Promoting trade, inclusiveness, and connectivity for sustainable development
WTO - Geneva
Just this morning I had coffee from Rwanda, oranges from Mexico, ham from Spain, butter from New Zealand and jam from Senegal as I browsed twitter on my ‘made in the world’ iPad.
This is trade in action. This is the result of increased connectivity. This is why at this 6th Global Review of Aid for Trade, we have to collectively shine a light on the importance of continuing to invest in trade-related capacity building. Not to ensure I have such a bountiful breakfast every morning of course - but to guarantee that we keep goods and services flowing and continue to help developing countries and their micro, small and medium-sized enterprises (MSMEs) grow through that trade.
This Global Review is focused on two very important elements of trade- inclusiveness and connectivity.
Trade - inclusive trade - is an important tool for achieving the UN Global Goals. Trade creates jobs, trade provides opportunities for women and youth, trade provides quality and choice to consumers, trade links economies and communities.
At ITC, we are also aware that the benefits of trade have not always reached those who need them. Trade can make jobs obsolete and the playing field is not always level. But we are committed to supporting inclusive and sustainable trade and making it work for all. We are committed to ‘good trade’. To the “good” and to the “trade”.
An important part of inclusive trade is women. Empowering women, both economically and socially, leads to stronger growth and more prosperous societies.
A trade agenda which explicitly recognizes and acts on women’s economic empowerment can be a strong force for inclusive growth.
This is the reason behind ITC’s SheTrades initiative, a global movement that seeks to connect one million women to market by 2020 by working on seven challenges including trade policies and capacity building. I thank the many SheTrades champions who are with us today for partnering to make this happen.
There are many facets to connectivity. Top of the list is how technology has made connectivity practically instantaneous. The world is online. Almost. In many developing countries, connectivity is still sub-optimal. Despite the proliferation of mobile phones there are still far too many, especially women, who are unconnected to the information grid. And this matters for business. And this matters for making trade work for MSMEs.
ITC’s research for the 'At a Glance' publication shows that women-led enterprises are 12% less likely to use email than men-managed firms which is
an important proxy for internet usage. We have a responsibility to help connect the unconnected. Especially the women.
Beyond simple connectivity is the question of what do we connect to? What do MSMEs need? One of the major gaps is in trade and market intelligence. Intelligence - and not just data - is critical to help small companies know how, what and when to produce and to trade. This is why I am very happy that for the WTO Ministerial Conference in Argentina in December, ITC, UNCTAD and WTO will unveil a new ‘SME Trade Help Desk’. This will be a global one-stop shop for MSMEs to access intelligence on tariffs, non- tariff measures, and more. This will be a major competitiveness tool consolidating trade-related information and making it accessible through a single entry point. This is ITC, WTO and UNCTAD making connectivity work for those at the base of the pyramid.
Connectivity is also about making the business environment work for trade and for investment. The ‘single window’, an electronic system which is one of the elements of the WTO Trade Facilitation Agreement, is one such example.
ITC’s research has shown there is a substantial e-connectivity gap between MSMEs and larger companies. Small firms are ten times less likely than large firms to use email to communicate with buyers and suppliers, and eight times less likely to have a business website. These differences matter as being e-connected is strongly associated with growth and competitiveness.
Just take the case of Brodo Footwear, an Indonesian men’s fashion company founded in 2010. In just a few years, it grew from a small company employing a handful of people to one employing over 100. The company sells directly to consumers via its website, and reported that Cloud tools and data analytics allowed it to target customers with bespoke offers, resulting in rapid sales growth.
We have seen this in our work with MSMEs across the world, where connecting them to e-commerce platforms and e-solutions payment systems has increased their sales and placed them in a marketplace where physical borders matter less and where the potential for growth is impressive.
We have seen Rania, an entrepreneur working with Syrian internally displaced women reach markets in Switzerland and beyond through e-commerce; Anna, from Let’s Sequoia, a Rwandan start- up selling biodegradable coffee capsules online; Oumar, a young Senegalese entrepreneur who has set up a logistics company in Dakar to manage the distribution of products traded online; Zineb, a young Moroccan selling argan oil and cosmetics providing an income for hundreds of farmers in the southern region of Morocco through getting onto the digital highway. The power of ‘digital’ for MSME growth is not a myth!
This is why it is so important that the WTO looks at facilitating e-commerce.
ITC has just surveyed thousands of MSMEs on the ground to have a better sense of the challenges they face to e-trade.
Logistics are still a major bottleneck for MSMEs with the cost of logistics in the final price of e-traded goods being twice as high in developing countries than in developed countries. Speedy implementation of the Trade Facilitation Agreement can help to address this.
MSMEs also express concern about a lack of access to international e-payment solutions and they find it hard to predict whether and which duties will be applied on returned products. They are also concerned about their own lack of technical knowledge, language skills and weaknesses to raise visibility of their offering for consumers abroad. As a consequence, many firms abandon their attempts to get onto the e-commerce highway, with female- owned companies getting stuck earlier in the process than male- owned companies. I hope WTO members look at the results of the survey to better understand what can be done to help MSMEs’ e-trade.
Trade, inclusiveness and connectivity are three important components of the trade, aid and investment nexus. They are mutually reinforcing and symbiotic. But trade is a tool to achieve both of them.
Invest in trade opening, trade capacity building and ‘good trade’ and you are investing in that female coffee producer in Lao who uses that income to invest in her community and her family; you are investing in that small organic pineapple farm and bottling centre in Benin creating livelihoods for thousands of young Beninese; you are supporting the agri-processing value chain in The Gambia and the thousands of workers who grow the fruit, process and package the jam, brand the products and ship them to Geneva. And then, of course, you are investing in my breakfast!