Digitial Economy: Enhancing Trade Opportunities for SMEs

3 May 2016
ITC News
Address by ITC Executive Director Arancha González to World Summit of Information Society Forum (WSIS)
Tuesday, 3 may 2016 - CICG

Thank you, Secretary-General Houlin Zhao, for the invitation to address the World Summit on the Information Society (WSIS).

As part of the United Nations system, the International Trade Centre (ITC) is committed to the United Nations delivering as One. We are here because our organisations provide expertise and capacity building on ICT. We must do it with a “value chain” approach, ensuring all links in the chain are addressed. At the end of the day this is how business works today. We must ensure we partner to get all links to function so we deliver greater impact.

At ITC we support small and medium-sized enterprises (SMEs) in developing countries to increase their competitiveness to use trade as a tool for growth, job creation and poverty reduction. An important- and growing- component of our work is focused on helping them to improve competitiveness, to better leverage the digital economy to connect to value chains and to use ICT as a tool for innovation.

Within the WSIS, ITC co-facilitates Action Line C7 (“E-Business”) together with its partners UNCTAD and UPU. Technology is a game changer for SMEs. Size, landlocked-ness, country GDP or distance from markets can be overcome through innovation, embedding technology in business processes or going digital.

By any measure E-Commerce is big business. It also represents a major change in the way that trade is conducted and offers great potential to help achieve the UN Sustainable Development Goals.

Online retail is estimated to account for 13% of consumer spending in the US and around 10% in Europe, and much more in some countries such as the UK and Germany. Business to Business sales are estimated to be as much as fifteen times as large. And this is also the case in developing countries. For example, by 2018 Africa's e-commerce market is projected to soar to US$ 50 billion, up from US$ 8 billion in 2013.

And yet, many developing countries are not taking full advantage of this opportunity. For instance, best estimates put the current share of African enterprises in this international trade below 2%: a share which could be much higher. Much more needs to be done to enable “digital dividends”.

In ITC we have analysed the shortcomings flagged by SMEs and we have moved from awareness-raising to action by providing support and coaching that meets those needs.

What are the challenges facing SMEs in e-commerce?

We have reflected some of these challenges in a recent study on ‘International E-Commerce in Africa: The Way Forward’. They range from difficulties with international banking transactions, to exclusion from international e-marketplaces, inexperience with sales taxes and import duties, infrastructure deficit, as well as lack of local and regional institutional support to name a few. And they are not specific to Africa. We know they also affect SMEs across the world.

Public-private initiatives, institutional and corporate capacity building, shared structures and technology, and improved access to transport and logistics are some of the actions and policies that need to be supported to address the challenges.

Working individually, SMEs are at a cost disadvantage. But by bringing them together it is possible to solve or alleviate a number of barriers. We have seen instances where this has been used effectively to open up new possibilities for vendors. This is why we are focusing on building collectively owned and managed cooperative structures as a foundation to promote eTrade.

With ITC’s support more than 400 Moroccan SMEs have joined in an export cooperative called ‘Made in Morocco’. We have coupled our traditional assistance to improve SME international competitiveness with that required to move on-line. The result is a sharp increase in exports of olive oil, cosmetics, books or music and a tripling of its ‘transformation rate’ or the share of website visitors who purchase goods. We are replicating this initiative in Senegal, Ethiopia and Rwanda and linking it with support to SMEs in Tunisia, and Jordan to sell in virtual marketplaces.

Many of you had a chance to meet some of these SMEs in an "E Commerce Souk" which we hosted in Geneva at the end of last year at which the goods of such cooperatives were displayed alongside their virtual marketplaces. Given the success of the initiative we replicated it in February this year with a cooperative of Syrian women who were eager to bring to market the products they had painfully manufactured in the midst of the conflict and devastation. We will do this again in July with a larger slate of SMEs.

In our work we see the power that trade has to empower women economically: women who can now obtain better prices from selling internationally on-line; women who can thrive in ICT and in providing digital services; and women who can now be financially included through electronic payment solutions. This is why in ITC we devote particular attention to women micro, small and medium-sized enterprises and this is why we advocate that we all take positive action to ensure women are also digitally included.

ITC’s vision is one where small firms in developing and least developed countries have access to advanced solutions, can sell through international market places transparently and efficiently; and are able to retain a significant part of the international value creation in the country of origin.

To achieve this ITC works with the private sector for the private sector. We partner with DHL, eBay and the International Cooperative Alliance. We will also have a chance to take this dialogue forward in May in Beijing in an event we will be co-hosting with Alibaba. But we know this is not enough. It is time that we must also look at trade rules and government policies to ensure they are supportive of digital inclusion.

It is in this context that UNCTAD, ITC, and other international agencies and private sector partners have worked to produce a call for action on “Aid for E-Trade”: a call to unite efforts in a mission to facilitate greater participation in “eTrade”.

Thank you for attention and best of luck for the forum.
n useful to the WSIS dialogue. Thank you