Unlocking the Potential of E-commerce for

Developing Countries

Cécile Barayre(cecile.barayre@unctad.org)

Economic Affairs Officer, ICT Analysis Section, UNCTAD

WSIS FORUM 2016

Estonian E-Residency: Building a Borderless Digital Society and Unleashing the World's

Entrepreneurial Potential

Geneva, 2 May 2016

Contents

• UNCTAD's work on e-commerce

• Global state of e-commerce

– UNCTAD B2C E-Commerce Index 2016

– Main barriers to e-commerce uptake

Electronic Identity Management

• New UNCTAD initiative: Aid for eTrade

E-commerce and development at UNCTAD

• Research and data analytics:

– the Information Economy Report - edition 2015 on E-commerce

– Study on Data Protection regulations and International Data Flows: Implications for Trade and Development (2016)

– Comparative reviews of E-Commerce Legislation (new: ECOWAS, Latin America)

• Capacity building in three key domains:

– E-Commerce and Law Reform

– Measuring the information economy

– ICT Policy Reviews - E-Commerce strategy assessment

• Forum for multi stakeholder-dialogue: eg. E-Commerce Week

Wider scope for INCLUSIVE e-commerce

• Beginning of the digital era → both opportunities and challenges

• Goods and services increasingly traded online

• E-commerce is crucial for SMEs (B2B and B2C) to

– access new markets (domestic and exports)

– participate in value chains

• Expanding opportunities as a result of:

– Improved ICT connectivity

– New e-commerce services and platforms and payment solutions

– Rise of new e-commerce companies in developingcountries

…but e-commerce divide is still hugeShare of individuals purchasing online 2013

Source: UNCTAD, based on Eurostat, ITU and national data (in red).

UNCTAD B2C E-COMMERCE INDEX 2016INDICATORS INCLUDED

• Percentage of individuals using Internet– Sources: ITU, 2014, 208 economies

• Credit card (% age 15+)

– Source: World Bank Findex survey, 2014, 159 economies

• Secure Internet servers (per 1 million people)

– Source: World Bank, 2014, 200 economies

• Postal reliability score– Source: Universal Postal Union, 2013-2014, 185 economies

• Total coverage: 137 economies

• Good starting point for assessment of readiness

Source: UNCTAD.

Top 10 economies in 2016

Source: UNCTAD.

2016

Rank Economy

Share of

individuals

using

Internet

Share of

individuals

with credit

card

Secure

Internet

servers per 1

million people

UPU

postal

reliability

score

UNCTAD

B2C e-

commerce

Index value

2016

1 Luxembourg 95 69 98 97 89.7

2 Iceland 98 77 100 81 89.0

3 Norway 96 67 96 89 87.1

4 Canada 87 77 92 89 86.3

5 Japan 91 66 89 99 86.1

6 Finland 92 63 95 87 84.3

7 Republic of Korea 84 56 97 100 84.3

8 United Kingdom 92 62 92 89 83.7

9 Switzerland 87 54 99 93 83.3

10 New Zealand 86 61 92 93 82.9

27 Estonia 84 31 89 85 72.3

TOP 10 DEVELOPING ECONOMIES

Source: UNCTAD.

2016

Rank Economy

Share of

individuals

using

Internet

Share of

individuals

with credit

card

Secure

Internet

servers per 1

million people

UPU

postal

reliability

score

UNCTAD

B2C e-

commerce

Index value

2014

Rank

7 Republic of Korea 84 56 97 100 84.3 8

14 Hong Kong (China) 75 64 88 98 81.1 18

23 Singapore 82 35 88 98 75.8 26

25 United Arab

Emirates

90

37 80 86

73.4 66

26 Qatar 91 32 78 88 72.4 73

32 Bahrain 91 28 75 72 66.5 34

39 Uruguay 61 40 70 79 62.6 40

40 Kuwait 79 28 73 68 61.9 N/A

43 Chile 72 12 64 69 60.3 39

44 Malaysia 68 20 69 84 60.1 45

Many barriers to e-commerce uptakeUrgent need for capacity-building and assistance

• Limited use of the Internet among businesses and consumers

• Lack of awareness among governments and regulators

• Concerns about possible adverse effects

• Insufficient access to affordable ICT infrastructure

• Inadequate trade logistics and facilitation

• Lack of security and trust in online transactions

• Inadequate online payment facilities

• Lack of trade finance

• Limited e-commerce skills among enterprises

• Absence of statistical data on e-commerce

• Weak legal and regulatory frameworks

Challenges to the enactment of e-commerce legislation

in 48 developing countries 2013-2015 (percentage of respondents)

0 20 40 60 80

Lack of skills or resources in settingup a national certification authority

for digital signatures

Inadequate ICT infrastructure

Funding issues

Lack of skills or training for membersof parliament

Lack of skills or training for policyand/or lawmakers

E-Transactions

Consumer protection

Privacy

Cybercrime

Source: UNCTAD.

Lack of security and trust in online

transactions

• Level of trust in online activities is declining - new 2016 CIGI-Ipsos Global Survey on Internet Security and Trust

• According to UNCTAD's Cyberlawtracker:

– 75 % of countries with an e-transaction law

Out of 146 countries with an e-transactions law, 29 have adopted technology-specific laws

– < 50 % of countries with a data protection Law

– 70 % with a cybercrime law

– 50% of countries with a law protecting consumers online

• In EU, Canada: e-commerce is mostly domestic

• In developing countries, mostly cross border

Source: unctad.org/cyberlawtracker and UNCTAD based on UNCITRAL data, 2015.

Identity management: building block for secure

digital transactions

• Relevant for economic inclusion and e-commerce

• Data-driven globalization

• Value is proportional to the number of users

• Robust IdM systems could save governments in the developing world by up to $50 billion per year by 2020

• Need for improving on technology, organizational, legal gaps

• UNCITRAL Working Group en E-Commerce (New York, 27 June-15 July): legal issues related to IdM and trust services

Source: World Bank Group , 2015.

Aid for eTrade

Purpose and scope of Aid for eTrade

• Multi-stakeholder initiative among public and private parties who can contribute to achieving significant improvements in the ability of countries to use and benefit from e-commerce, by:

– raising awareness of countries' unique opportunities, challenges and constraints to e-commerce;

– mobilizing and rationalizing available financial and human resources for the implementation of projects that would address those challenges and constraints; and

– strengthening coherence and synergies among partner activities to further the use and gains from e-commerce in developing countries.

Building TRUST is key:• Laws

E-transactions, Cybercrime, Data protection, consumer protection online

• Building capacity• Research: e.g in the pipeline

Study on IdentityManagement: issues and implications; technical note on e-transactions

• Toolkits and assessment tools

Creating synergies through collaboration

• Developing innovative development solutions to catalyze e-commerce

• Pooling capabilities leveraging each partner's strengths

• Developing joint and complementary initiatives

• Preparing joint studies, surveys and knowledge products

• Drawing on private sector inputs and promoting PPPs

• Sharing data related to e-commerce

• Project evaluation and monitoring to assess “what works”

Private Sector Advisory Council

• To facilitate the public-private dialogue

• Comprising e-commerce platform companies, payment providers, logistics firms, IT infrastructure companies and private foundations from developing and developed economies.

• Regular calls to discuss gaps and challenges, share ideas and unlock new e-commerce markets

• Share research and thinking

• Polled annually on the state of e-commerce.

• Mechanism to engage the private sector when discussing observed problems to e-commerce and possible solutions.

THANK YOU!

Unctad.org/ICT4D