E-Commerce as an engine for SME advancement in developing and low income countries

Event report

[Read more session reports from WTO Public Forum 2017]

This working session, sponsored by the SME Forum, addressed how developing and low income countries can use e-commerce to bolster their small and medium enterprise (SME) environments. Mr Robert Koopman, Chief Economist and Director, Economic Research and Statistics Division, WTO, moderated the panel. Later, Ms Berna Ozsar, Secretary General, World SME Forum (WSF), who was also a speaker, replaced Koopman.

Ms Anabel González, Senior Director, Global Practice on Trade and Competitiveness, World Bank Group, listed the enabling conditions of, and challenges to, SME inclusion in e-commerce. Essentially, they stem from three basic requirements: a strong telecommunications infrastructure, a sound business environment, and adequate human resources. All three influence the enabling conditions, per se, which are specific to e-commerce:

• Digital skills and entrepreneurship;
• E-trade regulation;
• E-commerce logistics; and
• Digital trade facilitation.

Noting that ‘reaping the full benefits of trade requires SMEs to embrace data as a tool of growth’, González added that the World Bank is very interested in e-commerce as a tool for development.

Focusing on the lessons learned in OECD countries, Ms Lucia Cusmano,Senior Policy Analyst, OECD Center for Entrepreneurship, SMEs, Local Development and Tourism, reported that 20% of firms in OECD countries with at least ten employees received electronic orders in 2014, and that this is a minor, albeit sizeable, share of trade shows, the untapped potential of e-commerce. However, the key data point concerns the participation of SMEs in particular: it amounts to only 5% in OECD countries. Developing countries should take two main lessons from these statistics: invest in infrastructure and foster capacity-building initiatives.

Oszar posited that although e-commerce opens new horizons for SMEs, the digital divide remains in areas such as access to markets and financing, and skill development. She summarised the main barriers as: awareness, access, and ability. The first also refers to access to information and to the knowledge of how to apply it. The second and the last pertain to a lack of infrastructure and resources, both material and intellectual. Her solutions are also threefold. First, competitiveness relies on the assistance of both public and private sectors. Second, capabilities can range from the development of digital readiness to the provision of knowledge on, for instance, how to package and transport goods.  Lastly, connectedness means reducing the distance between SMEs and access to the assets or knowledge they require. The WSF is contributing towards these goals with the SME Market, a digital platform launched in May 2017 that offers solutions in access to markets, global value chains and skills to SMEs with little to no presence in e-commerce. Already available now in three countries (Azerbaijan, Georgia and Turkey), the WSF intends to expand its reach.

Ms Hanne Melin, Director Global Public Policy, eBay, structured her presentation around three keywords. Firstly, e-commerce is an ‘opportunity’ for SMEs everywhere to internationalise their operations.  However, ‘conditions’ are unequal across the world, as the other speakers have shown. The third term, ‘disadvantage’, indicates an intrinsic feature of e-commerce: it will always be more difficult to operate online, in contrast to locally. To overcome these barriers, the Public Policy Lab developed the concept of a ‘global empowerment network’, which can be applied to eBay. Platforms like this allow small firms to overcome the costs of engaging in e-commerce from a distance.

Mr James Lockett, Vice-President and Head of Trade Facilitation and Market Access, Huawei Technologies, alluded to the company’s Global Connectivity Index, remarking that it reflected many of the topics discussed. Lockett emphasised the digital divide between developed and other countries, whose main causes would be a lack of investment in infrastructure and a gap in digital literacy. For the former, a complicating factor is that although many countries have invested in ICT, they do not have the other necessary infrastructure elements. Concerning the latter, he highlighted the difference between those who have some knowledge, however poor it may be, and those who have none.

The ensuing discussion covered the issue of how WTO laws could either hinder or benefit SMEs, and what would be needed for countries to reach an agreement in e-commerce at the next WTO Ministerial Conference, this December. All panelists agreed that countries should strive to lower the costs to SME participation in e-commerce.