Crossborder data: Connecting SMEs in the global supply chain

Event report

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Many conversations on cross-border data flows involve multinational technology companies offering services across different countries. However, the Internet provides new ways of connecting small and medium sized enterprises (SMEs) with new customers. It is therefore, globalising SMEs.

SMEs face different opportunities and challenges when transacting online across borders. This workshop sought to discuss current and controversial topics in cross-border data flows involving SMEs. Mr Thomas Grob (Deutsche Telekom) framed the issues in terms of data enabled digital transformation, data flows connecting SMEs to global supply chains, and human rights considerations, including privacy and data protection.

Ms Siva Devireddy (Founder, GoCoop) explained how the platform used in GoCoop responds to the market need for fair trade products. GoCoop connects rural Indian women with consumers in the United States and, in so doing, the Internet supports a growing movement of people who are conscious of the source of their goods as well as the consequences of their purchases on the producers of those goods.

Research conducted regarding digital transformation among SMEs found that they accounted for 99% of businesses in Europe. They are therefore embedded in the economy of Europe. Ms Cornelia Kutterer (Private Sector, Eastern European Group) explained that SMEs use digital technologies to improve efficiency, resulting in increased revenue. However, no commensurate policies support SMEs in digital transformation. A shortage of skilled digital workers allows SMEs to perceive digital transformation as expensive to integrate. In low and middle income countries, concerns exists that technologies such as artificial intelligence will create a new divide to the disadvantage of those without these technologies.

Hence, policies are needed to address inequalities in the digital transformation. Some of the policies discussed in the panel included: privacy and data protection; business and human rights; and, public sector information regulation. Kutterer explored emerging issues in data governance, explaining an increasing incentive to open up data. Mr Carsten Kestermann (Amazon Web Services) described the need for cross-border data flows, in light of new technologies such as the Internet of Things (IoT). A policy challenge to such cross-border data flows is the lack of harmonisation of regulations across different jurisdictions. This is compounded by compliance with data protection laws that increase the cost of business for SMEs.

Ms Sheetal Kumar (Global Partners Digital) summarised her views on business and human rights, explaining that globalisation calls for businesses to be more responsive to human rights. Rights that are affected by the digital transformation include privacy, freedom of expression, and access to information. Kumar explained that besides compliance with human rights, human rights in business was increasingly becoming part of business branding. Businesses now often have a market advantage in promoting high human rights standards.

Cross-border data flows are an ongoing debate. Businesses may be held back from fully engaging in online business because of data laws that vary across jurisdictions. Mr James Howe ( International Trade Centre) explained how closed data could be useful, but cannot be shared due to cross-border data restrictions. He also pointed out the danger in the fact that many SMEs are not aware of the legal requirements on data protection on small inventories. Howe emphasised the need for policies to define when data can be shared. He also mentioned data trusts, in which people collect and define how their own data can be used, as an alternative means of sharing data.

Mr Malgorzata Ignatowicz (Office of Electronic Communications of Poland) acknowledged the challenge brought about by global technology companies that provide digital transformation services for SMEs. For example, AWS provides cloud services that enable SMEs to conduct business globally. This role reinforces the influential position of global technology companies as SMEs become dependent on their facilities. Ignatowicz therefore emphasised the need for responsive policies to ensure that SMEs have appropriate knowledge, skills, and finances to support their growth in the digital economy.

By Grace Mutung’u