E-business: New opportunities for SMEs
Statement by the Executive Director of the International Trade Centre at the high level opening session by UN facilitators of the WSIS+10 high level event, 10 June 2014, Geneva
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Dr. Hamadoun Toure, Secretary General, ITU
Heads of Agencies
Ladies and Gentlemen,
In 2003 in Geneva and in 2005 in Tunis the global community agreed to a forward looking agenda aimed at translating the recognised benefits of ICT, e-platforms and mobile technology into action for all. The WSIS + 10 tagline -‘turning targets into action’- encapsulates this decade long process of transforming ideas and ideals into reality.
I am very pleased to be part of this WSIS + 10 High Level event. The International Trade Centre focuses primarily on building the capacity of small and medium sized enterprises in developing countries to become more competitive, to enter value chains and internationalise, and use trade as a tool for poverty eradication and for development. Fundamental to this process of internationalisation is technological change and adaptation.
Innovations in the way that companies produce and the way that countries trade has at its very core two elements: transformations in the manner that goods and services are transported within and across borders; and vast improvements in technology and ICT which allow for better, cheaper and more accessible production and distribution processes.
In essence, what you will discuss here over the next few days is about making available the tools for various actors- including SMEs- to innovate and upgrade through the intangible but transformative universe of e-solutions and to tap into the power of digital technologies for socio-economic transformation.
The “digital economy” is now one of the main factors driving global trade. Digital channels dominate and determine the nature of business transactions. Complex value chains are facilitated through the use of information flows and the question of whether an economy is investable now hinges on the notion of a receptive business climate. This not only includes ease of opening a business, trade facilitation, access to credit and available skill set; but also the penetration of mobiles per capita, the extent of the bandwidth, the technological awareness and exposure of the potential workforce and the capacity of the economy to innovate and be flexible with changes in technological advancement.
A good business environment is not just about the physical infrastructure and the regulatory environment. It is now as much about the invisible plain of transactions and the capacity of the economy, and the businesses within that economy, to prosper in a world where the walls of production and distribution cycles are broken down along a network of trade in intermediates and where services are now part and parcel of physical production processes.
Business to consumer e-commerce is a smaller but increasingly powerful distribution channel (now in excess of $1 trillion per annum) which is changing the nature of retailing in developed countries, and creating new consumer markets in developing countries. The rise of the middle class- especially in Africa- and their increasing purchasing power and quality awareness has fostered an emergence of e-commerce in the past decade that has opened up opportunities for developing countries and least developed countries (LDCs) to better access world markets: both as providers and consumers.
The emergence of E-Business presents a unique opportunity to facilitate better access for poor countries to world markets. Access to the digital economy is no longer the unique domain of business and consumers in high income countries. According to the ITU’s latest figures, almost 3 billion people – 40% of the world’s population – are using the Internet, and close to one in three people in developing countries are online.
Mobile communication technologies and innovation solutions are being pioneered in some developing countries- such as the Mpesa in Kenya for example. Today, 55% of the world’s mobile broadband subscriptions are in developing countries – in Africa, the growth in mobile broadband subscription is at the rate of 40% a year, with 1 in 5 Africans having access to mobile broadband.
While the digital economy is enhancing connectivity and trade its benefits are not always immediate. SMEs in developing countries need support in recognising, understanding and addressing the rules and access requirements which come with these new tools. Hard infrastructure remains a challenge in some quarters. To be able to utilise the potential inherent in e-tools a steady and reliable source of power is required. Another hurdle to address is the skills gap which may exist.
But there are many positive signs. The youth in particular are leapfrogging technological phases. Technology is facilitating the integration of women into the economy. Many in the younger generation have never used a desk top computer, moving straight to mobile devices and tablets. Young entrepreneurs in many parts of the world have never had their goods produced in their country but have instead engineered the development of a final good using components from other countries with just the press of a button or the swipe of a tablet. The way we consume is also changing. Exotic goods and services may soon be a thing of the past as e-commerce allows us to access the previously inaccessible in a matter of days or weeks.
ITC is working with local and regional partners in the private and public sectors to support access to the digital economy through improved technology and logistics infrastructure. We work with governments to promote a conducive regulatory and administrative environment for a digital economy to thrive which will spur innovation and trade. We assist SMEs to better harness the possibilities of e-commerce through the promotion of online marketing and e-commerce and digital tools. By offering training, advisory services and customized solutions ITC works with local stakeholders, and trade support institutions to adapt technologies to local requirements. An example is our suite of market information tools known as “Trade@Hand” which makes extensive use of available SMS technologies to provide useful data for business decision-making.
Further examples of ITC’s interventions include Fiji, where we are deploying a combination of mobile and web-based applications to facilitate the work of local trade associations in the agricultural sector to deliver key services such as the collection and dissemination of information on supply capacity and prices by linking producers with markets.
The opportunity to trade digitally relates to services as well as goods. The pattern of trade in digital services is not uniform: established relationships with traditional outsourcing centres are being reinforced – and there is a potential that developing countries risk missing the opportunity. An example of this is ITC’s work with Bangladesh in the information technology and ICT-enabled services sector. This local sector offers a strong value proposition, with a large pool of trained engineers and operators and through the support of the Netherlands, we have helped Bangladesh to improve its export competitiveness and strengthen its business links with Europe.
Even in the area of logistics services – which are typically expensive and poorly adapted to the needs of small businesses in Africa – new solutions are becoming available through partnerships with some of the leading e-commerce players and transportation companies. Bypassing poor local infrastructure, African companies can use fulfilment services in developed countries to hold stock, sell and distribute from remote locations in developed countries.
Internet technologies and cloud computing offer SME’s in developing countries the potential to access advanced systems at a very competitive price: assuming the availability of enough bandwidth. Mastering cloud-based solutions and tools such as those that relate to stock and transportation management, customer data and invoicing can be a requirement for SMEs to achieve access to the purchasing platforms of multinational buyers in the global value chain. Online sourcing can speed the identification of potential suppliers, generate innovative alternatives and reduce prices: each a source of competitiveness that can be harnessed by SMEs.
Digital tools open up access to online market places such as Amazon, eBay, and Alibaba for SMEs to grow beyond their shores into regional and global markets.
A barrier to e-commerce is the availability of online payment solutions, which are commonly unavailable to vendors in much of Africa for example. Here, ITC is working on solutions with partners to enable small vendors to accept electronic payments. We are assisting SMEs to build a presence on the web and marketing their products and services through virtual market places as well as helping to pioneer the use of cloud-based solutions for SMEs which would cut down on the need to make costly investments in ICT infrastructure and computing capacity.
These are the tools of the future and will be essential in allowing SMEs to realise their growth and job creating potential in the post 2015 world. My message to you today is “place SMEs and their needs at the heart of the digital agenda, place them at the heart of the XXI century Information Society”.
I wish you a successful few days of discussion and in closing let me reiterate that ITC is indeed your partner in turning these targets into action.