Special session on assessing trrade readiness of the least developed countries

Event report

Mr Daniel Blockert, Ambassador of Sweden to the WTO and Chair of the Enhanced Integrated Framework (EIF) Steering Committee, was the moderator of the session. The EIF is a multi-donor programme with the aim of helping Least Developed Countries (LDCs) to become more active players in the global trading system. Blockert started by recalling that the theme of eTrade readiness assessment is deeply related to the process that generated the eTrade for All initiative. The challenges for LDCs to engage in e-commerce are still significant, starting from a low level of connectivity in most of them. The launch of the eTrade for All initiative was an important first step, but it is necessary to discuss how it can be implemented. This session is an opportunity to hear views from LDCs, especially the ones that have undergone eTrade readiness assessments.

Cambodia was one of these countries. H.E. Mr Pan Sorasak, Minister of Commerce, Cambodia, underscored the important role of the EIF to the LDCs because it provides technical co-operation, keeps LDCs abreast of evolutions in the trade landscape and helps them identify the best way to advance their agendas. The eTrade readiness assessment complements assessments done by other actors, such as the private sector, and helps LDCs to prepare for global negotiations, including within the WTO. The eTrade for all helps to break the silos and encourages actors such as governments and the private sector, to work together.

H.E. Mr Lekey Dorji, Minister for Economic Affairs, Bhutan, mentioned that his country was one of the first selected by UNCTAD for the eTrade readiness assessments. The assessment has provided the country with a good guide on how to adopt ICTs for development. Important frameworks were approved, such as the ICT roadmap from 2011, which fosters ICT for good government and sustainable economic development.  In 2016, the ICT for development plan was launched, with the aim to foster the growth of the ICT industry. Buthan has no overarching law on e-commerce – and this was one of the weak points identified in the assessment report, but some legal frameworks are in place, such as the consumer protection law, from 2012. Having e-readiness assessments is an important first step, but the biggest challenge is to find the resources to develop e-commerce. More resources and technical knowledge are needed if the recommendations on the eTrade assessment are to be carried forward by LDCs.

H.E. Ms Anusha Rahman Ahmad Khan, Minister of State for Information Technology and Telecom, Pakistan, recalled that the future of the economy is digital, so LDCs need support to ensure that their limited resources are efficiently used to make e-commerce grow faster. ICTs are enablers of development, but this point has not been included among the 17 goals that encompass the Sustainable Development Goals (SDGs). The UN Broadband Commission aims to include ‘access to ICTs’ as an 18^th SDG goal.

Khan affirmed that the Universal Service Funds are an important instrument for developing countries. Many developing countries, however, do not use these resources for their intended purpose, which is to connect the unconnected. Governments should make these funds available to their ICT ministers, so they can deploy infrastructure. Pakistan has done that, and created a public-private-partnership (PPP) to administrate the funds. The Pakistani government also celebrated a PPP with Microsoft to develop a project that teaches girls technology skills, such as coding and cloud computing. When it comes to regulatory issues, it is important that governments perform their role in protecting their people. Sometimes it is difficult for governments to approve laws, such as cybercrime and privacy laws, because they impact the business models of the private sector, which are based on the use of data. Governments need to support each other in order to be able to develop the much needed regulation.

Blockert asked Khan how the distribution of resources from the Universal Service fund takes place in Pakistan. Khan explained in detail the functioning of the Universal Fund. She emphasised that every aspect, from governance issues to the actual disbursement of resources, is managed by a public private partnership (PPP).

H.E Dr Francois Xavier Ngarambe, Ambassador and Permanent Representative of Rwanda, mentioned that his country is starting to put into place the frameworks for enabling e-commerce transactions. SMEs are accompanied and supported in the process of creating their online businesses. Nevertheless, in order for LDCs to really progress, e-commerce needs to be linked with the transformation of the whole economy, transfer of technology and knowledge sharing. Institutional improvement is also necessary, so they develop better and more predictable policies.

Mr Günter Nooke, Personal Representative for Africa to the German Chancellor, BMZ, Germany, made an overview of the German contribution to initiatives to foster development. It includes support to the Enhanced Integrated Framework – an important tool to make e-commerce useful for LDCs, and also to organisations such as the International Trade Centre (ITC), which focuses on the inclusion of SMEs. Nooke also commented on the work of the G20 on e-commerce. Some of the topics discussed are taxation, the development angle, and capacity building for women and girls. He summarised the developments of the last G20 summit. Nooke recalled that digital trade needs not only ICT infrastructure, but also physical infrastructure and logistics. The G20, in partnership with other actors, is also contributing to channel private financing into infrastructure development.

Blockert opened the floor for questions to Khan. The representative of Pakistan shared information about initiatives that Pakistan is putting in place to promote connectivity. The representative of an e-commerce website in Cameroon asked how the ICT ministry in Pakistan overcame the resistance of families to let women participate in ICT training. Khan mentioned that these girls usually come from the most disadvantaged sectors of society and that they have been encouraged by their parents to attend the training. The employability agreement with Microsoft gives them the chance to further participate in a free-lancer training, offered to the ones that excel in the program. In Khan’s opinion, it is important to partner with the private sector, since they can help to develop the curriculum and train the tutors. A representative from Morocco commented on the trade-offs between strict regulation and innovation and defended the need for balanced policies that grant both economic and social opportunities. A representative from the Islamic Development Bank, mentioned that the bank is offering support for infrastructure deployment to its members.

Khan replied that it is up to policymakers to define what would be a balanced regulation. For Pakistan, providing job opportunities for young people is the most important goal, so regulation should not hinder innovation and employability.

Mr Ratnakar Adhikari, Executive Director of the Executive Secretariat for the Enhanced Integrated Framework, made some assessments of the current scenario:

• SMEs will need to use technology to participate in the global value chains.
• E-commerce has changed the way we conduct business. It reduces information asymetries and redundancy in the global value chain.
• LDCs are far from exploring the full potential of e-commerce and the gender divide is severe.
• Aid for Trade helps to realise the potential of e-commerce.

According to Adhikari, Samoa and Liberia will undergo the eTrade readiness assessment soon. Once the assessment is done, UNCTAD supports the countries with project preparation grants, helping them develop robust projects and apply to bilateral donors, to the eTrade for All, and other potential channels.

Ms Dorothy Ng’ambi Tembo, Deputy Executive Director of the ITC, affirmed that technology provides a good opportunity to scale SMEs:

• Through e-commerce, SMEs can build international reputation and enhance consumer trust.
• It allows to expand outreach. Less resources are needed for companies to become visible when they use online platforms.
• Disintermediation in international trade. SMEs can ship directly to the end point.
• Facilitate channels for SMEs to have access to multiple financial options.

In spite of that, participation of LDCs in e-commerce is still very low and there is a need to concretely support SMEs from LDCs in order to enhance participation. There is willingness from governments to work towards this goal, but most of them are still wondering how to do it. Some issues that need to be addressed include:

• Non-conformity with tax requirements. The failure to conform with VAT duties can generate additional costs for consumers and sellers and increase the number of returned packages.
• Availability of payment solutions. In Africa there is a considerable number of payment solutions, but restricted to the domestic market. There is a need to go beyond the domestic market.
• Lack of affordable logistics.

Ng’ambi Tembo made some recommendations on priority areas:

• To provide country-specific recommendations.
• Make human and financial resources available.
• Strengthen regulatory coherence.
• Provide capacity building for SMEs.

Ms Shamika N. Sirimanne, Director of the Division on Technology and Logistics, UNCTAD, explained UNCTAD’s main areas of activity: technical assistance, ICT policy reviews and regulatory reviews. She mentioned that the eTrade readiness assessment has been conducted in two countries for the moment and there is plenty of space to scale it to others. The assessment provides an opportunity to have a multistakeholder assessment, involving  governments and the private sector.

Mr Fernand Matendo, CEO of Burundi Shop, explained the issues that, in his view, prevent LDCs from developing faster. A large part of the workforce is in the countryside, doing manual labour. His company is engaged in developing a platform that will connect the countryside to the marketplace, using mobile devices. It will facilitate payments and create a network for the delivery of products. There are more than 50 partners engaged, including the associations of transports and logistics.

Ms Shomi Kaiser, Adviser at the e-Commerce Association of Bangladesh (e-CAB), highlighted the importance of the partnerships between the public sector and the private sector to develop the national framework that will allow a coherent e-commerce policy.