper- refund the payment made by the buyers certifications, and training for SMEs.
ates with a mission: make it easy to do busi- within the amount of trade assurance. This Cross-border e-commerce is the future
ness anywhere. Small and medium-sized can provide a lot of confidence and protec- of the global trade and Alibaba stands ready
enterprises (SMEs) have always been at tion to the overseas buyers. to help SMEs catch that wave and expand
the heart of Alibaba’s operations. It strives Alibaba’s vision is to build the future business globally.
to make international business for SMEs as infrastructure of commerce. In coming dec-
simple and cost-efficient as possible. It has ades the company will contribute towards
built a comprehensive ecosystem for SME building a global e-commerce market with-
e-commerce and the services cover virtually out boundaries. Therefore, it is actively
all key areas essential for SMEs, including pushing for better policies for global trade.
financing options, payment, shipping, deliv- The implementation of the Trade Facilitation
ery choices and logistics solutions. Agreement by the World Trade Organization
Alibaba strives to help SMEs to scale up and its members will significantly reduce the 1. Alibaba’s shares began trading on the New York Stock
Exchange in 2014.
and grow. For instance, to help overcome trade costs for SMEs. Alibaba is also calling
2. What shall we buy today?
challenges of access to finance, Alibaba for the establishment of an Electronic World

FORUM ISSUE 2 | 2016  | 17


SPECIAL REPORT

Creating an inclusive digital economy


is vital to achieving the SDGs
HOULIN ZHAO, Secretary-General, International Telecommunications Union

Information and communication technologies are already improving


peoples’ lives, but their potential can help us build an even better world

S
ince the birth of the World Wide Web
in 1990 the world has witnessed the
beginning of an extraordinary fourth
wave of industrialization. Information and
communication technologies (ICTs) from
computers and smartphones to mobile apps,
networked smart sensors, web-enabled
drones and cars now pervade the personal
and professional lives of those living in the
industrialized world.
At the International Telecommunica-
tions Union (ITU), the United Nations spe-
cialized agency for ICTs, we celebrate the
fact that more than 3.2 billion people are
connected to previously unimaginable pos-

© Pablo La Rosa / UNDP


sibilities. ICTs are already helping people
make better-informed decisions, providing
access to education resources and health
information and creating new organically
grown networks of information and influ-
ence around issues that matter.
According to Connecting the World:
Ten Mechanisms for Global Inclusion,
a new report from social media firm Face-
book and financial services company PwC, smartphone capabilities are now being used
providing internet access to the 4.1 billion Entrepreneurs and SMEs provide up in applications ranging from detecting and
to 70% of global employment and we
people in the world who do not yet have it mapping disease outbreaks, to the prolifera-
need their expertise, innovation and
would increase global economic output by investment to achieve common goals tion of educational resources, to platforms
US$ 6.7 trillion and lift 500 million people of sustainable economic and social for economic empowerment such as e-com-
out of poverty. development. merce and mobile banking.
The Global e-Sustainability Initiative, Three areas in particular are providing
an NGO focusing on ICTs for a sustain- good reason for optimism around the poten-
able future, estimates US$ 6.5 trillion of expanded e-commerce offerings and smart tial for ICTs to overcome long-standing devel-
additional revenues will flow from ICT- energy solutions. Increasing use of ICTs opment challenges – the Internet of Things
enabled services in 2030. It also predicts could also cut total economic costs across (IoT), digital financial services (DFS) and
ICT-enabled services from other sectors will sectors by US$ 4.9 trillion. small and medium-sized enterprises (SMEs).
contribute an additional US$ 4.5 trillion of Early success stories are already com- In the industrialized world, IoT – the
revenues from increased agricultural yields, ing out of the developing world, where growing number of connected devices

18  | FORUM ISSUE 2 | 2016


ranging from computers and smartphones
to simple sensors and radio frequency
identification chips – is already extensively
deployed in stock and inventory systems,
NO ZERO GOOD HEALTH QUALITY GENDER CLEAN WATER
fleet management, environmental monitor- POVERTY HUNGER AND WELL-BEING EDUCATION EQUALITY AND SANITATION
ing and industrial processes.
ITU’s report on ICTs, ‘Trends in Tel-
ecommunications Reform 2015,’ noted that
over one billion wireless IoT devices were AFFORDABLE AND DECENT WORK AND INDUSTRY, INNOVATION REDUCED SUSTAINABLE CITIES RESPONSIBLE
CLEAN ENERGY ECONOMIC GROWTH AND INFRASTRUCTURE INEQUALITIES AND COMMUNITIES CONSUMPTION
already shipped in 2015, with as many as 25 AND PRODUCTION

billion networked devices predicted to be


connected by 2020 – making IoT the largest
ICT device market worldwide.
CLIMATE LIFE LIFE PEACE, JUSTICE PARTNERSHIPS
This could be great news for developing ACTION BELOW WATER ON LAND AND STRONG FOR THE GOALS
INSTITUTIONS
economies. A recent joint report by ITU and
global technology company Cisco, ‘Harness-
ing the Internet of Things for Global Devel-
opment,’ gives concrete examples of how
IoT could have a major impact in areas such
as grassroots delivery of health care and edu-
cation, positively transforming communities putting financial services within reach of all to achieve common goals of sustainable eco-
within a time frame that would have been the world’s people. ITU is working to bring nomic and social development.
unimaginable just a few years ago. ICT and financial service regulators together Governments around the world recog-
In terms of deployment, strong demand with industry to develop a common inter- nize this and many are now actively promot-
for IoT technologies in developed countries national framework for DFS to facilitate the ing national innovation and entrepreneurial
has created a huge array of IoT devices that development and deployment of easy-to-use hubs with the aim of creating a vibrant start-
are readily available, affordable and scal- new services while ensuring vulnerable peo- up culture.
able. The basic infrastructure to support IoT ple are protected. However, we still need to address
(Wi-Fi, internet cafés etc.) is already in place Considerable work must be done to a huge gap in funding, skills, tools and
in many developing communities. realize that goal. Regulatory gaps that need knowledge. Almost one-third of the world’s
IoT devices are well-adapted for use in addressing include ensuring a level play- venture capital is concentrated in the San
rugged, remote and inhospitable environ- ing field for new service providers; number Francisco Bay area. This very small part of
ments and many devices already offer very and data portability to promote consumer northern California matches venture capi-
simple functionality that does not require choice; guaranteeing gender-inclusive tal investments in the whole of China and
skilled technicians for installation or mainte- access; creating consumer safeguards; and Europe combined.
nance. For example, reduced and alternate harmonization of regulations. Substantial As Secretary-General of ITU, I want
power supplies, such as solar, can maintain technical challenges such as safeguarding to ensure that we use our experience and
sensors and networks where there is no con- network and user protocols; developing global network to support the evolving ICT
sistent electricity supply. simple, effective online payment platforms; ecosystem, including government-funded
Global interoperability between devices counteracting digital fraud to mitigate risk; tech parks, university incubators and start-
will be key to leveraging IoT’s full potential. and promoting return on investment to up accelerators so that SMEs in emerging
To this end ITU’s Telecommunication Stand- encourage healthy market competition must economies can more easily grow and scale
ardization Sector has set up a new ITU-T also be overcome. their business and access new market oppor-
Study Group, ‘Study Group 20: IoT and its To fully realize the benefits in terms of tunities.
applications, including smart cities and com- social and economic progress of bringing the ITU will continue to work with our
munities.’ more than 4 billion people with no inter- membership in supporting these endeavours
DFS matters, too. Keep in mind that an net access into the online world, we must to achieve widespread digital social innovation
estimated 2 billion adults worldwide have continue leveraging the power of public pri- and promote ICT entrepreneurship for social
no access to even basic banking services, vate partnerships and the huge potential of impact to create a better world for all.
representing a major barrier to socio-eco- SMEs. Today’s ICT ecosystem is increasingly
nomic development. In today’s connected being driven by grassroots entrepreneurship,
world, however, we can start to leverage delivering local solutions to tackle local chal-
near-universal access to mobile phones as a lenges. Entrepreneurs and SMEs provide up
basic platform for financial transactions, rep- to 70% of global employment and we need
1. ICTs can provide better education for children across
resenting a fast, easy, cost-effective way of their expertise, innovation and investment the world.

FORUM ISSUE 2 | 2016  | 19


SPECIAL REPORT

Why labour-intensive business


is the future of job creation
MARIANNE HAAHR, Director of Global Opportunity Initiative, Sustainia

© Georgina Goodwin / M-Kopa

Technological innovation can lead to an increas in related employment

T
he battle against unemployment con- Increasing labour productivity has been The Global Opportunity Report, by
tinues to rage and nowhere more so the focus of policymakers and business leaders DNV GL, the United Nations Global Com-
than in developing economies. There is alike for decades. The aim is to produce more pact and Sustainia, shows leaders around
good reason for that. For example, in Africa goods and services with fewer hours worked. the world view unemployment as the most
more youths will enter the labour market Innovations also tend to focus on increasing pressing global risk – but when presented
in the next 15 years than in the rest of the labour productivity and as a result we are rac- with 15 different opportunities for cor-
world combined. Systemic change is needed ing towards an era we could define as ‘post- porate action the majority of respondents
to reverse the trend of jobless growth by job.’ Robots and machines demand no salary; rated opportunities for job creation as those
shifting focus from labour to resource pro- only electricity is needed for their work. In with the most promising impacts potential.
ductivity to re-design employment markets short, business has been incentivized to elimi- It points to a readiness to re-think business for
fit for the 21st century. nate jobs when we need them more than ever. job creation. The recently published Sustainia

20  | FORUM ISSUE 2 | 2016


© Sofie Tesson / World Bank
There is an urgent need to re-think
construction and urban planning as
untapped tools for job creation and
sustainable production.

100 offers examples of businesses already


doing so while using resources sustainably
and thereby operationalizing global goals as
they relate to good jobs and economic growth.
It also points to some bigger business trends.

OFF-GRID SOLUTIONS
Half the global population could be best served
with pay-as-you-go solar technology for energy
instead of grid-based services. This certainly
applies to Africa, where consumers at the bot-
tom of the income pyramid are best served by
off-grid solutions. An example of a company
providing this kind of opportunity is M-Kopa,
an East Africa-based enterprise delivering off-
grid solar energy to financially vulnerable com-
munities. Household solar kits are acquired for
a US$ 30 deposit. After 365 daily payments for LOCAL FABRIC, LOCAL SKILLS creation. It is shifting productivity from
less than the daily cost of kerosene, the buyer African cities are expanding at an almost labour to resources. Using more labour
owns their own solar system and becomes his unmatched rate. However, almost 200 mil- and equipping people with relevant skills
or her own energy producer. lion people live in slums and with an annual requires more designers and supervisors
The business model of M-Kopa is labour urbanization rate of 4%, that number is on-site, which can increase construction
intensive because once consumers acquire likely to rise. It suggests there is an urgent costs. Policymakers need to step in and
ownership of their solar kit, the relation- need to re-think construction and urban enable these businesses to create jobs by
ship between M-Kopa and the consumer planning as untapped tools for job creation incentivizing hiring and increasing the
shifts from product to service. Consum- and sustainable production. costs of harmful natural resources use. In
ers are offered around-the-clock assistance Another example is the Mass Design short, it requires systemic change.
with their solar kits, which consequently Group, a company based in the United
demands high labour inputs. This business States of America and Rwanda that is aim- FROM BUSINESS TO SYSTEM
model is trickling up from Africa to Europe, ing to improve people’s lives through archi- If we are to achieve the SDGs, we need
with even IKEA, the Swedish furniture tecture and by employing mainly local staff, business models that require high inputs
giant, offering off-grid household solar kits. both skilled and unskilled. Unskilled people of labour, which is good news for the bat-
Currently M-Kopa operates in Eastern receive training, providing them with mar- tle against unemployment. Businesses such
Africa and in Ghana in Western Africa. How- ketable skills, while skilled workers are given as M-Kopa and Mass Design Group are
ever, a major barrier to expansion is the lack an opportunity to improve their crafts. Mass already shifting productivity from labour to
of mobile connectivity and mobile banking Design Group is part of the ‘lo-fab,’ or locally resources, which is true for all forms of cir-
options for businesses to unlock access to fabricated, movement and is using mainly cular business models as well. A shift from
consumers by enabling them to pay the daily local inputs for the construction, which linear to circular production requires labor-
rates and user charges. A greater degree of reduces the need for transportation around intensive business models, such as research
digitalization of the economy can help drive the globe and thereby reduces emissions. It and development, repair, maintenance and
job creation. also enables local ideas and innovation during recycling. Policymakers everywhere need
Providers such as BlueTown, a Danish the design and construction processes. to support these businesses already leading
company offering communications solutions The end of a construction project is, the way by incentivizing the increased use
across developing countries, can pave the in many ways, a beginning. That is true of labour and the reduced use of planetary
way by connecting the unconnected through especially since all impacts are evaluated resources.
local masts, delivering wi-fi to off-grid com- and the local workers involved are equipped
munities. Clusters between off-grid energy with new skills, tools and know-how. Mass
firms, connectivity providers, mobile banking Design Group is good example of a busi- 1. A shop-owner lights up an M-Kopa solar lamp.
concerns and microcredit institutions can be ness developing synergies between Sustain- 2. Could home-based solar systems help speed up
a motor for sustainable job creation. able Development Goals (SDGs) and job the digitalization of Africa?

FORUM ISSUE 2 | 2016  | 21


SPECIAL REPORT

Harnessing the forces


of e-commerce for development
FABIAN STAECHELIN, Manager Business Development, eBay

E-commerce is breaking down geographical barriers between sellers


and buyers, as well as between developing and developed countries

S
ince its creation 20 years ago eBay has
been a significant force in promoting

© Shutterstock.com / Chonlachai Panprommas


small businesses and entrepreneur-
ship across the United States of America and
Europe. Today there are 25 million active
sellers on eBay, many of them making a liv-
ing selling online.* During a recent visit to
Africa I had the chance to meet with two
Rwandan-based eBay sellers and was able to
experience first-hand how online trade cre-
ates sales opportunities.
I strongly believe in the potential of
e-commerce to enable entrepreneurship
in developing countries similar to what is
underway in advanced countries. Proac-
tive action is needed to realise this poten-
tial. There is an opportunity for the public
and private sectors to join forces in help-
ing small businesses access global markets.
That opportunity is very real considering the
rapid technological advances in developing
countries.
less than in traditional trade. This leads come into play. Selling across borders comes
HOW E-COMMERCE BENEFITS to e-commerce-enabled small businesses with significant complexities and small busi-
SMALL BUSINESSES becoming veritable export champions: ness need help overcoming them. While
In short, e-commerce benefits small busi- while traditional businesses merely engage local e-commerce in developing countries
nesses because it can connect them to a global in exporting at all, 97% of technology-ena- is booming, online selling on international
customer base they cannot reach otherwise. bled businesses export and they reach as e-commerce platforms has yet to take off.
A recent research paper** by Hanne many as 40 destinations on average. While visiting Rwanda I was impressed
Melin of eBay’s Public Policy Lab shows that to see how far e-commerce has come in such
e-commerce has been a powerful export WHY SMALL BUSINESSES a short time. For example, Kaymu – the local
enabler for small businesses in advanced NEED HELP eBay – has expanded to 17 African markets
and developing countries alike. Essentially, Getting a store set up online and under- in less than three years. Mobile connectivity
in e-commerce the geographical distance standing customer behaviour and prefer- in Kigali is often better than what I experi-
between sellers and buyers becomes insig- ences in foreign target markets is challeng- ence in Europe. On every street corner you
nificant. In the case of online trade with ing. That is even more so when questions can buy SIM cards for the 4G network and
developing countries, distance matters 94% around export regulations or import taxes mobile money is omnipresent.

22  | FORUM ISSUE 2 | 2016


While local e-commerce in developing

© Fabian Staechelin
countries is booming, online selling
on international e-commerce platforms
has yet to take off.

ENABLING ENTREPRENEURS
While local e-commerce is a big step forward
for the national economy, local businesses
have yet to take advantage of the benefits of
cross-border e-commerce. A meeting at the
Rwandan Ministry of Commerce involving
30 small businesses showed that they all
cared for reaching a larger customer base but
lacked the skills and knowledge to run an
online storefront and serve foreign markets.
A recent pilot project run in the Ger-
man town of Mönchengladbach can serve €2.5 million (US$ 2.8m) in additional sales. in a unique position to accelerate the trend
as a model for the public and private sectors Most importantly, the majority of them towards a more inclusive global trading
to join forces to help small businesses realise engaged in exports, reaching customers in system – creating trade impact for good.
cross-border trade opportunities. 79 countries.
Mönchengladbach’s private-sector devel- This model is applicable to developing Hanne Melin contributed to this article. This article
presents the views of the author and should not be
opment authority turned to eBay in early countries in one form or another. The craft attributed to eBay.
2015 for help on an e-commerce pilot aim- of selling online is very similar around the
ing to bring local businesses online. Within world. The added challenge in developing
a short period of time 77 brick-and-mortar countries is dealing with customs, getting * Of the US$ 83 billion worth of merchandise traded on
eBay in 2015, 75% came from business sellers.
stores were recruited, including a pharmacy, the merchandise shipped timely and collect-
** https://www.ebaymainstreet.com/sites/default/files/
a shoe shop and an electronics reseller. eBay’s ing payments from foreign customers.
eBay_Commerce-3-for-Development.pdf, page 9is
merchant development team assisted these It is crucial, therefore, that entrepre-
businesses with establishing an online pres- neurs get appropriate support. I am excited
ence and advised them on marketing their to see the International Trade Centre (ITC)
1. Online platforms such as eBay are opening up new
products to local as well as foreign custom- developing a programme to assist small opportunities for people to trade across borders more
ers. The results were encouraging: within businesses and entrepreneurs in exporting easily.
six months the participating businesses online. By joining forces with the right part- 2. E-commerce has helped Lyce finalize sales of US$ 6,700
sold a total of 65,000 articles generating€ ners from the private sector, ITC puts itself to customers in the US.

Interview with Lyce of Rwanda Tribal

Q: How long have you been selling Q: What is your main export destination?
on eBay? A: United States, European Union, Russia.
A: 11 months.
Q: In your view, what are the biggest challenges when
Q: What type of goods do you sell? selling internationally?
A: Tribal Masks. A: PayPal doesn’t allow Rwanda based accounts to receive
payments.
Q: How many people do you employ?
A: One. Q: What are the key things that eBay should do to help you
sell internationally? Can eBay talk to PayPal to allow
Q: What is your sales volume so far?
Rwandans accounts to receive payments? How do you
A: US$ 6,700.
manage getting payments to Rwanda anyways?
Q: What platforms do you sell A: I have opened a PayPal account in Kenya. From there I can
on next to eBay? withdraw cash to Equity Bank (a Kenyan bank) and have it sent
A: None. to my Rwandan mobile money account. Transfer fees for this
are high. It would be much easier if I could withdraw money
Q: What % of your sales are international?
directly from PayPal in Rwanda.
A: 100%.

FORUM ISSUE 2 | 2016  | 23


SPECIAL REPORT

Digital economy unlocks doors


for women entrepreneurs in Africa
JENNIFER FREEDMAN, ITC Consultant

E-commerce investment helps Kenyan software company


expand clientele

S awaSawa means ‘fine and dandy’ in


Swahili and the women-led custom
software-solutions provider bearing
hold, its domain name base shot up to 2,000
over two years.
Technology companies have benefited
that name is doing ever-increasing business, as public and private-sector actors invest in
thanks in large part to electronic commerce developing the right infrastructure, access
and the development of digital tools. and space for the digital economy to emerge
What began in 1998 as a two-woman in Kenya, dubbed Africa’s ‘Silicon Savannah.’
enterprise has evolved into a 12-strong team SawaSawa is one of the 33 beneficiary com-
with clients around the world, thanks to the panies supported by the International Trade
technology boom that has brought a wave of Centre (ITC) Netherlands Trust Fund III, a

© SawaSawa
investment in Kenyan IT companies. series of projects funded by the Dutch Centre
‘When we got into e-commerce it really for the Promotion of Imports from developing
helped us grow our company,’ said Sarah countries (CBI). In Kenya, the project seeks to
Murugi, chief executive of Nairobi-based enhance the export competitiveness of Ken-
SawaSawa, which offers custom software yan information, technology and information
development and infrastructure. ‘We were technology enabled services companies. The E-commerce has also brought chal-
able to expand our clients’ geographical direct private-sector partner is Kenya Infor- lenges. These include protecting goods,
reach and our client base. With the interna- mation Technology & Outsourcing Society services and trademarks; sharing knowledge
tional digital tools of e-commerce, our busi- (KITOS), of which SawaSawa is a member. about how payments are made; reassuring
ness operations are all digitized and 90% are ITC also works with the Kenya ICT Authority clients about security; and proving expertise
automated.’ at government level. to foreign markets. Murugi says the key is
That means higher sales and income ITC is setting up an exporter directory to continually reinvent ways to overcome
because operational costs have dropped with an e-commerce function, which will e-commerce cross-trade barriers, such as
and the company has added customers in enhance the visibility of SawaSawa and forming favourable partnerships, improving
Europe, the Americas, Asia and Oceania. other participating companies. Potential cus- networking and brand-exposure strategies,
International business has grown well over tomers will find useful details online about and participating in dialogues that concern
60%, Murugi said, particularly for services Kenyan small and medium-sized enterprises SMEs and e-commerce trade.
that generate recurring revenue. (SMEs) and can ask for an electronic quo- ‘Once you open up your products and
‘When it comes to e-commerce, you tation. This platform will be hosted on the services, you face the challenge of proving
don’t have to be physically hired in an KITOS website. your expertise to foreign markets,’ she said.
office,’ she explained. ‘As long as you have Digitizing the e-commerce structure ‘Competition is stiff - you always have to be
a skill set you just have to make yourself has helped break down barriers confronting on top of your game, make sure your sys-
visible online, provide a proper platform to women entrepreneurs, Murugi said. tems are working flawlessly and that they’re
engage clients wherever they are and voila, ‘We operate in a patriarchal society easy to use. A great deal of work goes into
you create a job for yourself.’ where men are dominant and there are still maintaining an e-commerce business.’
stereotypes that women don’t understand
DIGITAL BOOM technology,’ she said. ‘Digitizing means cli-
SawaSawa’s domain-name registration activi- ents never have to know your gender. It’s
ties illustrate the importance of e-commerce. leveled the playing field and reduced patriar-
Initially, the company had registered about chy in business. We’re now able to operate
100 domain names, which translates into in areas where there is less discrimination 1. SawaSawa is one the 33 companies ITC work with in
customers. But once the digital boom took towards women.’ ‘Silicon Savannah’.

24  | FORUM ISSUE 2 | 2016


SPECIAL REPORT

Africa’s digital agriculture revolution


JARLE HETLAND, Editor, International Trade Forum

Fabian Lange of the Kofi Annan Foundation discusses how technology


can support Africa’s agriculture and lift people out poverty

D igital technologies can improve agri-


culture in Africa as they have potential

© Arne Hoel / World


to significantly raise productivity of
smallholder farmers, Fabian Lange, associate
research officer at the Kofi Annan Foundation,
tells Jarle Hetland. As part of the organization’s
Combatting Hunger Programme, which advo-
cates for the transformation of African agricul-
ture to ensure food and nutrition security, he
has seen first-hand how going digital is trans-
forming the continent.

Hetland: How can digital technologies


help to combat hunger in Africa?
Lange: Digital technologies such as mobile
phones, satellites and big data provide
unprecedented opportunities to integrate
smallholders into food systems. Through
mobile phones, for example, smallholders
can receive rural advisory services tailored the Agricultural Transformation Agency of
to their needs, access weather information We also have to ensure that digital Ethiopia developed a digital soil map which
in real time to adjust their planting and get applications are run on neutral is public and can be used by anybody.
market prices to negotiate efficiently with
platforms to which any farmer
can connect, including the poorest H: What is the foundation doing to
potential buyers. Digital technologies clearly address the situation?
and most vulnerable.
have the potential to improve smallholders’
L: The Kofi Annan Foundation mobilizes
productivity and increase food security.
H: What are some of the main chal- political will to overcome threats to peace,
H: Can digital technology be made lenges? development and human rights. Like with
realistic, cost efficient and sustainable L: There are numerous digital projects so many of the world’s issues, the know-
in rural and inaccessible parts of Africa? throughout Africa in support of smallholder how to combat hunger effectively is already
L: Digital technology is becoming increas- agriculture. One key challenge is scaling there. We therefore convene the big players
ingly available and affordable in rural areas them up, which requires policy changes, from the private sector, government, the UN
of Africa. Today, 75% of Africans own mobile investments and sustained effort from gov- and civil society to pool their resources and
phones and mobile networks are growing ernments, private enterprises and NGOs. make it happen.
dramatically in rural areas, enabling a two- On the technical level, farmers need to be With our partners we look to building the
way communication between previously assigned ‘unique user identifiers’ so that digital infrastructure in support of these
isolated smallholders and the other actors they can actually receive services tailored African smallholders. We named our efforts
involved in the food system. As well as pro- to their specific needs. This has been done here the African Food Systems Initiative,
viding benefits to rural communities, many quite successfully in Nigeria, where the gov- which aims to enable smallholders to turn
digital solutions are commercially viable and ernment has assigned identifiers to about 15 their subsistence farms into profitable busi-
therefore sustainable in the long term. For million farmers to provide input subsidies nesses while improving food and nutrition
example, M-Farm, a mobile phone-based directly to farmers through its e-Wallet pro- security across Africa.
market information and trading system, has gramme. We also have to ensure that digital
been successful in giving Kenyan farmers applications are run on neutral platforms to
access to market prices and connecting them which any farmer can connect, including the 1. Digital solutions are making it easier to grow crops
directly with buyers. poorest and most vulnerable. For example, across Africa.

FORUM ISSUE 2 | 2016  | 25


SPECIAL REPORT

Three ways tech will unleash


Africa’s economic potential
FRANCIS GATARE, CEO, Rwanda Development Board

© Book Aid International

Africa’s governments need to place the right infrastructure


for techonology to boost economic growth

T
here is a clear understanding among The latest success story is in India, tested way to simultaneously boost growth
Africa’s more rapidly developing eco- which a short while ago was more or less in while strengthening the foundation for
nomic players that technology must the same stage that many African countries future success. Many countries are well on
be brought centre stage in order to continue are in today – on the cusp of major success. their way to making information and com-
the pace of progress. Wildly successful over the past 20 years, munications technologies (ICT) a core com-
Thriving start-up scenes in Kigali, Nai- India has grown its tech industry to a value ponent of their long-term growth strategies.
robi and Lagos are excellent examples of the worth more than US$ 80 billion, directly At the World Economic Forum Sum-
promise that entrepreneurship and techno- and indirectly employing more than 10 mil- mit on Africa, Rwanda showcased the major
logical development offer to both strengthen lion people. steps it has taken to make ICT a central ele-
the economy and serve the needs of their Channelling technological innovation ment of our future development. Below are
populations. to strengthen a wider economy is a tried and a few key factors that we have identified

26  | FORUM ISSUE 2 | 2016


African startup ventures by country in 2015 % of ventures listed on VC4Africa

Cities looking to become ‘smart’ Nigeria 23


will need to give service providers
Kenya 22
the ability to be accessible to their
users at all times. South Africa 11
Ghana 8
Cameroon 6
Egypt 5
as being critical to unlocking Africa’s eco- Uganda 5
nomic potential through technological Tanzania 3
innovation. Zambia 2
Ethiopia 2
INFRASTRUCTURE AS A PRIORITY
Zimbabwe 2
Governments across Africa are operating
Senegal 2
with the clear understanding that technology
Ivory Coast 1
is a critical channel to economic growth and
that continuing the development of our ICT Mozambique 1

sector should remain high on the agenda. To Rwanda 1

truly ensure that this reality comes to be, the Botswana 1


foundations for long-term growth must be
prioritized. Businesses and individuals must
be able to connect and engage with mobile
technology every day, following the model of tech scene is exactly what governments can
other cosmopolitan countries. and should foster. The rise in tech hubs across Africa
Cities looking to become ‘smart’ will What’s more, the technology that is is part of a strategy to give young
need to give service providers the ability solving a problem also contributes to the software developers and recent
to be accessible to their users at all times. economy by providing jobs and injecting graduates in science and engineering
Rwanda has already made internet access cash into outdated systems. More widely, it the training and skills they need.
a priority throughout the country and soon can revolutionize the way African popula-
will introduce wi-fi to public places in major tions engage with everything from health-
cities. A small investment in connectivity care to banking, transportation and more. companies such as Microsoft and Intel
offers service providers the ability to engage have invested in Africa’s potential with a
with customers on a level that competes INTERNATIONAL INVESTMENT range of new schemes.
with international cities. African countries have been actively shed- This type of foreign involvement allows
The rise in tech hubs across Africa – ding the stereotype that the only capital our young tech ecosystem to receive guid-
right now there are more than 50 – is part injections in the region come in the form of ance that will enable local entrepreneurs to
of a strategy to give young software devel- aid from the West or investments in min- channel their expertise into a new wave of
opers and recent graduates in science and ing and resources. Friendly business policies solutions.
engineering the training and skills they and tax incentives are being used by govern- Now is the time to collectively decide
need. Tech entrepreneurs at these hubs now ments to great effect and these activities are on a wider vision for making technological
have a place to develop their product and helping to change perceptions and unlock innovation a core channel for our wider
receive guidance from experienced men- new opportunities. development goals.
tors. Without strong infrastructure, which Rwanda’s system is structured to enable
This article first appeared in Ventures Africa.
only the government can provide, the sector anyone to establish a new business in just
will never reach its full potential. three hours and flexible visa policies have
allowed Kigali to become a hub for regional
ICT ACROSS SECTORS entrepreneurs. This type of action helps
The benefits of technology can be felt far create a win-win scenario where the local
beyond high-tech industries. ICT developed economy and foreign investors can benefit
at one of the many African tech hubs can equally and substantially.
be used to meet people’s needs everywhere. ICT investment opportunities are
From mobile payment systems like M-Pesa, very rich and span from major innova-
which many suggest has overtaken the West tions in mobile connectivity to hardware
in terms of ubiquity and ease of use, to the development. Top Western research
world’s first drone port, African nations are universities are establishing degree- 1. Youngsters need to be provided with training and skills in
certainly aware that technology outside the granting programmes in Africa and major new technologies.

FORUM ISSUE 2 | 2016  | 27


SPECIAL REPORT

How will digitalization


change agriculture?
ACHIM WALTER, Professor of Crop Science, ETH Zurich

© Shutterstock.com

In the future, farmers are likely to consult other devices than their
mobile phones when deciding on which seeds to sow and when

D
igitalization is fascinating. Just as This data might be collected by self- Should the tomato be deprived of water
we’ve been spellbound by our piloted multicopters, or other drones, a tiny bit longer so that it develops the
smartphones in recent years, watch- which examine the state of the field perfect flavour? Does Daisy the cow’s
ing funny videos and sharing pictures of according to empirical formulas and effec- temperature indicate that insemination
adorable cats, in the future young farmers tively provide specific cultivation tips for should wait until the afternoon? Can the
are likely to don digital glasses or consult individual plants to answer the important next purchase of feed pellets be put off
devices that will help them analyse their questions of the day. A bit more fertilizer until next week after the markets have
work and make decisions. here, some of the latest insecticide there? calmed down?

28  | FORUM ISSUE 2 | 2016


Farmers will primarily assume the role
of technically skilled researchers:
new diseases will emerge, organisms
will migrate and unusual cases and
technical problems will arise.

AUTOMATION
Agricultural ‘Siris’ are already beginning
to answer such queries – even if they are
still in the pilot phases. For example, there
is a six-legged robot named Prospero [1]
roaming test fields in the United States of

© Swissmacky / Shutterstock.com
America and planting individual kernels
of corn in exactly the right spot for the
plant to take root. And for several years
now, Bonirob [2] has been wandering the
fields of Germany unassisted, testing the
ground and picking weeds that threaten
the main crop.
You don’t have to be a clairvoy-
ant to recognize that agriculture is also
undergoing rampant digitalization. The
automation movement is as inevitable
as the tasting of the forbidden fruit. The may in fact make it possible to focus more
promises of technology are all too seduc- In agriculture, digitalization may in on the true heroes of the story: the plants
tive and the promises of greater efficiency fact make it possible to focus more and animals. There will be more time to
entirely too tempting. on the true heroes of the story: tackle new challenges and more time to
Still, just because we want something the plants and animals. advise other farmers in remote places who
doesn’t mean that it’s good for us. Diver- do not have easy access to education and
sification and variety trump everything, THE FARMER’S ROLE technology.
especially when it comes to agriculture and What will be left for farmers to do when Granted, the world doesn’t actually
food. Simplistic, cookie-cutter approaches agriculture is digitalized and automated? work this way. But wouldn’t it be fantastic
to solving problems usually reveal consider- Will they simply be reduced to servants of if it did? We now have the opportunity to
able weaknesses early on. Food production algorithms and machines that require just set the course and develop a model for what
is a highly complex endeavour: millions of a few remaining manual manoeuvres or digitalization should bring to agriculture –
organisms in a single litre of soil affect the will they take on a new role? I think farm- instead of waiting to see the toll it will take
development of the crops that grow in it. ers will primarily assume the role of tech- on agriculture and on us.
Likewise, thousands of compounds in the nically skilled researchers: new diseases
This article was first published on the World
plant affect the cow that eats it. We can- will emerge, organisms will migrate and
Economic Forum’s Agenda blog.
not package everything into a single correct unusual cases and technical problems will
formulas. But is that a reason not to devise arise. They may no longer have to steer the
any formulas at all? tractors themselves, but in the future they
It may be more important to ask what will still have to go out in the fields and into
new formulae should be established next the stable to check the system recommenda-
or whether digitalization should aim to tions, take care of specific tasks and improve
reduce costs in the short term or preserve systems interactively on an ongoing basis.
environmental resources in the long term.
Compared to the rest of the world, our COMPLEXITY
agricultural practices are very sustainable In the field of medicine, technical advances
– whether they carry the organic label or have still not supplanted doctors or nurses.
not. Our farmers are highly knowledgeable Instead, they have made it possible for doc-
1. Beyond mobile phones: a quadrocopter inspects a field
and competent. This is why we should get tors to deal with more complex diseases as and sends data back to its user.
involved now and decide which problems we begin to live longer and often require 2. Mobile phones have made it easier for farmers to access
should be tackled by future technologies. long-term care. In agriculture, digitalization information on when to plant and when to harvest crops.

FORUM ISSUE 2 | 2016  | 29


SPECIAL REPORT

In line with going online:


using e-commerce to tap new markets
SUSANNA PAK, Staff Writer, International Trade Centre

© Laurena Arribat/ITC
Small and medium-sized businesses in developing countries are using
electronic solutions to leapfrog trade challenges and target customers
around the world with ITC help

T
o sell more goods online, sell them in ‘I donate my know-how to teach WHERE VIRTUAL
person. That’s what Syrian entrepreneur them how to do handwork so they can AND PHYSICAL MEET
Rania Kinge did to expand her online slowly get out of the shelters and live For small-business owners like Kinge,
market while offering handmade products rang- as normal Syrian citizens,’ Kinge says, opening a pop-up store is a low-cost, low-
ing from bracelets and bags to scarves to soaps adding that it’s important for her to commitment alternative to opening a brick-
at a pop-up store in Geneva earlier this year. give local women a chance at making and-mortar store. An added benefit is that
The goods were handcrafted by dis- a decent living in their own country. it can generate buzz about a company and
placed women in Damascus who received ‘Syria’s local economy is based on crafts. pique the interest of passers-by, making it
training from Kinge. Over time, she has I thought I would tap into this to reposi- more likely for them to purchase goods, visit
trained about 100 women. tion Syria on the international scene.’ the online store and tell others about the

30  | FORUM ISSUE 2 | 2016


© Laurena Arribat/ITC
I donate my know-how to teach them
how to do handwork so they can
slowly get out of the shelters and
live as normal Syrian citizens.

company. In other words, it levels the play-


ing field somewhat.
Kinge partnered with the International
Trade Centre (ITC) to set up her store –
which ITC calls an e-commerce souk or
eComSouk – as part of the ITC e-solutions
programme of advisory and capacity build-
ing services designed to help businesses of
developing countries to sell in international
markets using digital platforms.
By providing services and opportuni-
ties such as the eComSouk, businesses of all
sizes – particularly small and medium-sized

© Laurena Arribat/ITC

© Laurena Arribat/ITC
enterprises (SMEs) – are better able to reach
their target customers, explains Mohamed
Es Fih, ITC e-solutions adviser.
‘We have technology to help these busi-
nesses get easier access to major online mar-
ketplaces, like eBay, Amazon, Etsy and other
markets,’ he says. ‘We do this by unlocking
barriers to the tripod of problems: visibility,
payments and logistics.’
During the one-day eComSouk event,
customers bought nearly US$ 10,000 worth
of Syrian products. As a result of the visibil- This is a major challenge for many a chance to promote their products directly
ity raised by the event, about double that SMEs, particularly those in developing to end consumers. She hopes the products
amount in business leads, including busi- countries, where high logistics costs, unpre- she sells can share a positive message about
ness-to-business meetings, followed. dictable delivery times and outdated legisla- Syria with the rest of the world.
The Syrian eComSouk was the sec- tion can make it almost impossible for them ‘Thanks to ITC, I am equipped with
ond event of its kind. The first, which fea- to sell goods in international markets. Often- more courage and hope that we can change
tured products from Morocco, resulted in times SME owners do not fully understand people in a nice way,’ Kinge says. ‘We have
physical sales of US$ 5,500 and an addi- trade logistics procedures and processes and to make projects that are adapted to people
tional US$ 10,000 in online sales after struggle to manage risks related to crossing and their skills.’
the event. borders.
To help, ITC is partnering with DHL,
LEAPFROGGING TRADE BARRIERS the global logistics company, to address chal-
While the eComSouk introduces customers lenges to logistics and customs regulations.
to goods produced by SMEs in developing The goal of the partnership is to equip SMEs,
countries, the lasting impact comes from trade institutions and government authorities
attracting customers to their websites. For with the knowledge and skills to improve 1. Entrepreneur Rania Kinge introduces customers to bags
example, Kinge’s business has generated their trade logistics performance so more handmade by displaced women in Damascus at a pop-up
store in Geneva, organized by ITC.
more than 12,000 likes on Facebook and businesses can participate in e-commerce.
2. Customers browse jewellery handcrafted by Syrian
testimonials from buyers from the region
women at a pop-up store in Geneva.
and around the world. CRAFTING POSITIVE CHANGES
3. Mohamed Es Fih, ITC e-solutions adviser, rings up
To keep and build on customers’ trust, As for Kinge, marketing her products at the a customer’s purchase using a mobile phone and credit
companies must ensure that once an online eComSouk in Geneva opened up her busi- card reader.
order is placed, the goods are delivered on ness to a new clientele, giving the displaced 4. Customers shop for goods at the first eComSouk
time and in good condition. women that she works with in Damascus organized by ITC, featuring Moroccan goods.

FORUM ISSUE 2 | 2016  | 31


SPECIAL REPORT

How the digital economy is improving


women’s access to global markets
CYNTHIA BALOGH, National Program Manager, Women in Global Business

Social media is making technology more accessible for women


in the world of business

N
o matter what city you are in these PURCHASING POWER
days you will notice people with Research shows that men are primarily driven
their heads down, staring at their by technology, whereas women drive consump-
smartphones. One German municipality is tion, making over 80% of purchasing decisions.
installing warning lights in the pavement In Australia connected women navigate the
to keep distracted pedestrians from walk- digital landscape with confidence, outperform-
ing into oncoming trains. The safety haz- ing men on indicators such as media multitask-
ard aside, what is striking is how much ing, social connection, sharing of content and

© Leungchopan
time people spend on their phones. Digital number of hours spent on devices.
media and smartphones are everywhere, in According to the 2016 Sensis Social
every city, town and village across the globe. Media Report, 57% of Australians use social
Consumers are connected everywhere so media every day, spending 12.5 hours weekly
those institutions and businesses connecting online on average. The rise of consumer usage
with them are benefiting. Those that aren’t has influenced and encouraged the rise of businesswomen to global value chains, the
are left behind. SME businesses going online. The same report project team kept in touch with stakeholders
Organizations such as Women in states that 48% of small, 54% of medium- via social media as it is the preferred method
Global Business (WIGB), an Australian sized and 79% of large businesses in Australia of connection in Indonesia. As Indonesia is
government initiative, are intended to use social media to increase their client base one of the world’s most mobile-centric coun-
inspire and support women-led businesses and generate sales. This issignificant increase tries and is in the global top 10 of smartphone
with exporting goods, exploiting digi- on 2015 figures of 30% for small, 32% for ownership, it makes sense to communicate
tal technology and connecting with and medium-sized and 55% for large business. and connect with stakeholders and women-
engaging customers. WIGB programmes It is important for prospective exporters to led businesses via mobile apps rather than
are offered via digital technology plat- tailor their digital communication to the needs emails, which often go unanswered.
forms. For example, the programme was of each market. For example, whilst deliver- The digital economy has changed forever
one of the early adopters of social media ing the joint WIGB-International Trade Centre the way organizations do business and those
in government, which has resulted in a project to improve the access of Indonesian who have not adapted will be left behind.
large, loyal customer base that often only
connects through social media. Four tips to for better international online trade
In the same way, businesses seeking
to trade internationally can only do so 1. Make information visually appealing, using images, infographics and video for
effectively if they have a globally acces- maximum impact.
sible digital footprint. Digital communi- 2. Internationalize all communication while being culturally sensitive.
cation needs to be delivered in multiple Translate content into relevant languages, always checking the messaging with a native speaker before
languages, be culturally sensitive and be you go public.
open for business 24/7. Getting started 3. Post on social media regularly and keep content relevant and up
in international business has never been to date. Strive to keep a balance between broadcasting and engagement.
more accessible for business owners than 4. Appoint dedicated digital media resources and experts. Successfully
navigating the digital economy means investing in talented, experienced people.
it is today.

32  | FORUM ISSUE 2 | 2016


ANALYSIS

Unlocking FDI development


gains through facilitation
JAMES ZHAN, Director of Investment and Enterprise, United Nations Conference on Trade and Development

World leaders should take their cue from WTO efforts


on trade facilitation and jointly work to ease investment flows.
Here is a ten-point action menu that can guide such an agenda.

T
he World Trade Organization’s (WTO)

© Laurena Arribat / ITC


Trade Facilitation Agreement (TFA)
holds enormous promise to gear up
trade flows. WTO estimates suggest success-
ful implementation of the TFA could reduce
trade costs by 14%, which in turn could
raise global goods exports by US$ 1 trillion a
year – potentially boosting the world econ-
omy at a time of flagging growth. What is
more, the body’s World Trade Report found
that developing countries stand to capture
more than half those gains, a ramification
with significant implications for interna-
tional development efforts.
Still, trade facilitation cannot be the
only lens through which we seek to unlock
development gains. Fundamental structural
changes in the global economy over the
past 20 years have led to investment and
trade becoming enmeshed. The rise of mul-
tinational firms created intricate international
production networks, which now account for hope to meaningfully deliver on the 2030 matter of mobilizing those funds and chan-
more than a quarter of the world’s economic Development Agenda. SDG-related invest- neling them to the SDGs sectors and unlock
output and 80% of global trade. This shows ment needs run as high as US$ 4.5 trillion development benefits.
trade and investment are inextricably linked. per year in developing countries alone, data The development potential investment
Efforts invested to reap greater gains through from the United Nations Conference on holds is well acknowledged by govern-
the one need to be matched by similar efforts Trade and Development (UNCTAD) show. ments. However, investment facilitation
to grease the other. Trade facilitation without Yet current investment levels leave a gaping measures are far from sufficient in most
a concomitant push to smooth the way for shortfall of some US$ 2.5 trillion, an amount national policy suites. Governments show
increased investment will not unlock eco- far outstripping the combined mettle of pub- a strong inclination to offer incentives to
nomic growth in a sustained manner. lic investment, aid flows and remittances. lure investment; to address grassroots-level
Private sector investment can meaningfully obstacles, not so much.
SDG INVESTMENTS bridge that gap. The collective US$ 6 trillion An UNCTAD survey of foreign direct
At the same time, development impera- of cash holdings on the balance sheets of investment policies shows more than 1,000
tives as enumerated under the Sustainable multinationals and several hundred trillion new investment policies were set up over
Development Goals (SDGs) have amplified dollars of financial assets show the private the past decade. Yet, for the 323 investment
the central role investment must play if we sector is amply up to the task. It is simply a promotion and facilitation measures the

FORUM ISSUE 2 | 2016  | 33


institutionalizing the application of invest-

© Shutterstock.com
Trade facilitation without a ment regulations.
concomitant push to smooth the
way for increased investment will ƒƒ Improve the efficiency and effectiveness
not unlock economic growth in a of investment administration procedures.
sustained manner. This can be done through shortening and
simplifying licensing, registration and tax-
related procedures; establishing online
overwhelming majority related to investment one-stop approval authorities; and clarify-
incentives or special economic zones-type ing the roles and accountabilities between
benefits, while only 24% constituted concrete levels of government.
investment facilitation measures. This means
a range of inexpensive, potentially valuable ƒƒ Build constructive stakeholder relations.
policy fixes go unheeded while opaque legal This can be accomplished through estab-
or administrative requirements, cumbersome lishing and maintaining mechanisms for
operating environments and costly business regular consultations and dialogue with
requirements prevail. Rather than handing investment stakeholders through the life-
out incentives, eliminating such constraints cycle of investments; and mechanisms to ƒƒ Enhance international cooperation on
would be a far more compelling key to unlock engage interested parties in lawmaking investment promotion and facilitation
investment flows and create a business envi- and policy-review processes. for development through provisions in
ronment that keeps investors invested. IIAs. This can include advocating for high
ƒƒ Designate a lead agency or facilitator with
The same issue marks investment corporate governance standards and re-
a mandate to address investor complaints
policies at the international level. Concrete sponsible business conduct by outward
and suggestions; track and manage dis-
investment promotion and facilitation actions investors; encouraging home countries
putes; manage smooth information flow;
are either weak or absent in most of the exist- to provide outward investment support,
and liaise with relevant government insti-
ing 3,300 international investment agree- such as political risk coverage, investment
tutions on recurrent problems.
ments (IIAs). UNCTAD examined 1,200 IIAs insurance or facilitation services; and es-
ƒƒ Establish monitoring and review mecha- tablishing regular consultations between
and found that only 22% contain some sort of
nisms for investment facilitation, such as relevant authorities or formal collabora-
investment facilitation provisions. Even those
diagnostic tools and indicators on the ef- tion between outward investment agen-
agreements explicitly dealing with invest-
fectiveness of administrative procedures cies and IPAs.
ment facilitation issues command few, if any,
and measuring and benchmarking the
effective measures. Far more work than this As is clear from the above, the areas for
performance of institutions involved in
would be needed to win over wary investors. action are framed along two axes. The first
facilitating investment.
set of proposals can be deployed by coun-
THE ACTION MENU ƒƒ Enhance international cooperation for tries in their own interest. The second set of
UNCTAD crafted an Investment Facilitation investment facilitation. This can be done action lines is aimed to smooth the invest-
Action Menu *
that systematically signposts through consultation between relevant ment environment of developing country
policy options which can be adopted and authorities; collaboration on anti-corrup- partners and stimulate global collaboration
adapted by countries at the national and tion efforts in investment processes; and in the area of investment facilitation. In the
international level to create a better operating institutional expertise exchanges. absence of a formal governance mechanism
environment for investment. The overarch- ƒƒ Strengthen investment facilitation efforts for global investment, the spark to kindle
ing rationale is to unlock investment flows, in developing-country partners through formal collective collaboration is absent.
particularly in productive sectors, while con- technical assistance and support in a Still, organizations such as UNCTAD and the
tributing towards sustainable development. range of areas, including bolstering trans- World Bank work unceasingly in the area to
In brief, the action areas propose to: parent and effective administrative proce- develop expertise and collate best practice.
ƒƒ Promote accessibility and transparency dures; building capacity for preparation of The ultimate aim is to incrementally pave the
in the formulation of policies, regulations regulatory feasibility studies; and building way for greater international cooperation in
and procedures relevant to investors. actual institutional capacity, including an area sorely in need of such aid.
This can include a centralized registry of those of investment promotion agencies James Zhan is the lead author of World Investment
laws and regulations and a mechanism to (IPAs) and other relevant authorities. Report.
provide timely notice of changes in pro-
ƒƒ Enhance investment policy and promotion * Investment Facilitation: A Global Action Menu, UNCTAD
cedures, standards, technical regulations http://investmentpolicyhub.unctad.org/Blog/Index/53
in developing-country partners, including
and conformation requirements.
through policy reviews and the design of
ƒƒ Enhance predictability and consistency effective investment promotion strategies 1. Better trade facilitation needs investment to unlock
in the application of investment policies and building capacity to provide post-in- economic growth.
through, for instance, systematizing and vestment or aftercare services. 2. Paving the way for greater collaboration.

34  | FORUM ISSUE 2 | 2016


ITC IN ACTION

Sri Lanka sweetens its offerings


of fruits, vegetables for export
SUSANNA PAK, Staff Writer, International Trade Centre

© Susanna Pak / ITC

Farmers and exporters learn to cultivate safe and high-quality fruits


and vegetables that meet international buyer requirements through
an ITC project funded by STDF

O
n any given day, rain or shine, greater yield on the land. About 90% of the ‘It’s about finding the right buyer with
Ruwan Hemage tends to his farm in pineapples are exported to the Middle East. the right price,’ Hemage says. ‘Some person
Loluwagoda, Sri Lanka, about 70 kil- As a farmer who sells fresh pineapples asks me to sell pineapples at 50 Sri Lankan
ometres outside the capital city of Colombo. – prices for which constantly fluctuate on rupees (US$ 0.34) per kilogram, but there is
Hemage, his wife and two hired workers the world market – Hemage must negoti- a possibility in the market to sell at 70 rupees
cultivate a variety of crops on the six-hectare ate the best deal for his produce. Sri Lan- (US$ 0.48). So find the person who buys at
farm including coconuts, bananas, papayas and kan producers of pineapples have received 70 rupees and keep the relationship in the
ginger. The main focus, however, is on pineap- anywhere from US$ 100 to US$ 503.3 per long term – that is the challenge.’
ples, which are intercropped with or grown ton since 1991, according to the Food and Higher-quality goods always fetch the
in close proximity to coconuts to produce a Agriculture Organization. best prices. Through the International Trade

FORUM ISSUE 2 | 2016  | 35


© Susanna Pak / ITC

© Susanna Pak / ITC


Centre (ITC) project on Improving Safety consumers. And today, consumers are looking
and Quality of Fruits and Vegetables in Sri for a product that is safe and certified.’ Stakeholders of the fruits and
Lanka, funded by the Standards and Trade Hemage and other farmers, extension vegetables sector in Sri Lanka
now value the need to partner
Development Facility (STDF), 560 farm- officers and exporters selected for their high
and act together to address safety
ers including Hemage received instruction performance also participated in study tours and quality-related issues for the
from master trainers and extension officers to Thailand and Italy to learn best practices benefit of all.
on growing fruits and vegetables that bet- in cultivation and post-harvest care and to
ter meet international requirements. They understand market requirements.
visited farms certified by GLOBALG.A.P. ‘We never used post-harvest techniques ‘Through the project, we’ve been able
– the non-governmental organization that here, only at a minimum,’ says Hemage. to build a firm foundation based on public-
sets voluntary standards for the certification ‘But in Thailand we learned about very easy private collaboration involving farmers, pro-
of agricultural goods around the world – to and appropriate utensils and technologies cessors, exporters, government officials and
learn good agricultural practices, such as the that we can apply in Sri Lanka, which are buyers,’ says Ghizzoni, who’s also STDF Sri
minimal use of pesticides and fungicides. also suitable for women workers.’ Lanka project manager. ‘Stakeholders of the
‘We trained them on a variety of things, The fruits of these efforts to train hun- fruits and vegetables sector in Sri Lanka now
whether it’s to do with the use of fertiliz- dreds of farmers, exporters, officers and value the need to partner and act together to
ers, chemicals, hygiene, health or safety, inspectors of the plant quarantine depart- address safety and quality-related issues for
and on how to bring a quality product to the ment and the extension and training divi- the benefit of all.’
marketplace that is acceptable for export,’ sion of the Department of Agriculture are As for Hemage, he is looking to increase
says Suresh Ellawala, director of Ellawala beginning to show following the launch of cultivation and production on his farm, in
Horticulture, a farming business that uses the ITC project in 2013. particular for pineapple plants, and to sell
modern technology and methods to grow more of his goods abroad.
mangoes. His farm became the first in the IMPROVING STANDARDS ‘After joining this project my way of
country to be GLOBALG.A.P.-certified a few Annes Junaid, chairman of the Lanka Fruit thinking has expanded,’ he says. ‘So I will
years ago. and Vegetable Producers, Processors and try to support the establishment of a farmers’
Exporters Association, represents workers association and find a good-quality buyer to
CERTIFICATION BENEFITS in the fruits and vegetables sector. ‘We have tie to the export market, to improve linkages
GLOBALG.A.P. certification covers food seen the quality of the fruits and vegetables and to build a long-term relationship, not
safety and traceability; environment; work- that farmers grow raised to a certain stand- only for short-term benefits. This has helped
ers’ health, safety and welfare; animal ard and quality,’ he says. ‘And especially to widen my eyes.’
welfare; and integrated crop management, the use of certain pesticides, weedicides
integrated pest control, quality management and fungicides has been highly controlled.
systems and hazard analysis, and critical Phytosanitary methods have also been part
control points. of the training of this project, which has 1. Farmer Ruwan Hemage shares tips about growing and
‘The certification has certainly helped helped our farmers to improve their quality selling pineapples for export.

us in more ways than one,’ he says. ‘It has standards.’ 2. Employees working on Ruwan Hemage’s six-hectare farm
use good agricultural practices, such as the minimal
trained our workers, it’s brought quality at a The project has also increased business
use of pesticides and fungicides, in cultivating crops.
holistic level, we’ve taken better care of our opportunities and communication between 3. Workers peel and cut mangoes before drying them at
staff, they’ve taken better care of the product, participants, says Ludovica Ghizzoni, ITC the Ellawala Horticulture farm, the first in the country
and that in turn gives a lot of confidence to our adviser on export quality management. to be GLOBALG.A.P.-certified.

36  | FORUM ISSUE 2 | 2016


WORLD VIEW
NEWS

Agenda
from 30 June 2016

Upcoming ITC events


30 June E-Commerce Caravan, Palais des Nations, 1-10 September International Union for the Conservation of
Geneva Nature Congress, Honolulu
1 July E-Commerce Caravan, Place des Nations, 13-26 September Seventy-first General Assembly (GA) of the
Geneva United Nations. The General Debate will open
on 20 September, New York
4 July E-Commerce Caravan, World Trade
Organization, Geneva 24 September CITES holds 17th meeting of the Conference
of the Parties, Johannesburg
5 July E-Commerce Caravan, International Trade
Centre, Geneva 28-30 September ITC’s Third Trade for Sustainable Development
Forum, Geneva
7 July E-Commerce Caravan, e-Bay, Zurich
6 October Launch of the SME Competitiveness
4 July ITC Joint Advisory Group Meeting, Geneva
Outlook 2016, Geneva
17-22 July Fourteenth session of the United Nations
11-13 October ITC World Export Development Forum 2016,
Conference on Trade and Development
Colombo, Sri Lanka
(UNCTAD 14), Nairobi
7-18 November COP22, Marrakesh, Morocco
18-21 July World Investment Forum, Nairobi, Kenya
14-18 November United Nations Forum on Business and
27-28 August The Sixth Tokyo International Conference
Human Rights, Geneva
on African Development (TICAD VI), Nairobi
24-25 November ITC World Trade Promotion Organizations
31 August ITC Trailblazers Summit on Women and Trade,
Conference and Awards, Marrakesh, Morocco
Istanbul
30 November- Women’s Forum Global Meeting, Deauville,
1-2 September ITC Women Vendors Forum and Exhibition,
2 December France
Istanbul

Connecting one million women entrepreneurs to market by 2020

FORUM ISSUE 2 | 2016  | 37


PUBLICATIONS

BRINGING SMEs ONTO 03


New technical papers THE E-COMMERCE HIGHWAY

For free download, please visit: This report is a starting point for public-private
DIRECTORY dialogue to address e-commerce bottlenecks,
www.intracen.org/publications especially for small firms in developing countries.
Such businesses face policy challenges in four
processes typical to all e-commerce: establishing
INVESTING IN TRADE PROMOTION 01
ITC PUBLICATIONS GENERATES REVENUE
online business, international e-payment,
international delivery and aftersales. To improve
Trade promotion pays both in export and GDP competitiveness, challenges must be met within
Resources on trade growth, according to this International Trade Centre the firm, in the business environment and by
governments. The report provides checklists
and export development (ITC) report. The way trade promotion agencies are
managed also changes their impact on a country’s for policy guidance as well as case studies
for exporters, trade support prosperity. For every dollar of export promotion from e-commerce entrepreneurs in developing
countries.
invested in a national trade promotion organization
institutions and policymakers (TPO) there are US$ 87 of exports and US$ 384 of http://www.intracen.org/publication/Bringing-SMEs-onto-
additional GDP per capita generated on average, the-e-Commerce-Highway/
according to the report. TPO choices on goals,
clients, sectors and activities affect their impact,
it says.
ORDERING DETAILS http://www.intracen.org/publication/Investing-in-Trade-
ITC publications Promotion-Generates-Revenue/ New Books
For free download, please visit:

To order ITC publications online TRADE IN QUINOA: IMPACT ON 02 www.intracen.org/publications


Publications are listed online with prices and can THE WELFARE OF PERUVIAN
be ordered at ITC’s e-shop at www.intracen.org/ COMMUNITIES SETTLING BUSINESS DISPUTES: 04
about/e-shop and via the National Book Network
Buying quinoa contributes to better livelihoods for ARBITRATION AND ALTERNATIVE
(NBN) at: https://unp.un.org
rural Peruvian communities, according to this new DISPUTE RESOLUTION - 2nd ED.
To buy publications by mail ITC study, providing much-needed data on the
United Nations Publications Customer Service International business brings new opportunities and
impact of changing market prices on the welfare new risks alike, especially for small firms venturing
c/o National Book Network of rural households in the altiplano of Peru.
PO Box 190 into new markets with different languages, cultures
The findings inform policymakers about the benefits and legal systems. This book provides an overview
Blue Ridge Summit, PA 17214 of the trade and challenges still facing smallholders
USA of traditional and alternative dispute resolution
following conflicting media reports on the impact of options for international trade and offers cases
e-mail: unpublications@nbnbooks.com higher quinoa prices. and tools targeted to SMEs in developing countries.
In Europe, Africa, and the Middle East: http://www.intracen.org/publication/Trade-in-Quinoa-
Turpin Distribution Impact-on-the-Welfare-of-Peruvian-Communities/ Available in French and Spanish
Pegasus Drive http://www.intracen.org/publication/Settling-Business-
Stratton Business Park Disputes-Arbitration-and-Alternative-Dispute-Resolution-
Biggleswade SG18 8TQ --2nd-ed/
United Kingdom
e-mail: custserv@turpin-distribution.com

Publications are free in limited numbers for official


trade-related institutions. For print copies, contact ITC
Publications at: itcreg@intracen.org.

01 02 03 04

38  | FORUM ISSUE 2 | 2016


SUBSCRIPTIONS:
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PRINT SUBSCRIPTION:
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