The digital economy and e-commerce play a growing role in efforts to achieve the Sustainable Development Goals (SDGs), bringing both new opportunities and new challenges. Countries that harness the potential of e-commerce according to the United Nations Conference on Trade and Development (UNCTAD) will be better placed to benefit from global markets for their goods and services in this digitalizing economy, while those that fail to do so risk falling behind.
As efforts are being made by countries to consolidate on the gains of the sector triggered by the pandemic, the United Nations and many governments have made clear their determination that recovery from the pandemic should reach beyond restoration of the status quo before the crisis. Rather, in the words of the Secretary-General, the international community should ‘turn the recovery into a real opportunity to do things right for the future’.
The majority of African countries are developing countries and Least Developing Countries, and the continent has correspondingly low levels of online activity and e-commerce compared to other world regions.
UNECA’s report notes the dynamic potential of e-commerce on the continent and urges governments and development partners to foster this by approving appropriate fiscal and regulatory frameworks, promoting financial inclusion, developing the projected African Continental Free Trade Area (AfCFTA) and increasing engagement and partnership between governments and digital entrepreneurs.
Indeed, Africa has lower levels of intraregional trade than other parts of the world and is therefore economically more dependent on global export markets. Diversification through e-commerce associated with more relaxed and more efficient border infrastructure, as well as regulatory changes like de minimise tariff exemptions, could encourage local production and cross-border trade, adding to domestic revenue and supporting employment in sectors responsible for producing newly traded goods. It could achieve better results for African development than would follow a return to where things stood before the crisis.
Strategies for recovery, the evidence suggests, should build on prior experience and understanding of the role of e-commerce in development as a driver of economic growth, inclusive trade and job creation that can enhance both economic prosperity and social welfare.
The ability to leverage e-commerce therefore presents a significant opportunity for governments and businesses to build on the experience of crisis in order to accelerate recovery. As past research for the eTrade for all initiative has shown however, significant deficiencies and challenges pose barriers to those seeking to take that opportunity.
Many businesses and consumers in developing regions have yet to start using the Internet, let alone participate in e-commerce. Enabling e-commerce requires changes in public policy and business practice – to improve digital and trading infrastructure, facilitate digital payments and establish appropriate legal and regulatory frameworks for online transactions and security.
Measures to address these will encourage shifts in business practice and consumer behaviour where e-commerce offers economic and social benefits in different markets, but decisions need to be taken to enact them. Once enacted, they will take time to implement, enforce and have an impact.
The COVID-19 pandemic has accelerated digital transformations. Digital solutions are increasingly needed to continue some of the economic and social activities remotely. They have been critical for telemedicine, telework and online education, not least to keep alive our social ties in times of physical distancing.
The eTrade for all initiative, established in 2016, which aims to address knowledge gaps regarding e-commerce and foster synergies among the partners, is more needed than ever in efforts to recover from the pandemic. Since the outbreak of the pandemic, UNCTAD and its 32 eTrade for all partners have played an important role in raising awareness of the opportunities and risks for e-commerce that have emerged during the crisis and have worked together to improve understanding of the challenges faced by e-commerce businesses in developing and least developing countries (LDCs).
This has reinforced the growing importance of e-commerce and the need for action, supported by international development partners, to build upon it.
We have also witnessed e-commerce growth in developing countries, with long-term implications. However, unless adequately addressed, existing digital divides are likely to result in even greater inequalities.
Experience worldwide has shown that e-commerce develops and thrives best in an enabling environment that is facilitated by a coherent policy framework built on thorough understanding of economic activity and government commitment to support innovation and enterprise.
Governments that have taken strategic approaches to e-commerce have seen it make a greater contribution to national growth. Effective strategic approaches deployed across government as a whole, encourage new business development and enable economic growth.
National strategies for e-commerce should also be consistent with and integrated into broader national development programmes, taking into account regional agreements and frameworks.