International patent applications via WIPO in 2020 continued to grow amid the COVID-19 pandemic’s vast human and economic toll, with leading users China and the U.S. each marking annual growth in filings.
International patent applications filed via WIPO’s Patent Cooperation Treaty (PCT), which is one of the widely used metrics for measuring innovative activity, grew by 4% in 2020 to reach 275,900 applications – the highest number ever, despite an estimated drop in global GDP of 3.5%.
China (68,720 applications, +16.1% year-on-year growth) remained the largest user of WIPO’s PCT System, followed by the U.S. (59,230 applications, +3%), Japan (50,520 applications, -4.1%), the Republic of Korea (20,060 applications, +5.2%) and Germany (18,643 applications, -3.7%)
(Annex 1 ).
Beyond the top 10, other countries that saw strong growth include Saudi Arabia (956 applications, +73.2%), Malaysia (255 applications, +26.2%), Chile (262 applications, +17.0%), Singapore (1,278 applications, +14.9%) and Brazil (697 applications, +8.4%). Longer term trends point to the globalization of innovation, with Asia accounting for 53.7% percent of all PCT filing activity, versus 35.7% 10 years ago.
Use of the international trademark system dipped, but only slightly. This was expected given that trademarks tend to represent the introduction of new goods and services – both of which slowed as a result of the global pandemic. International trademark applications via WIPO’s Madrid System for the International Registration of Marks decreased by 0.6% to 63,800 in 2020 – the first decline since the global financial crisis of 2008-2009.
Press conference: Video on YouTube
The economic fallout from the pandemic hit demand for the protection of industrial designs via the Hague System for the International Registration of Industrial Designs. Demand fell by 15% in 2020 to 18,580 designs – the first decline since 2006.
Worldwide demand for IP rights, which help innovators and enterprises take their ideas to the market, has historically and broadly tracked global economic performance. However, growth over the past decade in the use of WIPO’s global IP services, most notably the PCT, has outperformed global GDP growth.
Charts with the latest key international IP data.
International patent system (Patent Cooperation Treaty – PCT)
Top PCT filers
For the fourth consecutive year, China-based telecoms giant Huawei Technologies, with 5,464 published PCT applications, was the top filer in 2020. It was followed by Samsung Electronics of the Republic of Korea (3,093), Mitsubishi Electric Corp. of Japan (2,810), LG Electronics Inc. of the Republic of Korea (2,759) and Qualcomm Inc. of the U.S. (2,173) (Annex 2 ). Among the top 10 filers, LG Electronics reported the fastest growth (+67.6%) in the number of published applications in 2020 and as a result it moved up from 10th position in 2019 to 4th position in 2020.
The University of California with 559 published applications continues to head the list of top applicants among educational institutions in 2020. Massachusetts Institute of Technology (269) ranked second, followed by Shenzhen University (252), Tsinghua University (231) and Zhejiang University (209) (Annex 3 ). The top 10-university list comprises five universities from China, four from the U.S., and one from Japan.
Among fields of technology, computer technology (9.2% of total) accounted for the largest share of published PCT applications, followed by digital communication (8.3%), medical technology (6.6%), electrical machinery (6.6%), and measurement (4.8%) (Annex 4 ).
Six of the top 10 technologies recorded double-digit growth in 2020, with audio-visual technology reporting the fastest rate of growth – +29.5%, compared to 8.7% the previous year – followed by digital communication (+15.8%), computer technology (+13.2%), measurement (+10.9%) semiconductors (+10.1%) and pharmaceuticals (+10%).
International trademark system (Madrid System)
U.S.-based applicants (10,005) filed the largest number of international trademark applications using WIPO’s Madrid System in 2020, followed by those located in Germany (7,334), China (7,075), France (3,716) and the U.K. (3,679) (Annex 5 ).
Among the top ten origins, China (+16.4%) is the only country to record double-digit growth in 2020. The U.K. (+5.1%) and Italy (+3.6%) also reported notable growth. Outside the top ten origins, the Republic of Korea (+13.4%), Canada (+94.4%), and Denmark (11.5%) saw the strongest growth. In contrast, France (-16.3%) and Turkey (-15.4%) saw sharp declines.
Top Madrid filers
Novartis AG of Switzerland with 233 Madrid applications heads the list of top filers in 2020. WIPO received 104 more applications from Novartis in 2020 than in 2019, elevating it from 3rd position to the top spot. Novartis AG was followed by Huawei Technologies of China (197), Shiseido Company of Japan (130), ADP Gauselmann of Germany (123) and L’Oréal of France (115). L’Oréal – the top filer in 2019 – moved down to 5th position as it filed 78 fewer applications in 2020 (Annex 6 ).
The most-specified class in international applications received by WIPO was Class 9 (computer hardware and software and other electrical or electronic apparatus, etc.) that accounted for 10.6% of the 2020 total. It was followed by Class 35 (services for business; 8.1%) and Class 42 (technological services; 7.1%). Among the top 10 classes, Class 10 (surgical, medical, dental and veterinary apparatus, etc.; +21.1%) and Class 5 (pharmaceuticals and other preparations for medical purposes; +9.2%) saw the fastest growth.
International design system (Hague System)
Despite a substantial decrease, Germany remained the largest user of the international design system, with 3,666 designs (Annex 7 ). The U.S. (2,211 designs) moved up from 6th position to become the second largest user of the Hague System in 2020. Switzerland (1,944 designs), the Republic of Korea (1,669) and Italy (1,231) are ranked third, fourth and fifth, respectively. Among the top ten origins, the U.S. (+62.7%), Turkey (+34.7%) and China (+22.7%) are the only three countries to record growth in 2020.
Top Hague filers
For the fourth consecutive year, Samsung Electronics of the Republic of Korea with 859 designs in published applications headed the list of top filers, followed by Procter & Gamble of the U.S. (623), Fonkel Meubelmarketing of the Netherlands (569), Volkswagen of Germany (524) and Beijing Xiaomi Mobile Software of China (516). For the first time a company from China is among the top five applicants. Lampenwelt GMBH of Germany –ranked tenth with 276 designs – is a new user of the Hague System (Annex 8 ).
Designs related to means of transport (10.1%) accounted for the largest share of total designs in 2020; followed by recording and communication equipment (8.8%); packages and containers (8.4%); furnishing (7.4%); and lighting apparatus (6.9%). Among the top 10 classes, pharmaceutical and cosmetic products (+42.6%) saw sizeable growth in 2020.
Domain name disputes
Trademark owners in 2020 filed a record 4,204 cases under the Uniform Domain Name Dispute Resolution Policy (UDRP) with WIPO’s Arbitration and Mediation Center, moving past the 50,000 mark since the start of this WIPO service (Annex 9 ). It was also a record year for WIPO Mediation and Arbitration cases involving patents, trademarks, digital copyright, and other types of disputes involving technology.
With a greater number of people spending more time online during the COVID-19 pandemic, trademark owners are taking up this WIPO service not only to reinforce their online presence, but also to offer authentic content and trusted sales outlets to Internet users across varied business areas (Annex 10 ). Representing 75% of WIPO’s generic Top-Level Domain (gTLD) caseload, .COM demonstrated its continuing primacy.
WIPO UDRP cases in 2020 involved parties from 127 countries, up from 122 in 2019. The U.S., with 1,359 cases filed, France (786), the U.K. (411), Switzerland (256) and Germany (235) were the top five filing countries (Annex 11 ).
WIPO also offers dispute resolution services for over 75 country code Top-Level Domains, such as .CN (China), .EU (European Union) and .MX (Mexico).
Outside the area of domain name disputes, the WIPO Center in 2020 received 77 mediation and arbitration cases in different areas of IP, up 24% from the previous year’s caseload (Annex 12 ). These WIPO procedures allow parties from around the world to resolve their cases without having to go to court. Patent-related disputes remained the most common in WIPO’s caseload, followed by trademark, information and communications technology (ICT), and copyright disputes
(Annex 13 ).
With the growing global interest in making available tariff-related information via web-based tools, the Liberia Revenue Authority (LRA) decided to embark on a project to implement an electronic tariff platform in the country. On 24 February 2020, a kick-off meeting to launch the project was held in Monrovia, Liberia, with the virtual attendance by representatives of the WCO, the ECOWAS Secretariat and technical experts specialized in the development of online platforms.
The project is implemented in the framework of the EU-WCO HS-Africa Programme, funded by the European Union. The main objective of the project is to develop an electronic platform where all information related to applied rates of duties and taxes imposed in connection with trade transactions will be available in an easily accessible manner. This effort will contribute not only to the implementation of the HS, but will also support the ongoing work undertaken in Liberia to meet the WTO Trade Facilitation Agreement standards.
The ECOWAS Secretariat representative Mr. Felix Kwame Kwakye expressed his great satisfaction with regard to the launch of the project, highlighting its importance for the ECOWAS region as an example of digital transformation of Customs work. He emphasized that the interactive nature of the electronic platform, its comprehensive coverage and its integration with the existing IT systems used by the LRA would make information available to all interested parties in a convenient and user-friendly format.
A multi-disciplinary team has been assigned at the LRA to coordinate this project and will ensure close collaboration with the WCO and the ECOWAS. The new electronic platform is expected to go live in summer 2021. The EU-WCO HS-Africa Programme reiterated its pledge to support the LRA throughout the entire process of implementation of this important endeavor.
For more details, please contact firstname.lastname@example.org.
Central bank digital currencies (CBDCs) are gaining increased attention around the world. Although once viewed with much scepticism, more central banks are exploring its use, with some analysts dubbing 2020 “the Year of CBDCs” due to the striking way the currency entered the international financial policy conversation.
As a blockchain-based, digital form of a country’s fiat currency, CBDCs lie in the “sweet spot” of the money flower, having the accessibility of cash, the digital ease of mobile money, the security of cryptocurrency, and the familiarity of being issued by the central bank.
Graph 1: The Money Flower (Bech and Garratt, 2017)
Small states lead the way
However, while much attention has been paid to the potential CBDC activity in large developed economies – like China and the US — small states are making actual breakthroughs. The Bahamas, a small chain of islands with under 400,000 people, became the first country in the world to officially launch a central bank digital currency, with the nationwide rollout of the Sand Dollar last October. Mauritius, the Marshall Islands, Curacao and members of the Eastern Caribbean Central Bank (Antigua & Barbuda, Dominica, Grenada, St Kitts & Nevis, St Lucia and St Vincent & the Grenadines) have also completed small-scale pilots and are looking to move on to national rollouts.
At first glance, it is surprising that these countries are at the forefront of this innovation. Many small states are heavily cash dependent and their domestic financial sectors are usually under-developed. They also tend to be very financially conservative and cautious.
On closer analysis however, there seems to be two key reasons why small states are leading the way. Firstly, they have strong motivations – CBDCs (more so than other technologies) can help to address their financial development issues. Financial exclusion remains a challenge in many small states, particularly those with populations spread unevenly across many islands. More remote places do not have easy access to banks and, should a natural disaster strike, even those islands with bank branches may find themselves excluded. When Hurricane Dorian hit The Bahamas in September 2019, the islands of Grand Bahama and Abaco were without banking services for weeks.
Beyond these geographic issues, small states have a relatively small financial sector with only a few financial institutions. These size-related challenges tend to result in high interest rates and expensive charges for ATM use and other basic transactions, further limiting financial inclusion. Financial innovations (like mobile money and CBDCs) are often regarded as viable solutions to improve financial inclusion and address de-risking.
The second – and arguably more important – reason small states are the drivers in the adoption of CBDCs, is that their risks are lower. Because of their island nature, these countries are able to conduct controlled self-contained pilots to safely test new ideas. Many analysts (BIS, 2020; Mancini-Griffoli et al, 2018) have expressed concern that CBDCs might undermine financial stability by disintermediating or crowding out traditional banks. The Bahamas tested the Sand Dollar for several months on two different islands before rolling it out nationally – and the disintermediation risk did not materialise. Similarly, the Eastern Caribbean Central Bank is testing its digital currency DCash in four of the seven countries in its jurisdiction.
Furthermore, the unique characteristics of many small states make it unlikely that the private sector will offer FinTech solutions on their own. On balance, there is little incentive for traditional banks in small states to increase financial inclusion, particularly for residents on sparsely populated islands. Regulator-driven CBDCs are likely the only way for small states to capitalise on the benefits of FinTech.
Small States with Big Lessons
This perspective of small states as key players in CBDCs highlights some broader lessons worth noting. The first is that context matters in small states. Perhaps showing how the small state context has allowed CBDCs to grow and develop can shed some light on the importance of understanding this context in other areas as well. Often saddled with blacklisting, small states have long argued that the international financial regulatory architecture does not understand nor take into account the many important nuances of the small state context.
The second takeaway is that context matters for FinTech adoption. FinTech solutions work best when they are tailored to address country-specific needs. For example, MPesa has been transformative in Kenya, but has struggled to replicate that same success in neighbouring countries with different contexts. Similarly, while CBDCs are growing in small states, other countries with different circumstances may not experience the same benefits from the innovation. FinTech is more effective when it is viewed as a solution to a problem, rather than the adoption of a new shiny technology.
The Commonwealth Secretariat’s forthcoming Commonwealth FinTech Report seeks to understand the FinTech landscape across our membership, identify trends, and draw out lessons like these that can be shared more widely.
 In part due to the parameters of the scheme, including a $500 cap on e-wallets held by individuals.
- Bech, M. L., & Garratt, R. (2017). Central bank cryptocurrencies. BIS Quarterly Review September.
- BIS (Bank for Intermediate Settlements) (2020). Central bank digital currencies: foundational principles and core features.
- Mancini-Griffoli, T., Peria, M. S. M., Agur, I., Ari, A., Kiff, J., Popescu, A., & Rochon, C. (2018). Casting light on central bank digital currency. IMF Staff Discussion Notes, 18(08).
Digital labour platforms are now a vital part of contemporary life—they allow us to arrange a ride, order food and access a host of other services online. They accomplish this by connecting clients or customers with workers who undertake these tasks or “gigs”. The past decade has seen the global rise of “gig workers” or “platform workers”, with platforms like Uber, Gojek, Deliveroo, Rappi, Upwork and Topcoder.
Digital labour platforms have created unprecedented opportunities for workers, businesses and society by unleashing innovation on a massive global scale. Yet at the same time, they pose serious threats to decent work and fair competition.
Explore this InfoStory to find out how digital labour platforms impact workers and enterprises around the world and why there is an urgent need for regulatory coherence for the platform economy.
Platform workers’ stories
Listen to Sergio and Mercy sharing their experience and describing their challenges
On November 10, 2020 UNCDF hosted the peer learning session “How Do We Make Women Builders of the Digital Economy?” at #FinEquity2020, an annual gathering of the global of researchers, practitioners, policy makers, and donors discussing the very latest developments in women’s financial inclusion.
The UN Capital Development Fund (UNCDF) makes public and private finance work for the poor in the world’s 47 least developed countries. With its capital mandate and instruments, UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. In the last years UNCDF has advanced women’s economic empowerment, increasingly leveraging digital tools and stakeholders when appropriate. UNCDF has created diagnostics and critical research, levelling the playing field for relevant stakeholders, and helping them understand the challenges and opportunities of advancing women’s financial inclusion. UNCDF has provided deep technical expertise to support human centric design of financial products for women and increased the number of women employees within financial service providers. Furthermore, UNCDF has worked with governments across the globe on the collection and usage of sex-disaggregated data.
Last year, UNCDF launched the approach to advancing gender equality in its Inclusive Digital Economy strategy, called Women as Builders of the Digital Economy, which aims to decrease the digital divide for women and girls, use technology to improve women’s economic opportunity, and to help to transform women into the builders of emerging digital economies. This approach focuses on creating strategic partnerships at a global, regional and country level, and complementing them with market facilitation and deep technical assistance to affect change on the ground. It leverages our on-the-ground presence and relationships with ministries of finance, central banks, telecommunications regulators, other relevant policy makers, as well as the private sector (including banks, telecommunications companies, fintechs and micro finance institutions) and civil society to remove the barriers to women’s economic empowerment. UNCDF is implementing tailored interventions on a country-by-country basis integrated into existing work that will both remove barriers and accelerate increased access to critical services, ultimately increasing the number of women that not only have autonomy but digital and financial inclusion. This event was a chance to bring together experts to discuss UNCDF’s approach, focusing on the most challenging barriers to advancing women’s digital and financial inclusion, and to find ways forward together.
The UNCDF Approach – Women as Builders of the Digital Economy
Nandini Harihareswara, UNCDF Senior Advisor on Inclusive Digital Economies opened the session welcoming the participants and sharing UNCDF’s new strategy, aimed at using digital innovations to address women’s empowerment challenges. Nandini explained how UNCDF pursues a market system development approach to advance gender equality and women’s economic empowerment.
Specifically, UNCDF works with a range of stakeholders to:
• Increase the number of women and girls that own a phone, can access/use the internet and have the capability and autonomy to use it to empower their lives;
• Increase the number of affordable digital and financial products that address the needs and challenges of diverse segments of women;
• Leverage technology to increase access to finance and formalization of women-owned of managed SMEs;
• Use policy incentives and sex-disaggregated data to increase women’s digital and financial autonomy by supporting governments
• Create a “coalition of the amenable” between public and private sector actors to increase the number of women in the workforce and leadership positions.
Challenges and solutions to enable women digital and financial agency and autonomy
UNCDF were joined by three champions of women’s economic empowerment, who presented on the work their organizations are doing to help women to fully engage in the digital economy and their expert perspectives on the barriers to women’s digital and financial agency in developing countries. Leadership was a key recurring theme.
Venge Nyirongo, Thematic Lead of the Generation Equality Forum’s Economic Justice and Rights Action Coalition at UN Women, discussed the need to bring together public, private, and civil society leaders to drive systemic change, He highlighted how the Generation Equality Forum, a campaign led by UN Women and hosted by the Governments of France and Mexico, are bringing together leaders to accelerate this kind of change. UNCDF is a co-lead of the Economic Justice and Rights Action Coalition of the Generation Equality Forum. He explained why these coalitions are needed now more than ever; “women have been agents of change since time immemorial, when we bring down the barriers that prevent them exercising agency they can take the world forward. But since the establishment of the Beijing Platform for Action 25 years ago things haven’t moved much. We need to make deliberate decisions to move forward.”
Karen Miller, Global Head of Leadership & Diversity Programs at Women’s World Banking, highlighted the need to develop a pipeline of women leaders. Organizations can do this by creating inclusive organizational culture, values and policies, using a “sponsorship” culture within financial service providers and policy making institutions to build a network of women mentors and mentees. In addition, collecting and analyzing organizational data on diversity and inclusion. She made the importance of organizational data in tackling biases clear through an anecdote; “recently I was having a conversation with an institution who said, “I’m not sure why we are spending so much time hiring and training women, when they get married and have children they leave the organization”. We started going through their data and it turned out that women had a much higher retention rate than men, it was just a bias they had. By being able to look at that data and ask the hard questions you can determine what the path forward is”.
Cavelle Dove, Lead for Women’s Economic Empowerment at UNCDF in Myanmar, also remarked on the critical role of data, particularly in understanding and addressing women’s needs. She also drew on a recent study into women’s demand for financial services in conflict and post conflict affected regions to highlight the need to raise women’s awareness of available products and build environments in which they feel comfortable learning about those products. She spoke of the power of the “sister approach”: “women have been helping other women from time beyond, so it’s vital to work women who can then share the news of what’s been helpful to them and how that might be helpful to others. For example, there was one woman we worked with in Kachin State who was not interested at all at first, but after the time was spent to understand the product and its benefit she eventually became one of the strongest advocates for this financial service”.
How do we identify the gatekeepers and unlock the gates?
Gatekeepers are people or institutions with the power to help or hinder access to a resource. Increasing attention is being paid to the need to engage the gatekeepers that control women’s participation in the digital economy. However, there is a paucity of extensive research that lists who these gatekeepers are and how to engage them effectively and appropriately.
The first discussion was focused on identifying and engaging the gatekeepers that prevent women’s access and usage of phones. Firstly, the participants identified a number of gatekeepers such as: husbands and male family members, religious leaders, regulators, teachers, but also “older generation women”. Then, they presented a number of solutions to engage the gatekeepers in a culturally appropriate way, including interventions such as digital literacy training, sisterhood learning programmes, and the empowerment of women as role models within their family and community. A strong reference that shares best practices on these and more is the “I’d Blush if I Could” Report from UNESCO. Finally, the group suggested ways to measure the success and impact of interventions=. For example, through the size of the mobile gender gap and internet usage; the number of women in the community who are using digital for economic, social and entertainment; the changes in values measured through the World Value Survey.
The last discussion of the session was aimed at recognizing the gatekeepers that control efforts to increase diversity and leadership in digital economies at scale. Regulatory bodies, men in leadership positions, and institutions that benefit from the status quo were all identified as gatekeepers. The group discussed engagement strategies including improving diversity and inclusion training, demonstrating of the benefits of diverse management on the bottom line, developing the next generation of female leaders through technical assistance, and linking investment to diversity indicators. Suggested potential measures of success were the number of female decision-makers on a national scale; the number of girls aspiring to work in the financial sectors; the number of digital platforms that have a diverse leadership and, last but not least, the number of gender-sensitive women policies.
UNCDF will integrate these learnings into its activities while supporting the work of building inclusive digital economies in 28 countries, as well as co-leading the Economic Rights and Justice Coalition of the Generation Equality Forum.
E-commerce is one of the five priorities of the Pacific Aid-for-Trade Strategy 2020-2025, noting its potential to narrow distances and trade costs, and to promote diversification of Pacific economies.
In this COVID-19 era, digital trade has become even more important, given its ability to sustain economic activity whilst preserving social distancing. Even when lock-downs and border closures will be lifted, new online buying and selling habits are due to stay and it is therefore essential that Pacific businesses are well-equipped to face this new digital era to avoid the risk of falling behind.
It is against this background that Forum Islands Countries, development agencies, and donor partners joined forces to improve digital trade readiness in the Pacific. At a 2017 PIFS-UNCTAD-WTO Pacific E-commerce workshop, partners concurred on the need to lay solid analytical and policy foundations as a precondition to undertake truly transformative actions.
To support this determination, PIFS and its partners have developed national and regional E-commerce Assessments, and are in the process of developing a regional E-commerce Strategy and Roadmap which will define the Pacific consensus consensus on priority regional actions to promote digital trade readiness. Focus will then shift on implementation.
A Concept Note of the E-commerce Initiative is available here.
|Cook Islands||Papua New Guinea (2020)|
|Federated States of Micronesia (2020)||Republic of Marshall Islands|
|Fiji (2020)||Samoa (2017)|
|Kiribati (2019)||Solomon Islands (2018)|
|Nauru (2021)||Tonga (2019)|
|Niue (2020)||Tuvalu (2019)|
|Regional Assessments and Strategies|
|Pacific E-commerce Assessment (2020)||Pacific E-commerce Strategy and Roadmap (2021)|
The ongoing digital transformation has opened up a whole new way of living and working. As deeper performance insights and new levels of connectivity allow businesses to reap the benefits of breakthrough technologies, the world is becoming faster, more flexible and more efficient. This shift is creating a global ecosystem where physical and digital things are increasingly connected, from critical infrastructure assets to people and data.
A study by Gartner finds that in 2019, 60% of organizations worked with more than 1,000 third parties, and those networks are only expected to grow. Other research by Deloitte shows that 40% of manufacturers had their operations affected by a cyber-incident during 2019. And in 2018, the average financial impact of a data breach in the manufacturing industry was $7.5 million.
Moreover, global technology supply chains are increasingly diverse and complex, resulting in changes in the overall risk for critical systems that support national defence, vital emergency services and critical infrastructure.
In December 2020, a global cyber-intrusion campaign was uncovered by a leading cybersecurity firm that compromised first the source code and then subsequently updates to SolarWinds’ Orion Platform, a widely deployed IT management software product. The corrupted update was downloaded by thousands of SolarWinds customers and spanned US government agencies, critical infrastructure entities and private-sector organizations. Though this cyberattack may be unprecedented in scale and sophistication, it is consistent with a number of persistent trends in using supply chain vectors.
This incident further reinforced the threat to global digital supply chains and the strategic imperative for public and private sector stakeholders to ensure trust in the digital ecosystem. It is critical that the software that drives the digital ecosystem is both trusted and secured. By reducing the risks and protecting the digital economy, our society will be able to realize the digital dividends of the Fourth Industrial Revolution.
The following core principles will contribute to a more secure and resilient supply chain and help move the needle on mitigating this complex and multifaceted challenge:
1. Embed security and privacy in the procurement process and life cycle
Having a mature third-party risk-management policy and practice will ensure cybersecurity and privacy are constantly considered and addressed with mature, consistent, repeatable and effective measures. These three precepts will embed them in every phase of the life cycle:
- Cybersecurity and privacy are built-in requirements of the procurement processes from sourcing to off-boarding
- All procurement contracts shall stipulate and contain clear and precise clauses that enforce continual compliance with cybersecurity and privacy requirements.
- Security and privacy obligations shall be continuously reviewed and optimized to keep up with the evolving threats.
2. Take a risk-based approach in assessments of third parties
A risk-based approach will help guide the third-party acceptance/rejection decision-making process, and helps efficiently and accurately mitigate cybersecurity threats third parties pose to the broader ecosystem.
- A risk-based approach improves the assessment of third parties’ security posture. By applying risk measurement and ratings tools and other trusted methodologies, organizations can better identify and rank third-party relationships by risk criticality.
- It ensures an accurate appreciation of risk, helps establish the measures third parties must take to mitigate their risks before entering an agreement with an entity and enable regular and/or continuous security performance monitoring.
- It contributes to a collaborative and valuable outcome for an organization and its broader ecosystem.
- It helps tailor mitigation plans and scale efforts and resources that ensure trustworthy, secure, privacy-protective and resilient products, systems and services. But it also helps third parties better understand gaps in their own security posture and, ultimately, demonstrate their cybersecurity maturity to their customers and stakeholders.
3. Implement a source code policy and secure-by-design development
Such a policy aims to reduce the risks around the development, management and distribution of software and software source code, which must go beyond defending intellectual property and address customer impact. It will help protect and strengthen trust in the digital ecosystem so businesses, governments and individuals can all have trust in, contribute to and benefit from the digital economy.
- The policy should apply to all source code written by or on behalf of an organization and must ensure that any source code is not tampered with, does not contain any known unmitigated security vulnerabilities and contains a licenxe that is compatible with the company’s other policies. It also prevents source code from being dynamically linked to third-party hosted source repositories. When third-party code is used as part of a software/firmware solution, the organization is responsible for change management as part of a secure development process.
- The policy also controls and governs all aspects of how the source code is stored and transmitted, including, but not limited to authorization and access, residency, protection at rest and protection in transit. Ensuring compliance to this policy will help reduce the threat of source code leakage, improves secure access and enables the traceability of any third-party code. Additionally, source-code development must include security and privacy in the design phase, and evidence of threat modelling must be documented.
- The policy should be based on widely recognized frameworks such as the NIST framework to establish secure-by-design development practices, covering four areas:
1. Ensure that the organization’s people, processes and technology are prepared to perform secure software development at the organization level and, in some cases, for each individual project.
2. Protect all components of the product from tampering and unauthorized access
3. Produce well-secured products that have minimal security vulnerabilities in its releases.
4. Identify vulnerabilities in product releases and respond appropriately to address them and prevent similar vulnerabilities from occurring in the future.
By regularly assessing the security posture of third parties, from early sourcing stages, to security due diligence and periodically throughout the duration of a collaborative relationship, an organization will be able to maintain trust with its customers and business partners across the supply and value chains.
A common understanding and approach to existing and emerging threats will enable industry and government actors to implement appropriate countermeasures to mitigate supply chain security risks. In the fallout of the SolarWinds incident, it is crucial all stakeholders in the supply and value chains embrace a risk-informed cybersecurity approach to ensure a secure and resilient ecosystem.
The growth of digital labour platforms is presenting opportunities and challenges for workers and businesses and a need for international policy dialogue.
Digital labour platforms have increased five-fold worldwide in the last decade according to the ILO’s latest World Employment and Social Outlook 2021 report.
This growth has underlined the need for international policy dialogue and regulatory cooperation in order to provide decent work opportunities and foster the growth of sustainable businesses more consistently.
According to the report World Employment and Social Outlook 2021: The role of digital labour platforms in transforming the world of work , digital labour platforms are providing new work opportunities, including for women, persons with disabilities, young people and those marginalized in traditional labour markets. Platforms also allow businesses to access a large flexible workforce with varied skills, while expanding their customer base.
The report focuses on two main types of digital labour platform: online web-based platforms, where tasks are performed online and remotely by workers, and location-based platforms, where tasks are performed at a specified physical location by individuals, such as taxi drivers and delivery workers. Its findings are based on surveys and interviews with some 12,000 workers and representatives of 85 businesses around the world in multiple sectors.
New challenges for workers and businesses
The challenges for platform workers relate to working conditions, the regularity of work and income, and the lack of access to social protection, freedom of association and collective bargaining rights. Working hours can often be long and unpredictable. Half of online platform workers earn less than US$2 per hour. In addition, some platforms have significant gender pay gaps. The COVID-19 pandemic has further exposed many of these issues, says the report.
Many businesses face challenges relating to unfair competition, non- transparency with regard to data and pricing, and high commission fees. Small and Medium Enterprises (SME’s) also have difficulties accessing finance and digital infrastructure.
“All workers, regardless of employment status, need to be able to exercise their fundamental rights at work.”
Guy Ryder, ILO Director-General
The new opportunities created by digital labour platforms are further blurring the previously clear distinction between employees and the self-employed. Working conditions are largely regulated by the platforms’ terms of service agreements, which are often unilaterally determined. Algorithms are increasingly replacing humans in allocating and evaluating work, and administering and monitoring workers.
With platforms operating across multiple jurisdictions, coherent and coordinated policies are needed to ensure they provide decent work opportunities and foster the growth of sustainable businesses, the report says.
“Digital labour platforms are opening up opportunities that did not exist before, particularly for women, young people, persons with disabilities and marginalized groups in all parts of the world. That must be welcomed. The new challenges they present can be met through global social dialogue so that workers, employers and governments can fully and equally benefit from these advances. All workers, regardless of employment status, need to be able to exercise their fundamental rights at work,” said ILO Director-General Guy Ryder.
The costs and benefits of digital platforms are not shared equally across the world. Ninety-six per cent of investments in such platforms are concentrated in Asia, North America and Europe. Seventy per cent of revenues are concentrated in just two countries, the United States and China.
Work on online web-based platforms is outsourced by businesses in the global North, and performed by workers in the global South, who earn less than their counterparts in developed countries. This uneven growth of the digital economy perpetuates a digital divide and risks exacerbating inequalities.
A way forward
Many governments, enterprises and workers’ representatives, including unions, have begun to address some of these issues but their responses are varied. This leads to uncertainty for all parties.
Since digital labour platforms operate across multiple jurisdictions, international policy dialogue and coordination is needed to ensure regulatory certainty and the application of international labour standards, says the report.
It calls for global social dialogue and regulatory cooperation between digital labour platforms, workers and governments, which could lead over time to a more effective and consistent approach towards a number of objectives to ensure that:
- Workers’ employment status is correctly classified and is in accordance with national classification systems.
- There is transparency and accountability of algorithms for workers and businesses.
- Self-employed platform workers can enjoy the right to bargain collectively.
- All workers, including platform workers, have access to adequate social security benefits, through the extension and adaptation of policy and legal frameworks where necessary.
- Platform workers can access the courts of the jurisdiction in which they are located if they so choose.
If you’re in the market for a new role, and you have the right skills for a position in e-commerce, healthcare, or digital content, you’re in luck: they’re all on the list of LinkedIn’s predictions for the hottest jobs of 2021.
LinkedIn analyzed jobs trends in 15 countries around the world for its annual Jobs on the Rise report. A common theme was that almost all of the roles identified can be undertaken remotely – meaning that people with strong digital skills will have a significant advantage in the jobs market. Here are some other key trends.
At the click of a mouse
In the United Kingdom, the number of people buying groceries online has doubled since the country’s first COVID-19 lockdown, in March 2020 – contributing to a strong growth in e-commerce. From package handlers to supply chain specialists, the sector saw a 143% hiring increase. Lockdown also led to a spike in new media platforms such as podcasts, with listenership reaching audiences of over 15 million in 2020, creating opportunities for digital content freelancers.
Digital content producers are also in high demand in India, which has an 82% YouTube penetration rate, and in the United Arab Emirates, which has experienced 197% growth in the hiring of digital content freelancers over the past year.
With 70% of Southeast Asia now online, the region has seen a notable rise in digital services, with two new fields, HealthTech and EdTech, opening up a range of new opportunities as jobs that were once carried out in person shifting to digital. Pharmacists, medical technologists and information technology teachers will all be in demand this year.
Caring for the mind, body, and soul
It’s a similar story in Australia, where – as in many other countries – the pandemic has led to a particular need for mental health specialists. The healthcare and social assistance sector is Australia’s fastest-growing, employing more than 1.5 million people.
In the United States, alongside a call for more healthcare professionals of every stripe in the wake of the coronavirus pandemic, roles in areas such as artificial intelligence are growing rapidly.
LinkedIn predicts that there will be 150 million new technology jobs globally in the next five years, and data scientist and data engineer roles in the US are growing by 35% annually. With growing concern over racial and gender equity, 2020 also saw a 64% increase in the hiring of workplace diversity experts.
The focus on technology aligns with findings from LinkedIn in 2020 on the top 10 most in-demand jobs, all of which relied heavily on digital capabilities, including software development, data analytics, digital marketing and graphic design.
Digital transformation means new opportunity
It also dovetails with the World Economic Forum’s Future of Jobs Report 2020, which suggests that business leaders continue to focus on rapid digital transformation. According to the report, 84% of employers are overseeing a significant expansion of remote work, with a third also implementing new digital tools to enable collaboration and community building.
The Future of Jobs Report uncovered a four-fold increase in the number of people looking for online learning opportunities, a five-fold increase in employer provision of online learning, and a nine-fold increase in online learners accessing such programmes through government initiatives. Unemployed people have focused more on learning digital skills, such as data analysis and information technology.
Remote working will revolutionize the labour market, according to LinkedIn – democratizing opportunity for employees who may not be based in major urban hubs and opening up access to fresh talent for employers.
The shift is also enabling a career change for many – from sales to social media, research to medical writing, and entrepreneur to life coach.
Over 80 members of the World Trade Organization (WTO) are currently negotiating trade rules on electronic commerce (e-commerce) under the so-called “Joint Statement Initiative (JSI)”. These WTO members seek to make progress in advance of the 12th WTO ministerial conference to be held when conditions so permit.
Digitalization has greatly affected the world of trade in the past two decades with more and more goods and services being sold online.
E-commerce was growing fast even before the COVID-19 pandemic. In 2019, about 1.5 billion people shopped online, an increase of 7% from 2018. The pandemic has further accentuated the shift towards e-commerce as people and businesses have gone online to cope with various lockdown measures and travel restrictions. It is estimated that online shopping as a share of global retail surged from 13% in 2019 to 17% in 2020.
The pandemic has also reminded us of the huge divides that still characterize the world in terms of country readiness to engage in and benefit from e-commerce.
As with in previous technological revolutions, the benefits from digital transformations will be immense, but they will not materialize automatically. The outcome will depend on policies, regulations and measures undertaken at both national and international levels to build the capabilities needed for countries to deal with technological disruptions. Development-friendly e-commerce regulation therefore matters.
Against this background, UNCTAD provides more evidence and analysis that could help developing countries to acquire a better understanding of the development implications of various issues under discussion in the JSI negotiations.
In a new report entitled, What is at stake for developing countries in trade negotiations on e-commerce? The case of the Joint Statement Initiative, we assess various options for harnessing e-commerce for sustainable development. Our hope is that the insights gained would serve to assist developing countries in positioning themselves vis-à-vis the JSI negotiations, as well as e-commerce negotiations in other trade forums, including at the regional level, and in the development of their national e-commerce policies and regulations.
Same goal, different paths
Opinions remain widely divided on how best to regulate e-commerce, especially at the international level. Many developing countries have chosen not to engage in JSI e-commerce negotiations, stating inter alia a preference for first building their regulatory and institutional capacities and safeguarding their policy space to pursue development objectives in this fast-evolving area.
While this is understandable, the possible outcome of the JSI negotiations will likely affect the governance of various dimensions of e-commerce, with implications for all countries, whether they are party to these negotiations or not. One key question that confronts trade negotiators is what negotiated outcome would best enable developing countries – both participants and non-participants – to harness potential benefits of e-commerce for sustainable development.
Multilateral vs “plurilateral” routes
Questions also arise as to whether and how the outcome of the JSI negotiations may be multilateralized.
Defining the JSI outcome as a “plurilateral” agreement is not likely to settle the ambivalence associated with the future e-commerce agreement. Procedurally, incorporating a plurilateral agreement within the WTO framework would require consensus among all WTO members. Moreover, plurilateral approaches should be a temporary journey and not a substitute for multilateralism.
It will also be important to consider how the content and implementation modalities of the possible outcome should be crafted to facilitate greater participation. When it comes to content, the inclusion of certain issues which have yet to reach a certain level of maturity even in domestic policymaking may be challenging for many.
For example, while digital data are increasingly recognized as important economic resource and a key driver of the digital economy, creating and capturing value from digital data has emerged as a central policy challenge.
Policymakers across the globe are considering various approaches for defining categories of data, including to establish ownership of data generated by individuals and communities when using digital platforms and possible compensation for those whose data are being used. Adequate regulation of cross-border data flows will be essential to ensure sustainable development outcomes from the data-driven economy.
But given the impact that privileged access to data can have on the competitiveness of firms, on the overall income distribution and on market concentration, the regulation of data remains complex. It must consider not only the trade dimension but also issues related to national security, human rights (such as the right to privacy) and law enforcement.
This raises concerns among many developing countries as they see the risk of becoming mere providers of raw data to global digital platforms – most of which are based in the United States and China – while having to pay for the digital intelligence produced from those data by the platforms. This would do little to reverse the current trends of rising inequalities. It is very difficult to address all the development dimensions of data through the trade lens, which explains why country positions vary considerably and why broader development policies need to be considered in this context.
What about SDT?
As for the implementation of a JSI outcome, member States will need to consider if special and differential treatment can be applied in a way that makes it possible for developing countries at varying level of e-commerce readiness to assume a higher level of commitments at different speeds.
The report discusses the useful lessons that may be learnt from the scheduling approach used in WTO’s Trade Facilitation Agreement (TFA), which allows parties to take into account individual countries’ implementation capacities, capacity-building support and capacity acquisition.
Old issues applied to a new form of trade
Not all issues addressed in the JSI negotiations are novel. Some concern longstanding challenges that developing countries face in reaping the benefits associated with trade liberalization.
For example, future trade rules on e-commerce could have considerable effects on scarce government revenues for many developing countries. While existing practice has waived customs duties on electronic transmissions, there are concerns that rapid technological advances will increase the number and volume of products that may be transmitted electronically, with adverse effects on customs revenue.
Similarly, in discussing de minimis thresholds to facilitate the e-commerce induced expansion of small, low-value parcels crossing borders, the question is how to strike a balance between reduced government revenues from import duties and taxes, and possible gains to economic agents, including consumers and small businesses. The lack of reliable data makes any assessment of the net effects on developing countries of both the moratorium and different de minimis thresholds values tentative in nature.
Likewise, the regulatory capacity of developing countries would be the key factor that could affect the effectiveness of future disciplines. Many developing countries suffer from lack of national laws regulating, for instance, online consumer protection, electronic transactions, data protection and cybercrime.
As shown by the UNCTAD Cyberlaw Tracker, less than half of the least developed countries have adopted legislation to protect consumers online and to protect data. These regulations are essential in ensuring the validity of contracts and enhancing trust on online transactions.
Many governments are also still considering how best to regulate the access to source codes of software when required for legitimate public policy reasons, which may include transfer of technology. This may however be deemed as an unwelcome regulatory intrusion by operators. In other instances, governments may wish to be able to hold intermediary platforms accountable for illegal or harmful content posted by their users.
How these topics are addressed in future e-commerce rules may have significant consequences for Internet governance and for the digital economy and society more broadly. This also suggests a need to facilitate more interaction between trade negotiators and the Internet community and its stakeholders.
Build e-readiness for sustainable development
For developing countries, irrespective of their participation in the JSI negotiations, formulating national policy and regulatory frameworks to build digital capabilities remains an essential component of a broader national development agenda.
UNCTAD’s e-Trade Readiness assessments done in 27 developing countries show that there are gaping holes in the areas of national strategy, connectivity, skills, logistics, finance, and legal and regulatory environment.
Future e-commerce trade rules should seek to help mobilize more resources for financial and technical assistance to developing countries to strengthen their capabilities to engage in and benefit from e-commerce and the digital economy. International development partners, including UNCTAD, have an important role to play in supporting such national efforts.
Tomorrow marks the entry into force of a new international agreement promoting paperless trade, a timely reminder of how the COVID-19 pandemic has brought digital solutions to regional development challenges into the limelight.
Paperless trade across borders has proven an effective way to mitigate trade disruptions since the onset of the crisis, enabling commerce to continue while limiting physical contact. Yet, despite the increasing acceptance of electronic documents across borders, implementation of cross-border paperless trade remains low according to the United Nations Global Survey on Digital and Sustainable Trade Facilitation for Asia and the Pacific.
Across Asia and the Pacific, governments must move from time-consuming paper-based processes to electronic and traceable trade procedures that can significantly enhance competitiveness and address new challenges associated with e-commerce and the digital economy. In doing so, our region can also recover some of the $200 billion in illicit financial flows that sharply reduce the capacity of governments to put in place support measures for vulnerable groups.
At the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in 2016, member States adopted the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific to accelerate trade digitalization – the electronic exchange of trade-related data across borders – while leaving no one behind.
More than 25 countries worked together to develop the treaty, which is now open for accession to all 53 members of ESCAP. The five countries that have ratified or acceded to the treaty — Azerbaijan, Bangladesh, China, the Islamic Republic of Iran and the Philippines – represent a diverse group of countries spanning the wider Asia-Pacific region but all are committed to regional cooperation in this critical area. Armenia and Cambodia signed the treaty in 2017 while several other ESCAP members are in the process of completing their accession this year, before implementation of the agreement starts in earnest in 2022.
But we must do more to realize the transformative potential of trade digitalization.
First, we need to fully use the Framework Agreement to provide a region-wide multilateral intergovernmental platform, a dedicated space for developing and testing legal and technical cross-border paperless trade solutions that build on national, bilateral, and subregional initiatives. This treaty marks the beginning of a new journey, one focused on turning cross-border paperless trade into reality through cooperation, testing, innovation, and implementation.
Second, we have to ensure that the Framework Agreement is catalyst for those countries that become a party to it to implement key measures featured in the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), including Single Windows and other actions requiring the use of information and communication technologies.
Third, we recognize that the Framework Agreement is an inclusive and highly flexible cooperation and capacity building opportunities that countries can participate in regardless of their levels of development and digitalization. The estimates presented in the most recent regional trade facilitation report by the Asian Development Bank (ADB) and ESCAP suggest that the Framework Agreement can help reduce trade costs by more than 20 per cent in most of the region’s developing countries. So, this is particularly important now when many bilateral or regional deals exclude some of the least developed countries.
I encourage all ESCAP member States to join the treaty as soon as possible and demonstrate political will. There is no deadline for acceding to the treaty but doing so early on will ensure a seat at the table when the Parties formally discuss the implementation of priorities. The benefits of cross-border paperless trade multiply with the number of countries involved. So, the more countries on board, the larger the development gains for all. It is time to accelerate the excellent bilateral and subregional paperless trade initiatives that have emerged across the Asia-Pacific region to build truly seamless and resilient supply chains as we recover better together in the post-COVID-19 era.
The COVID-19 crisis is challenging governments to step up their efforts to digitize public management. International trade is no exception. This is an opportunity to make a qualitative leap towards the modernization of foreign trade procedures through technologies such as blockchain.
The need for government authorities to exchange documents, usually in paper format, to comply with requirements relating to the import, export, and transit of goods can constitute a barrier to trade. Processing an international trade transaction at a border crossing can require the exchange of around 36 documents on average, and up to 240 copies when financing is also considered.
It is estimated that exchanging paper documents reduces potential international trade by 15%. The digitization and modernization of customs and logistics processes could restore that 15%, which would imply a US$ 1.8 trillion trade increase this year, and US$5.2 trillion per year globally up to 2050, according to Tradelens.
Facilitating document exchange in foreign trade operations in Latin America and the Caribbean (LAC) by using blockchain would make regional value chains more efficient, a much-needed step forward for trade after the pandemic. These efficiencies would boost private-sector efforts to relocate part of the production chains for given products or services to Latin America (nearshoring) and would foster preferential trade by leveraging the rich networks of trade agreements that are already in force.
Blockchain in trade: the IDB and WEF partnership
Since 2018, the Inter-American Development Bank (IDB) and the World Economic Forum (WEF) have worked together to validate blockchain’s potential for increasing efficiency, transparency, and interoperability in the trade ecosystem.
As part of this joint effort, the IDB’s Integration and Trade Sector recently published two reports that seek to promote the use of blockchain in trade: “Windows of Opportunity: Facilitating Trade with Blockchain Technology,” a white paper published in partnership with the WEF, and “Blockchain and international trade: new technologies to increase and improve Latin America’s international transition,” published in Spanish by its Institute for the Integration of Latin America and the Caribbean (INTAL). The latter includes a chapter entitled “Tracing products back to their origin: facilitating regional trade through blockchain” by Rafael Cornejo.
Rethinking the Integrated Process of Origin (IPO)
One of the documents exchanged in preferential foreign trade is the certificate of origin. Exporters must obtain it to be able to export within their trading bloc without having to pay customs duties.
There are currently three phases in trade operations impacted by the regulations contained in trade agreements on rules of origin. These phases work independently and in isolation from one another in terms of documentation.
- Phase 1: The manufacturing process of the exported good
- Phase 2: Issuing the declaration and certification that the good qualifies as an originating good
- Phase 3: Control and verification of origin
Implementing an Integrated Process of Origin (IPO) using blockchain would merge these three phases into a single process, improving access to tariff preferences. The main advantages would be:
- Access to secure input information provided by the producer and the issuer of the certification of origin to determine compliance.
- Greater security for operators within preferential trade and better information on the origin of goods.
- Customs facilities can focus efforts on verifying the least reliable import operations.
Figure 1. Data Providers and IPO Users
Source: Rafael Cornejo, “Trazar desde el origen: facilitando el comercio regional con blockchain [Tracing products back to their origin: facilitating regional trade through blockchain], Integration & Trade Journal no. 46 (IDB).
What are the advantages of using blockchain in IPOs?
Blockchain has the potential to improve and facilitate the operational conditions of trade in goods imported under preferential schemes. Applying this technology to certifying the origin of a good leads to greater security and more guarantees, contributes to streamlining the monitoring process by providing more reliable data on the origin of each product, and facilitating the application of risk analysis criteria. The following chart summarizes the benefits in each of the phases described above.
Figure 2. Advantages of the IPO that derive from the use of blockchain
Source: Rafael Cornejo, “Trazar desde el origen: facilitando el comercio regional con blockchain [Tracing products back to their origin: facilitating regional trade through blockchain], Integration & Trade Journal no. 46 (IDB).
Blockchain would help implement the extended cumulation of origin,1 which has yet to be put in place appropriately and effectively in LAC. It would also increase the efficiency of trade transactions, therefore helping to increase preferential trade operations. It won´t be necessary to prove that a specific product qualifies as an originating good because the supply chain itself would show whether it qualified for preferential market access.
Who are the stakeholders in an IPO?
Implementing an IPO is a process that involves both the public and private sectors. Stakeholders include private trade operators who participate in exporting products, government authorities processing and overseeing these procedures, and origin-certifying bodies such as chambers of commerce or industry associations.
To help women entrepreneurs emerge stronger from the COVID-19 crisis, the International Trade Centre’s SheTrades Initiative and world’s largest package delivery company, UPS, are focussing on boosting the digital transformation of women-led businesses.
The ITC SheTrades initiative aims to connect three million women to markets and rallies stakeholders around the world to work together to break down trade barriers and create greater opportunities for women entrepreneurs. It is supported by a web and mobile digital platform.
By bringing together UPS’s smart global logistics network and knowledge and ITC’s SheTrades initiative, the partnership aims to help women in business succeed in international markets by making the process of exporting easier and more efficient.
Covid-19’s Impact on Women-led Businesses
The Covid-19 pandemic exposed the vulnerabilities small and medium-sized businesses (SMEs) and particularly those in the hospitality, textiles and apparel sectors. Women-led firms operate in several of these sectors, and 64% of them have stated that their operations have been significantly impacted by the pandemic.
Recognizing the need for improved and effective digitalisation to ensure these business’s survival and growth and boost their resilience against future economic downturns, ITC SheTrades and UPS enlisted digital transformation experts to offer virtual training and bootcamps to women entrepreneurs in three of their project countries: India, Mexico and Vietnam.
Held in October and November 2020, the bootcamps focused on digital marketing, e-commerce, cybersecurity and understanding the online consumer. The events, relevant tools and supporting materials were also made available to all SheTrades members through the online platform.
Business Bootcamp Entrepreneurs
Almost 700 women attended the virtual bootcamps held for Vietnam, Mexico and India. More than 90% of the participants reported the training helped them identify strategies on how to scale up and improve their digital business operations, while almost all confirmed that they had improved their knowledge and skills on privacy and data protection.
Cyntia Reyes operates her sustainable children’s clothing line, Chiquitito Detalles in Mexico, with 6 artisans and workers. Prior to the coaching programme, she was trying to launch her online store and implement a marketing funnel to enhance the user experience and track the customer journey. But she faced low user engagement and high service commissions. Following her coaching with SheTrades and UPS Project, Reyes developed a digital marketing strategy using Facebook and email, leveraging El Buen Fin, the national shopping festival in Mexico.
Reyes implemented different payment methods to enhance her online store, mitigating high costs and commissions. She also developed a holistic sales proposition that reduced her shipping charges and elevated her brand value on social media. Through a tailored strategy for Buen Fin, she increased her online sales by 30%. She has also expanded her marketplace to Facebook and Whatsapp, thereby increasing exports to USA, Canada and other global markets.
Madhumita Sarkar Guha in India owns Luxe Living, a manufacturer of unique home furnishing accessories such as ethnic printed/painted curtains, cushions, throws and rugs. Since opening in 2016, she has expanded into clothing and fashion accessories, incorporating traditional Kolkata prints in her products. Guha soon realized that digital marketing and online business were essential to reaching a larger consumer base and growing her market access. As a result of the coaching programme under the SheTrades and UPS Project, she strengthened the digital marketing and branding of her business, improved customer feedback and the functionality of her online store.
She has expanded her online presence to key marketplaces in India, such as Etsy, Amazon, Nykaa and Pernia’s Popup Shop. Today, Luxe Living is on the way to scaling up and doubling revenues through its enhanced digital presence and improved export readiness.
For queries regarding SheTrades, please email: email@example.com.
We value innovation and diversity—including in money. In the same day, we might pay by swiping a card, waving a phone, or clicking a mouse. Or we might hand over notes and coins, though in many countries increasingly less often.
Today’s world is characterized by a dual monetary system, involving privately-issued money—by banks of all types, telecom companies, or specialized payment providers—built upon a foundation of publicly-issued money—by central banks. While not perfect, this system offers significant advantages, including: innovation and product diversity, mostly provided by the private sector, and stability and efficiency, ensured by the public sector.
These objectives—innovation and diversity on the one hand, and stability and efficiency on the other—are related. More of one usually means less of the other. A tradeoff exists, and countries—central banks especially—have to navigate it. How much of the private sector to rely upon, versus how much to innovate themselves? Much depends on preferences, available technology, and the efficiency of regulation.
So it is natural, when a new technology emerges, to ask how today’s dual monetary system will evolve. If digitalized cash—called central bank digital currency—does emerge, will it displace privately-issued money, or allow it to flourish? The first is always possible, by way of more stringent regulation. We argue that the second remains possible, by extending the logic of today’s dual monetary system. Importantly, central banks should not face a choice between either offering central bank digital currency, or encouraging the private sector to provide its own digital variant. The two can coincide and complement each other, for example, to the extent central banks make certain design choices and refresh their regulatory frameworks.
It may be puzzling to consider that privately- and publicly-issued monies have coexisted throughout history. Why hasn’t the more innovative, convenient, user-friendly, and adaptable private money taken over entirely?
The answer lies in a fundamental symbiotic relationship: the option to redeem private money into perfectly safe and liquid public money, be it notes and coins, or central bank reserves held by selected banks.
The private monies that can be redeemed at a fixed face value into central bank currency become a stable store of value. Ten dollars in a bank account can be exchanged into a ten-dollar bill accepted as legal tender to settle debts. The example may seem obvious, but it hides complex underpinnings: sound regulation and supervision, government backstops such as deposit insurance and lender last resort, as well as partial or full backing in central bank reserves.
Moreover, privately-issued money becomes an efficient means of payment to the extent it can be redeemed into central bank currency. Anne’s 10 dollars in Bank A can be transferred to Bob’s Bank B because they are redeemed into central bank currency in between—an asset both banks trust, hold, and can exchange. As a result, this privately-issued money becomes interoperable. And so it spurs competition—since Anne and Bob can hold money in different banks and still pay each other—and thus innovation and diversity of actual forms of money.
In short, the option of redemption into central bank currency is essential for stability, interoperability, innovation, and diversity of privately-issued money, be it a bank account or other. A system with just private money would be far too risky. And one with just central bank currency could miss out on important innovations. Each form of money builds on the other to deliver today’s dual money system—a balance that has served us well.
Central bank currency in the digital age will face pressures
And tomorrow, as we step squarely into the digital age, what will become of this system? Will the digital currencies issued by central banks be so enticing that they overshadow privately-issued money? Or will they still allow for private sector innovation? Much depends on each central bank’s ability and willingness to consistently and significantly innovate. Keeping pace with technological change, rapidly evolving user needs, and private sector innovation is no easy feat.
Central bank digital currencies are akin to both a smart-phone and its operating system. At a basic level, they are a settlement technology allowing money to be stored and transferred, much like bits sent between a phone’s processor, memory, and camera. At another level, they are a form of money, with specific functionality and appearance, much like an operating system.
Central banks would thus have to become more like Apple or Microsoft in order to keep central bank digital currencies on the frontier of technology and in the wallets of users as the predominant and preferred form of digital money.
Innovation in the digital age is orders of magnitude more complex and rapid than updating security features on paper notes. For instance, central bank digital currencies may initially be managed from a central database, though might migrate to distributed ledgers (synchronized registries held and updated automatically across a network) as technology matures, and one ledger may quickly yield to another following major advancements. Phones and operating systems too benefit from major new releases at least yearly.
In addition, user needs and expectations are likely to evolve much more quickly and unpredictably in the digital age. Information and assets may migrate to distributed ledgers, and require money on the same network to be monetized. Money may be transferred in entirely new ways, including automatically by chips imbedded in everyday products. These needs may require new features of money and thus frequent architectural redesigns, and diversity. Today’s, or even tomorrow’s, money is unlikely to meet the needs of the day after.
Pressures will come from the supply-side too. The private sector will continue innovating. New eMoney and stablecoin schemes will emerge. As demand for these products grows, regulators will strive to contain risks. And the question will inevitably arise: how will these forms of money interact with the digital currencies issued by central banks? Will they exist separately, or will some be integrated into a dual monetary system where the private and central bank offerings build on each other?
A partnership with the private sector remains possible
Keeping with the pace of change of technology, user needs, and private-sector competition will be challenging for central banks. However, they need not be alone in doing so.
First, a central bank digital currency may be designed to encourage the private sector to innovate on top of it, much like app designers bring enticing functionality to phones and their operating systems. By accessing an open set of commands (“application programming interfaces”), a thriving developer community could expand the usability of central bank digital currencies beyond offering plain e-wallet services. For instance, they could make it easy to automate payments, so that a shipment of goods is paid once received, or they could build a look-up function so money can be sent to a friend on the basis of her phone number alone. The trick will be vetting these add-on services so they are perfectly safe.
Second, some central banks may even allow other forms of digital money to co-exist—much like parallel operating systems—while leveraging the settlement functionality and stability of central bank digital currencies. This would open the door to faster innovation and product choice. For instance, one digital currency might compromise on settlement speed to allow users greater control over payment automation.
Would this new form of digital money be a stable store of value? Yes, if it were redeemable into central bank currency (digital or non-digital) at a fixed face value. This would be possible if it were fully backed by central bank currency.
And would this form of digital money be an efficient means of payment? Yes again, as settlement would be immediate on any given digital money network—just as it is between accounts of the same bank. And networks would be interoperable to the extent a payment from Anne’s digital money provider to Bob’s would be settled with a corresponding move of central bank currency, just as in today’s dual system.
This form of digital money (which we have called synthetic currency in the past) could well co-exist with central bank digital currency. It would require a licensing arrangement and set of regulations to fulfill public policy objectives including operational resilience, consumer protection, market conduct and contestability, data privacy, and even prudential stability. At the same time, financial integrity could be ensured via digital identities and complementary data policies. Partnering with central banks requires a high degree of regulatory compliance.
A system for the ages
If and when countries move ahead with central bank digital currencies, they should consider how to leverage the private sector. Today’s dual-monetary system can be extended to the digital age. Central bank currency—along with regulation, supervision, and oversight—will continue to be essential to anchor stability and efficiency of the payment system. And privately-issued money can supplement this foundation with innovation and diversity—perhaps even more so than today. Where central banks decide to end up on the continuum between private-sector and public-sector involvement in the provision of money will vary by country, and ultimately depend on preferences, technology, and the efficiency of regulation.
Key speakers from ConsenSys, Mastercard, R3 and Visa explore how CBDC policy and innovation will support greater financial inclusion, governance, and transparency.
In collaboration with the Central Bank of West African States (BCEAO), the International Islamic Trade Finance Corporation (ITFC) (ITFC-IDB.org), a member of the Islamic Development Bank (IsDB) Group, organized a virtual workshop on the trends and developments in CBDC and its potential impact on driving inter-regional trade between West African countries and internationally. The workshop highlighted the growing interest of Central Banks in digital currencies across the globe and was aimed at exploring how BCEAO can adopt CBDC into its operations.
Speakers included Matthieu Saint Olive of ConsenSys; David Wray and Willy Lim of R3; Harold Bosse, Sébastien Le Callonnec, Kamran Shahin and Arn Vogels of Mastercard; Pascal Ordonneau, former CEO of HSBC Invoice Financing; and Erin English and Catherine Gu of Visa.
The experts addressed key trends in the integration of CBDC into mainstream finance, exploring a range of themes and topics including policy, security, legal and regulatory considerations. They explored the impact on the global banking system and the role of commercial banks, impact on FX reserves and the need to educate the wider public. The panel also highlighted the potential benefits of digital currencies, which include greater financial inclusion, integrity and stability, operational efficiency, and monetary policy effectiveness.
Highlighting the importance of the workshop, Nazeem Noordali, ITFC COO, said: “The 4th industrial revolution will change the face of the traditional monetary system as we know it. Technology is already reshaping the way trade is being conducted, creating new and vast opportunities for greater efficiencies and impact. ITFC firmly believes in the potential of digital currencies in boosting trade and driving greater financial inclusion and stability in the developing world.”
Madame Justine Amenan Tano Beugre, Advisor to the Director General of the West African Center for Training and Banking Studies (COFEB), a division of BCEAO, noted that the Bank was of the same view as evidenced by the organisation of a press conference last December themed ‘Emergence of Cryptomoney: Fears and Controversies’, and moderated by Professor Michel Ruimy, a world-renowned expert in the field.
“It is important to stress that the BCEAO attaches particular interest to technological and financial innovations, considered as essential levers to strengthen financial inclusion. Also, like of the main central banks, our issuing institute is concerned about digital developments to be considered in the context of monetary issuance. This workshop therefore offers the opportunity to explore the issuance of the digital currency in a theoretical and practical way, but also discuss the implications for monetary policy and financial stability”, said Beugre.
From education to entrepreneurship, global recovery efforts need to pay particular attention to the needs of women and girls.
When the 2008 recession hit, few asked how stimulus measures would affect women compared with men.
That approach won’t work for the COVID-19 crisis.
In many countries, women have been hit hardest by COVID-19 lockdowns. In Latin America, for example, they were 50% more likely than men to lose a job in the pandemic’s first months.
Women tend to be heavily employed in vulnerable sectors such as retail, restaurants and hospitality. They also often work in informal jobs, from selling wares on the streets to sewing at home, that lack protections such as paid sick leave or unemployment insurance. When those jobs disappeared, women had no social safety net to fall back on.
Moreover, women can have an outsized impact on economic recovery, particularly in low- and middle-income countries. World Bank research, for instance, shows Niger’s per capita GDP could be more than 25% larger if gender inequality were reduced.
What can governments do? At least three broad areas deserve attention.
First, countries can accelerate the digitization of government identification systems, payment platforms and other critical services, in partnership with the private sector. Economically marginalized women are often invisible to their governments. They are less likely to have formal identification, own a mobile phone or appear in a social registry.
While over 200 countries have developed social-protection measures in response to COVID-19, many have struggled to identify and deliver aid to informal workers, meaning many women continue to be overlooked.
Direct cash transfers targeted to women in countries such as Indonesia, Nigeria and Zambia have already offered millions of women safer access to and increased control over funds.
India’s experience highlights the benefits of getting this right. Last year, the government was able to transfer pandemic-relief payments quickly to more than 200 million women in need because it already had sex-disaggregated data and a digital infrastructure, and these women had their own bank accounts. Governments can ensure that economic opportunities are equitably shared by broadening access to the internet, increasing mobile connectivity and building digital skills.
Second, governments can remove barriers to women’s full inclusion in the economy, whether as entrepreneurs or employees. In economies with the strictest pandemic lockdowns, women-owned companies were 10 percentage points more likely to close than those owned by men. That’s not surprising: Most women-owned businesses tend to be smaller — sole proprietorships or informal microenterprises with fewer than five employees.
Governments should thus target lines of credit and other forms of finance to women-owned businesses, boost the creation of e-commerce platforms to enable female entrepreneurs to access markets, and help business incubators to overcome biases when it comes to investing in women-owned businesses.
Employees, too, require multiple forms of support. In some countries, this may mean making public transport safer for women so they can get to work without fear of harassment. Elsewhere, laws and regulations need to be reviewed to prevent discrimination against women in the workforce. And all countries would benefit from appropriate family-leave policies and quality childcare supported by the public and private sectors.
Finally, More than half of 10-year-olds in schools across low- and middle-income countries could not read and understand a basic text.Even before the pandemic, the world faced a learning crisis:
The pandemic has made things worse. Globally, more than 800 million students remain out of school and many poor students, especially in rural areas, have no access to remote learning. In sub-Saharan Africa, as many as 45% of children have been completely disconnected during school closures.
Girls face additional challenges to remote learning. If there is only one phone per household, for example, it is likely to be used by boys rather than girls, while a heavier burden of domestic work prohibits access to instruction for many girls.
As students return to school, countries need to ensure that both girls and boys reengage with the learning process. That will require investing in hybrid schemes that mix remote and in-person learning, while focusing on foundational and socio-emotional skills that will help children catch up.
True, most of these measures will require substantial investment, at a time when rising debt poses a major concern. But the best way to pay that debt back is to get economies growing faster and to keep more families from falling into poverty.
This piece was originally published on Bloomberg Opinion.
Switzerland replaced the Netherlands at the top of UNCTAD’s Business-to-Consumer E-commerce Index 2020, which ranks 152 countries on their readiness to engage in online commerce.
Europe remains by far the most prepared region for e-commerce, according to UNCTAD’s Business-to-Consumer (B2C) E-commerce Index 2020, but wide gaps with countries with the lowest level of readiness need to be addressed by tackling weaknesses in those nations to spread the benefits of digital transformation to more people.
For the first time, Switzerland leads the UNCTAD B2C E-commerce Index, just ahead of the Netherlands. In 2019, 97% of the Swiss population used the internet. The only non-European economies among the top 10 are Singapore, ranked fourth, and Hong Kong (China) in the 10th position.
The index scores 152 nations on their readiness for online shopping, worth an estimated $4.4 trillion globally in 2018, up 7% from the previous year.
Countries are scored on access to secure internet servers, reliability of postal services and infrastructure, and the portion of their population that uses the internet and has an account with a financial institution or a provider of mobile money services.
Developing countries: Asia leads the pack
The 10 developing countries with the highest scores are all from Asia and classified as high-income or upper-middle-income economies.
At the other end of the spectrum, least developed countries occupy 18 of the bottom 20 positions.
The two largest B2C e-commerce markets in the world, China and the United States, rank 55th and 12th respectively in the index. Although both countries lead in several absolute measures, they lag in relative comparisons.
For instance, internet penetration in the United States is lower than in any of the economies in the top 10, while China ranks 87th in the world on this indicator. As for online shopping penetration, the United States ranks 12th while China takes the 33rd slot.
“The e-commerce divide remains huge,” said Shamika N. Sirimanne, director of UNCTAD’s division that prepares the annual index. “Even among G20 countries, the extent to which people shop online ranges from 3% in India to 87% in the United Kingdom.”
Also, in Canada, the United States and 10 European nations, more than 70% of the adult population makes purchases online. But that proportion is well below 10% in most low- and lower-middle-income countries.
“The COVID-19 pandemic has made it more urgent to ensure the countries trailing behind are able to catch up and strengthen their e-trade readiness,” Ms. Sirimanne said. The index, she said, underscores the need for governments to do more to ensure more people can avail of e-commerce opportunities.
“Otherwise, their businesses and people will miss out on the opportunities offered by the digital economy, and they will be less prepared to deal with various challenges,” she added.
Changes in the 2020 rankings
The 2020 edition of the index includes a few notable changes from the previous year. In the composition of the top 10 positions, Hong Kong (China) replaced Australia. Among the top 10 developing economies, Oman replaced Turkey.
The four largest increases in index scores were recorded in developing countries – Algeria, Brazil, Ghana and Lao People’s Democratic Republic, whose scores surged by at least five points, largely due to significant improvements in postal reliability.
Costa Rica became the best performer in the Latin America and the Caribbean (LAC) region, replacing Chile. Mauritius retained the highest score in sub-Saharan Africa, while Belarus again got the highest score among transition economies.
Special focus on Latin America and the Caribbean
The 2020 index takes a closer look at the LAC region, which accounts for 9% of the world’s population aged 15 and older and as much as 11% of the world’s internet users. However, the region’s share of global online shoppers was only 6% of the global total in 2019.
The UNCTAD report notes that five countries account for 92% of online shoppers in LAC, much higher than their share (72%) of the region’s population. Postal unreliability is the region’s biggest e-commerce infrastructural weakness, particularly in the Caribbean.
As seen globally, COVID-19 has boosted online shopping in the region. For example, 7.3 million Brazilians shopped online for the first time during the pandemic. And in Argentina, the number of first-time online buyers during the pandemic was equivalent to 30% of the 2019 online shopping base.
Top 10 economies in the UNCTAD B2C E-commerce Index 2020
|2020 Rank||Economy||Share of individuals using the Internet (2019 or latest)||Share of individuals with an account (15+, 2017)||Secure Internet servers (normalized, 2019)||UPU postal reliability score (2019 or latest)||2020 Index value)||Index value change (2018-19 data)||Rank 2019|
|10||China, Hong Kong SAR||92||95||88||92||91.8||0.3||14|
Top 10 developing economies in the UNCTAD B2C E-commerce index 2020
|2020 Rank||Economy||Share of individuals using the Internet (2019 or latest)||Share of individuals with an account (15+, 2017)||Secure Internet servers (normalized, 2019)||UPU postal reliability score (2019 or latest)||2020 Index value)||Index value change (2019-20 data)||Rank 2019|
|10||China, Hong Kong SAR||92||95||88||92||91.8||0.3||14|
|18||Korea, Republic of||96||95||68||100||89.8||0.0||19|
|37||United Arab Emirates||99||88||61||64||78.2||0.0||28|
|44||Iran (Islamic Republic of)||70||94||57||79||75.0||-1.5||45|
Top 10 developing and transition economies in the UNCTAD B2C E-commerce Index 2020, by region
|East, South & Southeast Asia||West Asia||Africa||Latin America and the Caribbean||Transition economies|
|Singapore||United Arab Emirates||Mauritius||Costa Rica||Belarus|
|China, Hong Kong SAR||Saudi Arabia||South Africa||Chile||Russian Federation|
|Korea, Republic of||Qatar||Tunisia||Brazil||Serbia|
|Iran (Islamic Republic of)||Kuwait||Libya||Uruguay||North Macedonia|
|China||Lebanon||Kenya||Jamaica||Republic of Moldova|
|Mongolia||Bahrain||Nigeria||Trinidad and Tobago||Kazakhstan|
|India||Iraq||Senegal||Argentina||Bosnia and Herzegovina|
In December, 2020, the United Nations Capital Development Fund (UNCDF) in partnership with the Singapore FinTech Festival organized a series of discussions entitled ‘Building Inclusive Economies in the Digital Era’.
One of the sessions – ‘Powering a Connected Economy – was moderated by UNCDF’s Inclusive Digital Financial Services Consultant – Ronald Rwakigumba, on 8th December.
This session comprised a panel of industry leaders comprised of Gillian-Alexandre Huart (CEO, Engie Energy Access); Martin Baart (CEO, Ecoligo); Vijay Modi (Professor of Mechanical Engineering, Columbia University), and Peter Mwesiga (Strategic Projects Manager, UMEME).
In this read, we document some of the insights discussed by the panel on quite a nuanced topic.
Not all Markets are Equal
Universal access to electricity is core to building a connected economy. However, more than a billion people are without electricity, and many more have only marginal and unreliable access. At the same time, the innovations borne out of connected economies are enablers for universal electrification, especially digital solutions that allow distributed systems in electricity production, distribution, and financing. Therefore, how are market players leveraging the symbiotic relationship between mobile connectivity, decentralized electricity, and financing technologies to build a robust, climate resilient, and inclusive connected economy? What more can be done?
The session was inspired to promote a connected economy that is inclusive; inclusivity meaning universal access for all. Discussions started with highlighting key trends and status toward achieving the goal of a more inclusive connected economy. As Vijay Modi noted, “the last decade has seen significant progress towards closing the energy access gap following various initiatives such as UN efforts like Sustainable Energy for All for continuous progress in reducing households without energy access.”
While it’s common to refer to markets and geographies across Africa, Asia and the Pacific in a homogeneous way when referring to energy access, Vijay cautions that it is important to be cognizant of the unique characteristics of various markets. For instance, sub-Saharan Africa is a large region with many diverse countries, with significant differences from country to country in terms of structure of economy, dependence on agriculture, domestic export led growth, settlement pattern, port access/landlocked, and cost structure associated with renewable energy assets.
Key Trends in Universal Access to Electricty
1. Growth of renewables. It is expected that renewables will continue to play a key role in the next decade including scale-up of solar as the cost of solar panels reduces further. What will be interesting to observe closely is the pattern of consumption. Learning from previous experiences in East Africa, consumption in a year or two was observed to be quite low despite the rapid progress in connecting the population to the grid. Therefore, in certain instances, despite being under the grid for customers under the distribution network or those that can be served by the grid, consumption can be low. In addition to unreliable or inconsistent grid power, this low consumption under the grid can be attributed to imbalance between access and demand, especially in new access areas that have limited consumption/demand and thus require demand stimulation initiatives. As Vijay highlights, it is important to understand the difference in both technology and market that can be leveraged to promote utilization. Similarly, Gillian-Alexandre Huart noted that it is estimated that by 2030, 60 percent of new access to electricity in the world will come from renewables, half of which will come from off-grid solutions.
2. Cost reduction and energy efficiency. The gap in cost of energy in sub-Saharan Africa is gradually closing with game changing renewables like solar. Take for instance in Ethiopia where a deal was recently signed for 2.56 cents kilowatt per hour for utility scale (a kilowatt hour is a unit of measurement that equals the amount of energy you would use if you kept a 1,000 watt appliance running for an hour) which is 1 cent more in markets like the middle east, where cost of capital, currency convertibility and supply chain was very good. As Vijay observes, “The gap is getting closed between what these differences used to be five years ago, that is, 5 – 10 cents at utility scale”. Gillian sees this decrease in the price of photovoltaic, and storage as being significant in such a way that ‘decrease in cost will be matched by more affordable solutions’. This is in addition to benefits from energy efficiency which, thanks to innovations, makes it possible to power multiple appliances, ranging from basic lighting to other use cases such as in agriculture for irrigation, small businesses like barber shops, and productive industrial usage, with limited amount of energy.
3. Ubiquitous Digital Technologies. GSMA projects that unique mobile subscriptions in sub-Saharan Africa will increase from 477 million (2019) to 614 million customers by 2025 with connected smartphones reaching 65 percent in 2025 from 44 percent in 2019. As mobile tele-density and smart phone access increases, mobile internet usage will also grow to 475 million users from 272 million in 2019. With this trend, energy access is bound to benefit as energy providers are able to access remote areas to provide both delivery and financing solutions using mobile technologies, like pay-as-you-go, making the technologies affordable. From an energy provider perspective, digital technology infrastructure comes with various opportunities which, as Gillian mentions, “facilitates innovation and new product penetration on the market with Internet of Things (IoT), Smart Meters making it possible to monitor and maintain equipment remotely providing better service to the end customer.”
In Uganda, the large utility provider – Umeme also identified opportunities emanating from digital technologies like providing better services while bolstering the profitability position of the company. “Digital solutions have enabled cashless payments such as use of mobile money which enables customers to make payments at their convenience. This has reduced cost of travel, for customers, and decongested offices”, notes Peter Mwesiga. This was ever more important with COVID-19 pandemic impacts. It was easier to facilitate remote revenue collection and service provision, complaints logging and resolution during lockdowns, initiatives that have improved efficiency and timely service delivery. Complaints have been managed remotely, with positive impact on revenue collection, compared to where the utility would have found itself without cashless and prepayment systems. The utility provider looks to deepen digital services to include online self-service solutions, and digital documentation, not only for efficiency, but also to reduce operational budget while improving quality of service with new points of service for the customers.
While customers may use digital technology, energy service providers too have various applications as well. Take for instance Engie that uses these technologies at different stages of project and interaction with customers, from GIS satellite imaging to informing preselection and design of the network of the minigrid, and technical action on assets remote monitoring to serve customers better. Gillian shares the example on “being able to remotely identify dirt on solar photovoltaic or less optimal charging fosters predictive maintenance to anticipate changing part of the equipment to have better customer experience”. Peter also observes that technology and data “give new opportunities and new areas for optimization and if we can optimize existing resources then we have more resource to extend access” and create win-wins for both providers and customers.
4. Innovative Financing Solutions. As the cost of technology continues to sink, there is increased learning about off-grid areas and how to connect them, hence clarity on this side of the market. Knowing this side of the market brings the question which many like Martin Baart ask; “how do we finance the energy deployments?” Traditional investors who provide either equity of debt to large scale projects are afraid to change their way of operation and focus on small decentralized renewable energy systems. If we are to achieve universal electrification while staying within the Paris Climate goals, “we have to find new ways on how to channel much more capital than we used to into these projects” suggests Martin. This is where innovative financing mechanisms play major roles on the dual goals of saving the planet while helping communities to get electrified.
Crowd Funding is one of the ways to channel unused capital into these projects. Take the example of Germany where over Euros 2.5 trillion are sitting on bank accounts without being used. “That’s a lot considering this is just Germany” observes Martin. He elaborates further on how “we have to find ways to convince private individuals to invest their capital into sustainable projects that give them a financial return and also serve a greater purpose of reducing effects of climate change, help developing/emerging markets to speed up electrification and let the communities, companies and private people in these markets enjoy benefits that come with having access to electricity.”
Elements for Scale-up
Various conditions or settings shape and could contribute to fast tracking closing of the energy access gaps.
I. Contrary to some misconceptions about last mile or rural customers at the bottom of the pyramid stealing electricity and not creditworthy, experience in last mile deployments, show that rural customers are creditworthy. A decade ago, when a Columbia University Shared Solar minigrid project in Mali and Uganda was deployed, Vijay informs us that using digital technologies entities, they were able to go directly to the customer and leverage the credit worthiness of the customer. He also notes that “If digital can leverage the credit worthiness for the customer, this can in turn create credit worthiness for the service provider.” Appropriate product -customer matching being important for Engie, Gillian posits on the importance of “being able to size the solution in such a way that customers get appropriate solutions dedicated and customized”
II. It is important to boost the financial position of energy providers to catalyze the whole chain of investments needed to ensure reliability of service, and sustainability of business models to allow more investments to come in with low cost of capital. It is also observed that in addition to rural customers being unable to pay high amounts, their income can be variable over time such as in seasonal agricultural activities, which could inform electrification models informed by digital solutions and data analysis. This is self-evident that it is important to understand the customer’s needs, income, growth drivers, and credit constraints at scale. Vijay recollects that the use of digital payment solutions enabled to “create transparent, accountable, small payments which was key not just for consumer but also for the operator”.
III. Identifying where customers are located and what their energy needs are, along with any other constraints is important to the success of providers. To better understand the customers and market context, UNCDF, Columbia University, Government of Uganda, and service providers are partnering to conduct a survey to map where the current Uganda energy market is and where the market is likely to grow for productive use. This is another example of how technology and big data facilitate energy access.
IV. Insights into successful financing campaign. As Martin explains “similar to how there are different types of energy access configurations like standalone home systems, utility grid, and minigrids, there are also different types of investors. We have large institutional banks, investors that traditionally invest in large scale projects, and investors that have different motivations that want to invest in smaller projects.” It is important therefore to try to understand which investors can invest in certain projects, and appreciate their motivation; “what drives them?” adds Martin. He further suggests ways to convince them, that is, trust building process; “They have to be trusting and trust comes through credibility”. To raise capital successfully, it is thus important to be the expert in the field and focus on that specific niche – this helps the project developer to be credible.
V. Diversified market implications. Just as Vijay noted, the markets are nuanced with intrinsic characteristics, so are the energy access interventions such as solar home systems, minigrids, and National Grid (main grid) – a strength of Engie that “looks at the market in an integrated way by addressing different market segments and needs” adds Gillian as he goes on to explore the various attributes for each market. Solar home systems, being at the lower end of consumption and aided by technology and innovation is, for instance, starting to have maturity and entering into small businesses like barber shops and restaurants. Gillian further expounds how minigrids, which focus on productive usages to create economic growth by delivering energy services, are long term with high Capex with regulatory implication and relationships. “While minigrids are relatively young market, they show promise” observes Gillian. Not least, the national grid helps with rural electrification by helping extend the national grid, support the grid, and grow under the grid services which fosters reliability and availability of the grid.
VI. Realizing that extending only by grid can not be expensive with high capex but also slow, national utility providers like Umeme are cognizant of new emerging technologies. In fact, as Peter notes “Umeme is exploring partnerships with various players including home appliance companies, and minigrid companies so as to find progressive innovative ways on how decentralized systems can collaborate with main grid (Utilities 2.0)”. This exploration of partnerships helps take advantage of strategic advantages that are typical of centralized systems such as established structure, standardized quality requirements, and expended research in metering technologies to manage commercial and distribution losses. It’s important that the partnerships are longsighted, and intentioned to fast track interoperability of systems and full utilization of off-grid built infrastructure. With national grid and minigrid collaboration in early stage planning, interconnection is made possible with existing minigrid investments put to use through integration when “main grid arrives to minimize dormant investments, avoiding wastage while allowing appliance financing and customers to grow from the beginning” explains Peter.
Arguably the most important driving factors for digital transformation in the government sector are political support, a sufficient budget, and the technological know-how to make this transformation happen (shhh, we know a few companies that can help with that!).
Let’s say you are the Prime Minister of your country, and you have all of the factors mentioned above at your disposal. Congratulations! You’ve got money, your ministers and population support your digital transformation project, and you’ve got experts who would programme and set up these systems! Now, here’s the catch: How will you delegate and implement your digital dreams? It’s not as straightforward a question as it may seem.
Which step of your digital journey are you on right now?
Let’s start with a simple factor that is often overlooked: Digitalisation in the 1990s was a very different undertaking compared to countries taking their first steps right now. Internet penetration is still an issue in some countries but certainly not as much as 30 years ago. Digital skills, again, have come a long way since then – so yes, educating your population with regards to IT skills will still be necessary, but not to the same extent as was the case pre-2000.
By now, some of your ministries and authorities may have already started implementing siloed IT solutions, creating a fragmented service landscape forcing citizens to create separate user accounts and passwords because there is no unified government authentication method. Effectively, you are already on Digitalisation Avenue – do you walk back to the start and tear up the asphalt to build something new, or will you try to build on the foundations already built, risky as that may be? Those foundations can take different kinds of shapes, for example, small “digitalisation teams” that have quite a bit of authority and a decent budget to test things out… but when we look around the world, we see that these teams are usually regular government workers who were additionally tasked, nay, burdened with thinking up exceptional new services on the side. Do you take their powers away?
How about creating a Ministry of Digitalisation? One massive, well-funded entity that has the right to implement innovative digital services within the respective areas of expertise of all the other ministries? You could do that, but then again, shouldn’t the services be created by those that actually know what their stakeholders want? As an example, are we sure that a software engineer from the Ministry of Digitalisation knows best how to design a service for the Ministry of Agriculture? That’s unlikely.
Top-down vs. bottom-up
Having looked at countries around the world and how they are implementing digital services, I can tell you that there is no fool-proof way to success. Still, there is one finding that stood out to me: Countries that are at the start of their digital journey have a greater chance at success if they digitalise top-down. Why is that? I’d say it’s because if a government creates a clear regulatory framework for data exchange and provides a free, compulsory, and universal digital identity to its citizens, different stakeholders can’t stray away from that common path.
Once the different players are led in the same direction, the useability of the electronic identity will grow exponentially – and quite organically so. The more services are provided by different authorities, the higher will be the usage rate of the electronic ID itself, and the more time and money will be saved in both the public and private sector. With this unified, top-down approach, the government has the chance to create a level playing field and shared rules of the game for service providers, both in the public and private sector, to compete.
Conversely, the opposite appears to be true for countries that are already further down the path of digitalisation: If you already have the key factors such as the electronic ID and data exchange in place, the responsibility of innovation will almost automatically shift more toward the lower strata of government. Budget responsibility may still lie with a higher-level authority in some countries, but the people who know best what service the clients of particular government authority might need in the future…usually are connected to the government authority in question. Put bluntly, the Prime Minister won’t be an expert (and shouldn’t have to be!) in why the latest batch of EU regulations means that a subsidy service protocol in the Ministry of Agriculture has to be adjusted.
So…how did Estonia manage its digital transformation?
What an outstanding question! I’m glad you asked! When we look at the Estonian model of (e-)governance, we see very clearly how it has organically grown over the years, and how competencies and responsibilities have shifted around. Here are some of the key players in the chronological order of when they were created:
- E-Estonia Council: Put simply, the e-Estonia Council directs the overall direction and development of Estonia’s digital society. The Council is chaired by the Prime Minister and its membership is very limited: Four Ministers (Economic Affairs, Entrepreneurship, Education, Public Administration), the President of the Estonian Association of IT and Telecommunications, and a handful of seasoned IT experts constitute this organ. It gives opinions on proposals, approves action plans, and ties Estonia’s development into the digital developments around the world. The Council had different names and focuses throughout the decades and was actually created as the Estonian Informatics Council in 1989 when the country was still occupied by the Soviet Union.
- SMIT: The IT and Development Centre at the Estonian Ministry of the Interior got started in 2008 and was tasked with the service provision for ICT solutions within the realm of the Ministry of the Interior. As such, SMIT oversees a wide range of services and security systems ranging from the Police and Border Guard Board to the Population Register.
- Office of the Government Chief Information Officer: The Government CIO is responsible for setting strategies and policies for the implementation of digital services. Part of the CIO’s Office includes Estonia’s Chief Technology Officer and the National Cyber Security Policy Director. Together, this team has to consider how the nature of digital services could be shaped over the next few years while maintaining Estonia’s prowess in the area of cybersecurity. The position of Government CIO was created in 2013.
There is no universally right or wrong way
What I wanted to show you with these three examples is that also in Estonia, not everything went according to plan. Suppose you take the transition from top-down to bottom-up innovation and responsibility at face-value. In that case, the CIO position should’ve been created before the setup of institutions responsible for just one ministry each, such as SMIT. On the other hand, one could argue that this was the correct order for Estonia because the CIO spends quite a significant part of his time thinking about the future of digital society. So the coordination of current service implementation (as done by SMIT and others) should come before some of the tasks that the CIO focuses on.
Put simply, examples around the world prove that setting top-down ground rules is wise but that there is always wiggle-room for your transition from foundation-building to creating a landscape filled with user-friendly digital services. I hope this small excursion into Estonia’s digital governance architecture proves helpful to you. Now, let’s get back to work! 😊
If you want to stay ahead of the curve in your digitalisation plans, secure your spot at our Digital Discussion on electronic identity on March 10th at 11 AM (+2GMT) where three leading Estonian ICT companies – SK ID, B.Est.Solutions and Proud Engineers present their solutions for building digital identity platforms 👉 https://e-estonia.com/digital-discussions/
Digital markets are evolving at an increasingly rapid clip and have the potential to dynamize all economic sectors through digital transformation. A new generation of policies and regulation is geared towards fast-tracking digital development and expanding meaningful connectivity.
But amid COVID-19, closer and deeper collaboration is needed more than ever – across economic sectors and beyond borders.
Governments, companies, international organizations, and other institutions need to redouble regulatory efforts to speed up post-pandemic recovery – already catalyzed by digital transformation. But how can this be done?
A collaborative approach
“We need to keep our eyes firmly on goals like harmonization, resource sharing, and collaborative multi-stakeholder frameworks that embrace transparent, globally-agreed principles,” said Doreen Bogdan-Martin, Director of the ITU Telecommunication Development Bureau, during a conversation on Moving the Regulatory Cursor for Digital Regulation, co-hosted by ITU and the World Bank.
“We need to keep everyone working together constructively to help push access out to more and more people, as affordably as possible,” she added.
According to Boutheina Guermazi, Director of the Digital Development Infrastructure Practice Group at the World Bank, today’s digital era is built on a dynamic and consensual approach that integrates a diversity of voices and makes them work together.
“Among the […] digital risks posed by digital transformation, one of the most dramatic is the risk of doing nothing and being left behind. If we do not join forces to address emerging issues, global digitalization will carry on in a fragmented regulatory environment that will deepen existing vulnerabilities.”
7 key objectives
When it comes to the question of whether the regulatory basics still apply, the answer is yes. While core regulatory mandates still need to be thoughtfully used, the job of modern digital regulators also requires new skills and fresh thinking.
When it comes to digital regulation, flexibility and agility are ‘the new normal.’
To get off-script and apply these new regulatory patterns, regulators should focus on innovating with new tools and dynamic approaches while meeting 7 key objectives:
- Working together
- Committing to shared leadership
- Innovating to speed up global recovery
- Practicing multi-stakeholder engagement
- Going beyond regulatory fragmentation by building common ground around high-level regulatory principles
- Experimenting with new regulatory tools that offer digital opportunities for all
- Embracing the shifting the role of the regulator
The impact of digital regulation is coming under increased scrutiny as digital markets become increasingly powerful drivers of social and economic growth. In this context, stakeholder engagement is key to understand challenges faced by different market players who are all searching for a way out of the crisis.
New regulatory models need to be grounded in market realities and “make sense” for both industry and consumers. Practical, agile, scalable policies can have a multiplier effect on digital markets and economies.
New solutions and tools
The is no simple answer to the current challenges – but many solutions are at hand to help digital markets raise post-COVID. Regulators need to keep abreast of these new approaches and tools to help them learn, streamline regulatory processes, and enhance collaboration. The Digital Regulation Handbook and Platform are designed to help regulators understand new challenges and find solutions to them.
Regulation has never been easy. But today, amid technological disruption, a global health crisis and an economic downturn – the outlook remains uncertain. All eyes are on policy-makers and regulators to lead the way out of these multiple crises and guide economies and societies towards recovery.
ITU and the World Bank will continue to deepen the analysis of topical regulatory issues to further assist regulators, market players and governments to deal with the complexity of digital markets.