Trade for Development News, by the Enhanced Integrated Framework (EIF)
The original article was written by Deanna Ramsay in 2018. Updated by Inga Chilashvili in 2022.
The COVID-19 pandemic has given stimulus to embracing eCommerce and digital technologies while intensifying pre-existing digital divides and highlighting how LDCs need to better prepare for a digital world.
1. More than 800 million people in LDCs are offline.
It should go without saying that to buy and sell things online, people must have internet access. But that access is hampered for LDCs by factors from lack of infrastructure to geography to government readiness. Having access to the Internet is necessary, but often not a sufficient condition for getting online. According to a recent ITU report, 76 per cent of the population of LDCs is covered by a mobile broadband signal, while only 25 per cent are using the Internet. This means that two-thirds of the population who could use the Internet do not use it. Getting more people in LDCs online requires efforts at multiple levels and via multiple sectors. And this work, ranging from funding to logistics, policy to trust, is a mighty task.
2. eCommerce offers a solution to some of the development challenges LDCs face.
With more than 1.3 billion online shoppers in 2020, our giant global marketplace presents countless opportunities for people in the world’s poorest countries – if the digital divide can be overcome. An eCommerce boost could mean much for country economies, and the possibility of greater outside investment.
Access to new markets and the potential for job creation and trade growth could increase people’s earnings. And there is a lot people in LDCs can do pending affordable connectivity, tools and training. In addition, certain barriers for women, youth and small businesses could be overcome, thereby levelling the playing fields through increased inclusivity and incomes. eCommerce is among the few sectors with the potential to add value to LDCs in the region while helping them to diversify their economies and graduate from the group.
3. Supporting eCommerce in LDCs requires contextual understanding.
Making progress with eCommerce in LDCs means understanding different country conditions and asking the right questions: Are there 4G networks? Is the country landlocked or an island nation? Are government policies in place to regulate eCommerce? Do citizens have access to education? Can people afford phones or computers? Is there a largely rural population?
The United Nations Conference on Trade and Development (UNCTAD) with financial support from the Enhanced Integrated Framework (EIF) developed the Rapid eTrade Readiness Assessments of Least Developed Countries, an eCommerce ecosystem analysis that offers needed insights into a country’s ability to engage in eCommerce and what is needed to do so. Specific recommendations are made related to policy, information and communications technologies (ICT) and trade logistics.
For example, the 2020 assessment of Malawi indicates that only 13.8 per cent of the Malawian population uses the Internet. The launch of 4G had positive developments but affordability of Internet, coverage and quality of service (QoS), and the last mile connectivity remain critical concerns. Some suggested improvements relate to the country’s national policy for the digital economy and the implementation of an eCommerce strategy.
4. eCommerce will not solve every problem.
There is the risk that digitalization could widen existing divides, create new ones and result in job losses. Because of this, it is essential that eCommerce support in the LDCs is done with this in mind.
EIF has supported the preparation of national eCommerce strategies in Cambodia and Senegal, which emerged as an outcome of the eTrade Readiness process initiated through dialogue between governments and development partners. In Cambodia, the EIF is further supporting the Go4eCam strategy, which contains significant eCommerce capacity-building components.
5. eCommerce is an ecosystem.
The combination of trade and the Internet is its own ecosystem, with the interconnections complex and entangled in sometimes surprising ways. Developing and enhancing eCommerce in LDCs means making global and local connections, and requires partnerships, cooperation and coordination.
The quarantine measures taken during the pandemic turned people to online shopping. While up to 8 in 10 Internet users shop online, that figure is less than 1 in 10 in many LDCs. The level of eCommerce in the LDCs remains the lowest in the world, due to a lack of online shops, as well as demand-side constraints, such as awareness, distrust and payment methods. Clearly, the ecosystem of trade on the Internet is unbalanced with a lot of room to grow.
With government policies needing updates related to this rapidly changing sector, issues like movements across borders, data protection and ICT intersect can be a challenge to address. And this is why partnerships and the sharing of knowledge are so integral, especially when it comes to eCommerce. The 2022 edition of UNCTAD eCommerce Week under the theme “Data and Digitalization for Development” will be an opportunity to focus on data and cross-border data flows and the crucial role they play in inclusive and sustainable economic development.
* This article is excerpted from Trade for Development News, 18 March 2022.