Countries today started implementing the first United Nations agreement dedicated entirely to accelerating cross-border trade digitalization at the first session of the Paperless Trade Council, convened in Bangkok under ESCAP auspices.
The Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific is a UN treaty developed by ESCAP member States to accelerate the implementation of digital trade facilitation measures for trade and development.
“The COVID-19 pandemic has seriously disrupted global supply chains and accentuated the importance of international trade as a key means of implementation of sustainable development,” said Armida Salsiah Alisjahbana, Under-Secretary-General of the United Nations and Executive Secretary of ESCAP. “As the pandemic continues and new crises unfold, accelerating the implementation of trade facilitation measures and digitalizing procedures is more crucial than ever to make trade more resilient and inclusive in Asia and the Pacific.”
The start of the Paperless Trade Council demonstrates the Asia-Pacific region’s high-level commitment and leadership in digitalizing trade procedures. The Chair of the meeting, Mr. Mohammed Abdul Hye, Ambassador and Permanent Representative to ESCAP, noted the importance of the Agreement in economic development and encouraged delegations to speak about the benefits of digitalization. As successful implementation of cross-border paperless trade requires sustained collaboration to develop the necessary legal and technical solutions, the neutral and dedicated space provided by the Framework Agreement will facilitate these efforts. Full implementation of the treaty is expected to decrease trade cost by over 13 per cent on average across the region.
Unlike many other international treaties, the Framework Agreement is action-oriented and includes a provision on institutional arrangements for establishing different levels of bodies for its implementation, including the Council, Standing Committee and working groups, encouraging parties to meet regularly to jointly work on actions and issues for facilitating cross-border paperless trade.
The Framework Agreement entered into force on 20 February 2021, in accordance with Article 19, as five ESCAP member States (Azerbaijan, Bangladesh, China, Islamic Republic of Iran and the Philippines) ratified or acceded to it. Timor-Leste became the sixth Party when it acceded on 5 April 2022. Several other countries in the region are expected to finalize accession in the coming months.
The newest digital training centres of the African Development Bank’s Coding for Employment program will set aside half of their initial training slots to women applicants, the Bank said on International Girls in Information and Communication Technology (ICT) Day.
The Coding for Employment program, which equips African youth with the digital skills they need to contribute meaningfully to the global digital economy, is part of a foundational pipeline for girls and young women to pursue science and technology-related careers.
Coding For Employment held virtual and in-person ribbon-cutting ceremonies for three new centres of excellence on 8 March 2022. Two of the centres are in Nigeria—at Covenant University in Ogun State and at Gombe State University, Gombe State. The third centre of excellence is situated on Kenya’s University of Nairobi campus. The ceremonies took place at Covenant University and the University of Nairobi. Bank representatives, Coding for Employment partners and university staff attended.
“This launch is a reflection of the Bank’s strong commitment to creating a world where gender equality is true in the classroom, in the boardroom, and in every sector of the economy in order to build a more inclusive, innovative, and resilient African society,” Martha Phiri, Bank Director for Human Capital, Youth and Skills Development said in virtual remarks.
Initially, the centres will serve participants in Coding for Employment’s Digital Ambassadors program, a new, intensive peer-to-peer training model set to expand digital skills to more African youth, especially in rural communities where internet connectivity is low.
The launch event also included a virtual discussion on the role of women in Africa’s digital economy as well as persistent gender disparities in science, technology, engineering and mathematics (STEM) fields.
According to the International Telecommunication Union, which organizes the Girls in ICT Day, only 30% of the world’s tech science and technology professionals are women.
“Socio-cultural norms, beliefs, and bias have long informed how women are perceived and limited the opportunities for women to pursue careers in the technology field. Breaking these biases requires exposing young girls to coding and to STEM-related fields very early on, for them to see it as a viable career path,” said Olatomiwa Williams, Microsoft’s Nigeria country manager. Microsoft is a Coding for Employment partner.
The new centres of excellence are equipped with 50 computers, ergonomic furniture in classroom-style learning stations, and informal networking areas. Students enrolled in Coding for Employment programs gain access to free courses in web design, app development, data science, and digital marketing, among others.
The Coding for Employment Program is a key component of the African Development Bank Group’s Jobs for Youth in Africa Initiative, which aims to put Africa’s youth on a path to prosperity. By 2025, the Jobs for Youth in Africa Initiative aims to equip 50 million youth with employable skills and create 25 million jobs in agriculture, information, communication and technology fields, and other key industries across Africa.
The centres’ opening brings to seven the number of Coding for Employment-branded learning spaces across the continent, including in Rwanda, Senegal, and Côte d’Ivoire. Coding for Employment plans to open 130 centres across Africa by 2025.
To watch the virtual ceremony and gender-themed discussion.
Learn more about Coding for Employment: www.coding4employment.org(link is external)
Alphonso Van Marsh, Principal Digital Content and Events Officer, email: A.VANMARSH@AFDB.ORG(link sends e-mail)
Jessica Muganza, Senior ICT and Digital Education Officer, email: J.MUGANZA@AFDB.ORG
Digital technologies are fuelling the climate crisis. Only drastic behaviour change will make them work for people and the planet.
While digitalization comes with many economic benefits, its effect on the environment is often overlooked.
But the rapidly growing digital ecosystem is exacting a heavy toll on the planet, warned Gerry McGovern, author of the book “World Wide Waste”, on 26 April during a session of UNCTAD’s eCommerce Week 2022.
“We are killing the planet through the use of technology,” Mr. McGovern said.
He cited the 120 trillion spam emails sent every year, creating 36 million tons of CO2 emissions. About 3.6 billion trees would need to be planted every year to offset the pollution.
Mr. McGovern drew attention to digitalization’s enormous material impact on the Earth and living systems.
A smartphone, for instance, can contain 1,000 materials. Humanity pulls some 100 billion tonnes of raw materials out of the fabric of the planet annually, equivalent to destroying two thirds of the mass of Mount Everest every 12 months.
Digital development not ‘ecologically neutral’
UNCTAD Deputy Secretary-General Isabelle Durant had earlier underlined that digital development is not “ecologically neutral”.
Every time we download an email, tweet or search on the web, we create pollution and contribute to global warming, Ms. Durant said. “So paradoxically, digital is very much physical.”
She added: “Data centres are not in the cloud. They are on Earth, in massive physical buildings filled with energy-intensive computers.”
Digitalization seems invisible and is often sold to us as free technology, she said. “But it’s not. And it’s something we need to seriously consider in how we develop and use digital tools.”
Massive waste problem
Mr. McGovern said only 5% of data is managed while the rest is digital waste. “There’s a massive waste problem in digital. Most of the massive data created has no value.”
He criticized big tech companies for designing devices that need to be updated or replaced frequently and are difficult to recycle, warning that waste from old phones, computers and screens is piling up fast.
Less than 20% of e-waste is recycled, he said, and most of the “recycling” is done in a way that is highly polluting – often dumped by “ships of doom” in developing nations, causing untold environmental harm.
Digitalization could help the planet
But a different digital future is possible. If used wisely, Mr. McGovern said, digital tools could help save the planet by making things more efficient and more environmentally friendly, while improving living standards.
This requires a rethink about technology, warning that business as usual would lead to “environmental Armageddon”.
Mr. McGovern urged radical behaviour change in the use of digital tools, saying people should delete as much digital data as they create.
He also called for more training and education to boost people’s skills in organizing information and data. “These are skills that are not expensive technologically but bring a lot of benefits to the society,” he said.
Underscoring the need to change the culture of waste, Mr. McGovern urged people to think twice before upgrading a gadget.
“Keep things until they break and then fix them. We must make things that last and make things last.”
The UNCTAD-led eTrade for all initiative marks a new milestone with the enrolment of the International Chamber of Commerce as its principal private-sector counterpart.
A new strategic partnership between the International Chamber of Commerce (ICC) and the eTrade for all initiative seeks to strengthen efforts towards more inclusive development outcomes from the digital economy.
The partnership was announced on 25 April during the UNCTAD eCommerce Week held in Geneva and online, following a vetting process among the initiative’s 34 members.
UNCTAD Secretary-General Rebeca Grynspan welcomed the new role of ICC and said: “I am very proud to lead this unique global partnership that leverages each partner’s contribution to make the digital economy work for all.”
Ms. Grynspan added: “By partnering with ICC, we will better leverage a global network of businesses and resources that are active on the ground to help us boost our support and assistance to developing countries for greater impact.”
Role and scope of new partnership
The eTrade for all initiative serves as a global helpdesk for developing countries to bridge the knowledge gap on e-commerce. It provides access to information and resources, promotes inclusive dialogues on e-commerce and the digital economy and catalyses partnerships.
The new cooperation will provide a trusted, neutral and global channel to bring private sector voices to the discussion and enhance coordination.
It will enable consistent, systematic and strategic engagement of micro, small and medium-sized enterprises (MSMEs) across all sectors, which are affected by the increased digitalization of economies in developing and developed countries.
ICC Secretary General John Denton said: “I’ve been incredibly impressed by the vision and track-record of UNCTAD’s eTrade for all initiative over recent years. This new partnership provides an opportunity to take this important capacity-building work to a new level.”
He said the partnership would harness the expertise of businesses throughout ICC’s network to deliver targeted support that unlocks the enormous potential of digital trade across the developing world.
“We look forward to working as a trusted partner to UNCTAD and governments to tackle key bottlenecks to digital development, driven by our overarching commitment to enable trade as a driver of peace, prosperity and opportunity for all,” Mr. Denton added.
ICC will serve as the main private-sector counterpart and ensure effective interaction between businesses around the world and eTrade for all. This will involve regular information sharing and ongoing cooperation activities by its members.
Representing more than 45 million companies in over 100 countries, ICC is the world’s largest business organization. It promotes international trade and investment as vehicles for inclusive growth and prosperity through a mix of advocacy, solutions and setting standards.
Digitalization is putting pressure on developing countries
The growth of e-commerce has been massively accelerated by the COVID-19 pandemic as people have turned to digital platforms to shop online, with the global share of online retail sales of total retail sales rising from 16% in 2019 to 19% in 2020, a level sustained in 2021.
While digitalization offers immense potential, it also poses huge challenges to people and businesses, and not everyone has been able to harness the potential of digital opportunities.
Only 27% of people in least developed countries (LDCs) use the internet, and while up to 8 in 10 internet users shop online in developed countries, that figure is less than 1 in 10 in most LDCs.
Many small businesses in developing countries are unable to go online due to weaknesses in the digital ecosystems of their countries.
People and countries that are less prepared for the digital economy risk falling further behind, highlighting the urgent need to bridge gaps in digital readiness.
Building the capacity of low- and middle-income countries to participate in and shape the digital economy will require smart partnerships to avoid duplication of efforts and to make effective use of scarce resources.
This new collaboration between the eTrade for all initiative and ICC is an important step in this direction.
The eTrade for all initiative was launched in 2016 with 14 partners to make e-commerce and the digital economy more inclusive.
UNCTAD eTrade for Women advocate taps into digital tools to grow her food business and build a connection between farmers and consumers.
Helianti Hilman has run Javara, an Indonesian-based food marketing company, since 2008. She started with a physical store in the country’s capital, Jakarta, before transforming her business digitally.
“We had to go digital,” Ms. Hilman said on 27 April at a special online session during UNCTAD’s eCommerce Week 2022.
“We realized that we had to do it if we wanted to achieve more in terms of how we partner with farmers and serve our customers.”
With determination, Ms. Hilman embarked on what she called a “rewarding journey” that got off to an uncertain start.
Overcoming tech barriers
The biggest uncertainty had to do with skills, Ms. Hilman recalled.
Despite being “not at all tech-savvy”, she was willing to learn and adapt, focusing mainly on two areas: enterprise resources management and social media.
With accurate, real-time data synchronized in one place, Ms. Hilman improved her operational efficiency and took cost-saving measures.
“That itself is actually sort of like a payback to the investment that we make to digitize our internal processes,” she said with a smile.
Ms. Hilman also took to social media to promote her products because such “borderless marketing” doesn’t cost much but brings results.
Step by step, Javara’s e-commerce journey took off. In 2021, the business saw a 400% yearly growth through digital channels.
In March 2022, it landed a new contract in Latin America through social media marketing, expanding its reach to customers in over 20 countries across five continents.
Empowering partner farmers
A big believer in branding, Ms. Hilman turned to digital tools to address one of the key problems that faced her suppliers – the hundreds of thousands of Indonesian farmers went unnamed and unrecognized for a long time.
She used digital marketing to help build a connection between the farmers and consumers.
Ms. Hilman has been teaching her suppliers to use mobile phones to take photos and videos as they produce their products, catering to the needs of the mindful consumers keen to know the origins of their food.
With social media, Ms. Hilman even turned some her partner farmers into local celebrities, as public recognition of what they do and how hard they work grew.
“This is a game changer. It’s not really about e-commerce itself. It’s about putting a name, dignity, pride and recognition to their (farmers’) existence.”
eTrade for Women advocate
In 2021, Ms. Hilman became involved with UNCTAD’s eTrade for Women initiative, which is funded by Germany, the Netherlands, Sweden and Switzerland, and is dedicated to supporting women entrepreneurs in developing countries.
As an advocate for the initiative, she interacts with fellow advocates, strengthening her drive “to go further and faster” as a woman trader.
She says it means a lot for her to be able to inspire other women entrepreneurs with her digital transformation experience.
Although she doesn’t have a technology background, she exemplifies how a traditional business can successfully go digital. And she wants others to think that “if they can do it, we can do it too.”
Day 1 : April 25th, 2022
UNCTAD’s eCommerce Week is the leading forum to discuss the development opportunities and challenges associated with the digital economy. This week’s edition, held under the theme “Data and Digitalization for Development”, puts a special emphasis on data and cross-border data flows, as well as the crucial role they play in economic and social development. With this bulletin, CUTS is keeping you posted on the proceedings.
The opening plenary session introduced the UNCTAD’s E-commerce week and its theme: ‘Data and Digitalization for Development’. In a world where almost 3 billion people remain offline, 96% of whom live in developing countries, data and cross-border data flows are playing an increasingly crucial role in economic and social development. This week’s dialogues will provide opportunities to reflect on governance approaches that make the digital world more inclusive, equitable and beneficial to all.
Data to measure the digital performance of seaports
It is estimated that only 20 per cent of the 4900 ports of the world have established, or plan to establish, accurate digital capabilities to assure transport chain connectivity. There is a need to support the upgrade of ports’ digital capabilities in their steps to develop their digital maturity responding to the requirements of the smart and the sustainable port of tomorrow. This session discussed ways of measuring the digital readiness and performance of seaports, with a view to possibly proposing a future digital performance index for ports (DPI-Ports).
Digitalization to facilitate inclusion of MSMEs in e-commerce trade
The session addressed the role and importance of Micro, Small and Medium-sized Enterprises (MSMEs) as they are the backbone of the global economy, comprising over 90% of firms in many markets. The session primarily focused on the experience of the Universal Postal Union in coordinating best practices in international postal policy, as well as the Global Alliance for Trade Facilitation in facilitating the digitalization of trade processes for e-commerce. The session also concentrated on the ideal policy and operational frameworks that should be in place to grow digital trade with a specific focus on the needs of MSMEs.
Keys to harnessing e-commerce strategies for inclusive development
The pandemic has made people aware of the importance of e-commerce. It has resulted in a surge in e-commerce development as evidenced by the emergence of multiple national and regional e-commerce strategies, especially in developing countries. This raises the need for a shared vision towards building an enabling e-commerce ecosystem which includes actions to improve the digital and trading infrastructure, develop affordable digital payments options, and design appropriate legal and regulatory frameworks for online transactions and security, among others. The session aimed at demonstrating the good practices that have been designed and led to improved implementation of the e-commerce strategies in developing countries.
Building online dispute resolution for Southeast Asian consumers
In 2020, an estimated 1.5 billion people shopped online but many of their transactions went awry. Therefore, the trust-enabling benefits of Online Dispute Resolution (ODR) are yet to be fully realised, especially for cross-border B2C e-commerce. ASEAN member States foresee the establishment of a network of national ODR systems. This session presented the ongoing initiatives and discussed avenues for future collaboration among interested stakeholders.
Creating a level playing field for digital trade
The absence of a systematic global approach to governing cross-border data flows may make it harder for low- and middle-income countries to participate in the global digital economy, by leaving them with limited leverage in negotiations with wealthier jurisdictions and companies that dominate global data flows. It also encourages the proliferation of national data protection adequacy regimes that could further fragment the global digital economy.
Digital self-determination – an alternative approach to data governance issues
The session presented the idea of digital self-determination as a new approach to data governance. The panelists first presented a roadmap of the digital self-determination concept, which was followed by two practical presentations on how digital self-determination can be implemented in two contexts, namely open finance and migration.
In conversation with Vint CERF, Internet Pioneer
The session addressed the issues related to access to the internet, data flow, the future of digitalisation, and the challenges associated with it. Advancement in internet services has accelerated over the years, and it has also increased the digital divide. The session also discussed about the important actions that need to be taken to achieve universal and ultimately meaningful access to the internet.
High-Level Dialogue: Towards Digital and Data Governance for All
Data has become an increasingly important economic and strategic resource, and cross-border data flows are surging. This has opened new opportunities for addressing global development challenges but also created new ones. While data can be processed to generate private profits and social value, it can also be abused and misused by private companies as well as governments. The readiness of countries to harness data for sustainable development is highly uneven. Dealing with data is one of the major development challenges. Therefore, innovative ways to strengthen global data governance are urgently needed to respond to rapid digital transformations. This session focused on the perspectives of the Government and business leaders on how to ensure that the surge of digital data brings benefits to the planet and the people.
Egypt: How the lack of and inconsistent data affect policymakers to continue measuring e-commerce and take policies/steps to improve
This session discussed possible avenues for policy-makers in Egypt to overcome some of the challenges faced in leveraging data to measure the country’s performance in the digital economy, towards informing policies. It also introduced Egypt’s 2018 eCommerce Strategy, developed in collaboration with UNCTAD.
How will current proposals for international e-commerce rules governing data flows affect digitalization for development?
In this session, experts from the government, international organisations and think tanks discussed some of the proposed rules on e-commerce at the WTO regarding the governance of cross border data transfers. Panelists explored what such rules may mean for developed and developing countries, what should be the appropriate forum for discussing these rules, and what international rules on data governance would best support developing countries’ use of data flows for development.
Integrating the digital economy – Global, regional, and national initiatives
The session discussed the multiplicity of governance levels and their involvement in the growth and integration of digital markets, especially in developing countries. It aimed at finding a course for better integration between the different levels of governance to enhance the core building blocks of the digital economy: connectivity, e-skills and digital literacy, and supportive regulatory frameworks. It reviewed first-hand experiences of international experts in implementing policy solutions to boost digital trade at each governance level.
- Third edition of IDB, IDB Invest and Finnovista study highlights the rise of the fintech ecosystem in Latin America and the Caribbean, growing 112 percent from 2018 to 2021.
- The COVID-19 pandemic prompted the digitalization of numerous activities and sped up the adoption and consolidation of digital finance from fintech platforms in the region.
- Besides the payments and digital lending segment, the largest in the region, other emerging relevant verticals include business technology platforms for financial institutions, digital banks, and insurance (insurtech).
The fintech ecosystem in Latin America and the Caribbean has experienced rapid growth and established itself as a key actor to meet the demands and needs of financial consumers in the region, according to the third edition of the study Fintech in Latin America and the Caribbean: A Consolidated Ecosystem for Recovery, published by the Inter-American Development Bank (IDB), IDB Invest and Finnovista.
The number of fintech platforms reached 2,482 in 2021, a growth of 112 percent from 2018 to 2021. Nearly a quarter of fintech platforms globally – 22.6 percent – are Latin American and Caribbean. Country distribution in the number of platforms changed little since the study’s last edition and is still led by Brazil (31 percent of the total), followed by Mexico (21 percent), Colombia (11 percent), Argentina (11 percent), and Chile (7 percent).
Fintech startups in Latin America and the Caribbean, 2017-2021
Source: Compiled by the authors using Finnovista’s historical data base (2021).
Growth was fueled by an increasing demand for financial services not provided by the traditional financial sector, an increased demand for digital financial services because of the COVID-19 pandemic, and regulatory changes that enhanced transparency and security for investors using these platforms, the study says.
“The study shows that the fintech ecosystem is becoming a key tool for promoting greater financial inclusion,” said Juan Antonio Ketterer, head of the Connectivity, Markets and Finance division at the IDB.
“At the IDB, we are committed to supporting the development of this sector because we believe fintech platforms hold great potential for expanding credit in sectors such as micro-, small- and medium–sized enterprises and segments of the population that are commonly excluded, such as women. We hope that this study serves as an input to promote an ecosystem where fintech platforms continue to grow and become stronger so they can support Latin America and the Caribbean’s sustainable development,” Ketterer said.
Six countries account for 14 percent of all fintech companies in the region, whose ecosystem is still emerging but posting significant rates of growth. Peru is the leader in terms of the number of currently active fintech ventures, followed by Ecuador and the Dominican Republic.
The study also provides an analysis of the largest fintech sectors in the region over the past three years. Although the payments and remittances sector remains the largest, accounting for 25 percent of the market and driven by recent regulatory developments in Brazil and Mexico, the study notes that the digital loans (19 percent) and crowdfunding (5.5 percent) sectors are registering important growth in the region. These are followed by business technology platforms for financial institutions (15 percent) and business finance management (11 percent), among others.
Other key takeaways from the study include:
- The number of fintech platforms offering digital banking services, mainly through mobile apps, rose from 28 in 2018 to 60 in 2021.
- Thirty-six percent of fintech startups polled offer solutions involving segments of the population that are totally or partially excluded from the formal financial system.
- Results of the poll carried out by the IDB and Finnovista show an increase in the average of fintech initiatives where a woman is a founder or cofounder. Since the last report came out, the average of fintech firms with a woman as founder or cofounder in the region rose from 35 percent in 2018 to 40 percent in 2020.
- The rise in the adoption of mobile technology led to the emergence of insurtech platforms directly offering insurance products in line with users’ needs. In 2020, 73 percent of identified entrepreneurial ventures operating actively in Latin America offered insurance products, compared to 60 percent in 2018.
The report (download it here) also lists the public policy challenges overcome in the region. To this end, the document features, for the first time, a summary of fintech regulations in the region and highlights the adoption of regulatory innovations, such as the creation of regulatory sandboxes and innovation hubs that have opened up testing or dialogue spaces in countries like the Bahamas, Brazil, Colombia, Costa Rica, the Dominican Republic, El Salvador, and Guatemala. The report also notes regulatory progress, such as the rise of crowdfunding, in Brazil, Colombia, Ecuador, Mexico, and Peru, and the enabling of open finance in Brazil and México.
“Even though prospects for recovery in Latin America are still unclear, the fintech sector is currently going through a phase that could be categorized as exuberant. This sentiment is reflected by the investment available for startups, whether in the form of debt or capital, which has grown during a period in which the value propositions offered by fintech platforms have been even more relevant,” said Andrés Fontao, managing partner at Finnovista.
Fintech investment in the region led venture capital investments and accounted for 39 percent of the amount invested in 2021.
About the study
Fintech in Latin America and the Caribbean: A Consolidated Ecosystem for Recovery has been possible thanks to a collaboration between the IDB, IDB Invest and Finnovista, and countries and strategic allies in the region which, since 2016, have published reports that generate interest among the communities that comprise the fintech ecosystem. These reports have become one of the main sources of information on this sector and they support the IDB’s Vision 2025 strategy of promoting the development of small and medium-size enterprises and greater gender equity among its member states.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.
About IDB Invest
IDB Invest is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $14.8 billion in asset management and 376 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
Finnovista is an innovation and venture capital company driven by the fintech ecosystem, helping transform finance and insurance to create a better world. Finnovista connects and facilitates the fintech ecosystem in Latin America to make the transformation of the financial industry possible. Through the FINNOSUMMIT conference, Finnovista lead the largest fintech community in Latin America with more than 30,000 entrepreneurs, investors, and industry executives. Finnovista also shares its knowledge of the fintech ecosystem with the public and publishes studies on innovations in fintech and insurtech.
The Women Entrepreneurs Finance Initiative (We-Fi) has announced a new round of funding under which the African Development Bank’s Africa Digital Financial Inclusion Facility (ADFI) will receive $15 million to develop and extend digital financial solutions to women-owned small and medium businesses in Cameroon, Egypt, Kenya, Mozambique and Nigeria.
This fourth round of financing of $54.8 million will benefit almost 69,000 women entrepreneurs in developing economies with access to digital technology and finance.
The funds will enable the Africa Digital Financial Inclusion Facility to design and implement programs to improve digital access to finance for women entrepreneurs, reducing the $42 billion financing gap, and improving their operational efficiency to build back better following the COVID-19 crisis.
“We-Fi’s fourth round of allocations comes at a crucial time. Women’s economic empowerment is under pressure due to conflict and insecurity, rising prices and the continuous fallout from the Covid pandemic around the world,” said Bärbel Kofler, Parliamentary State Secretary of Germany’s Ministry for Economic Cooperation and Development. “I am pleased to see our Implementing Partners preparing such strong proposals to support women-led businesses. Access to technology and financing will be key to unlock the potential of women entrepreneurs.”
“Digital financial solutions are key to improving the quality of life of people in Africa and to reducing the gender access-to-finance gap. This funding, which is complementary to the Affirmative Finance Action for Women in Africa Initiative (AFAWA), will be used not only to broaden access to finance for women small and medium businesses, but also to provide an avenue for their increased economic empowerment and resilience,” said Stefan Nalletamby, Director of the Financial Sector Development Department at the African Development Bank Group.
Three other multilateral development Banks received allocations in this fourth round: The Islamic Development Bank, the Inter-American Development Bank Group, and the World Bank Group.
About Women Entrepreneurs Finance Initiative(link is external) (We-Fi)
We-Fi, hosted by the World Bank Group, is a partnership among 14 governments, eight multilateral development banks (MDBs), and other public and private sector stakeholders. The African Development Bank is an implementing partner, and its Affirmative Finance Action for Women in Africa program is a We-Fi initiative. For more information: www.we-fi.org.
About Africa Digital Financial Inclusion Facility (ADFI)(link is external)
ADFI is a pan-African initiative designed to catalyse digital financial inclusion throughout Africa with the goal of ensuring that 332 million more Africans, 60% of them women, gain access to the formal economy by 2030. Launched in 2019, ADFI works through the gender-intentional development of infrastructure, policies and regulations and product innovation. Current ADFI partners are the Agence française de developpement (AFD); the Ministry for the Economy & Finance, France; the Ministry of Finance, Luxembourg; the Bill and Melinda Gates Foundation and the African Development Bank, who host and manage the facility. For more information: www.adfi.org<(link is external)
- Africa Digital Financial Inclusion Facility (ADFI)
Louise Simpson, Email: email@example.com(link sends e-mail)
- African Development Bank
Olufemi Terry, Email: firstname.lastname@example.org(link sends e-mail)
- We-Fi Secretariat, The World Bank
Angela Bekkers, Senior External Affairs Officer
The pandemic’s impact on digital transformations and how e-commerce and associated digital technologies can contribute to the recovery are in focus during the UNCTAD eCommerce Week 2022 from 25 to 29 April.
New UNCTAD figures show that the significant uptick in consumer e-commerce activity fuelled by the COVID-19 pandemic was sustained in 2021, with online sales increasing markedly in value, despite the easing of restrictions in many countries.
The average share of internet users who made purchases online increased from 53% before the pandemic (2019) to 60% following the onset of the pandemic (2020/21), across 66 countries with statistics available.
But the situation prior to the pandemic and the extent of the boost to online shopping experienced vary between countries. Many developed countries already had relatively high levels of online shopping (above 50% of internet users) before the pandemic while most developing countries had a lower uptake of consumer e-commerce (Figure 1).
Figure 1. Online shopping before and during the COVID-19 pandemic
Percentage of Internet users who made purchases online, 2019 (x-axis) and 2020/21 (y-axis)
Source: UNCTAD based Eurostat Digital Economy and Society Statistics database, OECD ICT Access and Usage by Households and Individuals database, ITU World Telecommunication/ICT Indicators database), Argentina CACE, Australia Post, China Network Information Center, DANE Colombia, IMDA Singapore.
Notes: For most European/OECD countries, data relate to individuals aged 16-74 years who used the internet/shopped online in the 12 months prior to survey. For other countries, wider age ranges and different recall periods may apply. 2021 figures used when available (y-axis) but for a significant minority of countries (29 of 66 countries presented), and especially for developing countries (17 of 19 countries), the latest data relate to 2020.
Greatest rises in developing countries
The greatest rises occurred in several developing countries. In the United Arab Emirates, the share of internet users who shopped online more than doubled, from 27% in 2019 to 63% in 2020. In Bahrain the share tripled, reaching 45% in 2020, and in Uzbekistan it rose from 4% in 2018 to 11% in 2020.
In Thailand, which already had a relatively high uptake prior to the pandemic, a 16-percentage-point increase meant that for the first time more than half of internet users (56%) shopped online in 2020.
Among developed countries, the greatest increases were seen in Greece (up 18 percentage points), Ireland, Hungary and Romania (each 15 percentage points).
Of the 66 countries covered, online shopping remains the lowest in El Salvador (1% of internet users), Azerbaijan (5%), Uzbekistan (11%) and Colombia (17%).
One reason for such differences is that countries differ greatly in their extent of digitalization and therefore in their ability to turn swiftly to digital technologies to mitigate economic disruption. Least developed countries (LDCs) are especially in need of support to take up e-commerce but are not represented in this analysis due to a lack of data on internet usage.
Online retail sales particularly boosted by the pandemic
Official statistics, available for seven countries that together comprise around half of global GDP (including the United States and China), indicate that online retail sales increased substantially in these countries from around $2 trillion in 2019, immediately prior to the pandemic, to around $2.5 trillion in 2020 (not shown) and $2.9 trillion in 2021 [Figure 2, panel a]. China accounts for over half of the online retail sales across these countries and the United States for a further 30%.
The pre-existing upward trend accelerated in many of these countries [panel b]; especially those where a relatively low share of retail sales take place online. In Singapore, online retail sales in 2021 were approaching triple the 2018 level. Canada and Australia also experienced especially large increases over the same period.
Looking across all these countries, although the disruption and economic uncertainty wrought by the pandemic suppressed overall retail sales into 2020 (only Australia and the United States saw retail sales increase from 2019 to 2020), online retail sales grew strongly as people took to shopping online and as offline sales declined [panel c].
This led to a marked increase in the share of online sales in total retail sales – from 16% in 2019 to 19% in 2020 [panel d]. That level was sustained into 2021 despite offline sales picking up strongly. Online sales comprise a much greater share of total retail sales in China (around a quarter in 2021) than in the United States (around one eighth). As a result of steep increases following the onset of the pandemic, the United Kingdom joined Korea (Rep.) in having the highest overall online retail share in 2021, at 28%.
Figure 2. Online retail sales, seven countries, 2018-2021
Value (US$ billions, current prices), Indices (2018=100) and percentage of retail sales
Source: UNCTAD based statistics published by Australian Bureau of Statistics, Statistics Canada, China Ministry of Commerce, Kostat, SingStat, the UK Office for National Statistics, and the US Census Bureau.
Notes: There may be some differences in the coverage of retail trade statistics across countries. Indexes calculated based on US$ values in current prices.
The biggest online platforms benefit the most
The 13 top consumer-focused e-commerce businesses increased their revenues sharply during the pandemic [Figure 3].
In 2019, these companies made sales worth $2.4 trillion. Following the onset of the COVID-19 pandemic in 2020, this rose sharply to $2.9 trillion (not shown), and a further one-third increase followed in 2021, taking total sales to $3.9 trillion (in current prices).
The shift towards online shopping has further entrenched the already strong market concentration of online retail and marketplace businesses.
Alibaba, Amazon, JD.com and Pinduoduo increased their revenues by 70% between 2019 and 2021 and their share of total sales through all these 13 platforms rose from around 75% in 2018 and 2019 to over 80% in 2020 and 2021.
Expedia, Booking Holdings and AirBnB saw gross bookings decline by up to two thirds in 2020 as movement controls reduced demand for travel and accommodation services, though growth returned in 2021 as restrictions were eased.
Figure 3. Sales by major consumer-focused e-commerce businesses before and during the pandemic
$ billions, current prices
Better statistics are needed
These statistics only provide a partial perspective on the evolution of e-commerce during the pandemic.
There is a pressing need for more inclusive statistics on online retail sales, business-to-consumer and business-to-business e-commerce and cross-border digital trade that can provide insights covering a wider range of countries, especially developing nations.
UNCTAD and its partners are collaborating on establishing the foundations for international statistics that can bring about a better understanding of the links between e-commerce, trade and development and compiling the second edition of the Handbook on Measuring Digital Trade.
Women farmers in Cote d’Ivoire will more easily find markets for their crops, thanks to a digital platform recently launched by UN Women.
Blaatto, part of the UN agency’s Buy From Women initiative, is targeting women smallholder farmers and members of women-led agricultural cooperatives in the country’s central region where access to markets is relatively poor. The word ‘blaatto’ means ‘come and buy’ in the region’s Baule language.
Buy From Women is an open-source, cloud-based enterprise and e-commerce platform that can be customized to specific market products. It also offers women information and finance. In Cote d’Ivoire, UN Women is rolling out the initiative with African Development Bank support and with funding from the Bank-managed Korea Africa Economic Cooperation Trust Fund.
The platform is part of a UN Women project in Cote d’Ivoire to strengthen women’s agricultural resilience to climate change and quality of life by incorporating ICT into agricultural production.
Blaatto launched during a ceremony held on 25 March 2022 in Abidjan, attended by Mr. Felix Anoblé, Minister for the Promotion of Small and Medium Enterprises, Handcrafts and Informal Sector Transformation of Cote d’Ivoire.
Mrs. Antonia Ngabala Sodonon, UN Women’s country representative for Cote d’Ivoire and Ms Esther Dassanou, Coordinator of the African Development Bank’s Affirmative Finance Action for Women in Africa initiative also participated.
Before an audience of government representatives, development partners and women farmers, Anoblé and Sodonon signed an agreement for the management of Buy From Women.
Minister Anoblé said, “The Buy From Women platform will ensure long term results for beneficiaries.” He urged its adoption, saying, “Please take the opportunity to use it and uplift locally produced crops.”
Sodonon said, “The Buy From Women platform will connect women producers to all categories of buyers of agricultural products: wholesalers, retailers and consumers across Cote d’Ivoire. It is an opportunity for women farmers to sell their products to a large market of buyers.”
Esther Dassanou said: “We appreciate the support from the Government of Cote d’Ivoire in various interventions, especially in women’s economic empowerment. For the African Development Bank, UN Women is a strategic partner to implement the gender equality and women’s empowerment agenda.”
She added, “this platform will serve as a one-stop shop for producers, buyers, sellers and investors. Not only will it help women farmers gain access to markets but will also elevate their expertise and improve the quality of their farming products.”
Minister Felix Anoblé (left) and UN Women’s Antonia Ngabala Sodonon signed an agreement for the management of the Blaatto platform during the launch ceremony
About Korea Africa Economic Cooperation (KOAFEC) Trust Fund
Korea Africa Economic Cooperation (KOAFEC) Trust Fund is hosted at the African Development and provides untied grants for upstream work of project design to defray front-end project development costs and risks, and other activities necessary to ensure quality project design including the training of government officials and technocrats. Examples of activities that KTF undertakes include knowledge papers, South-South cooperation missions, feasibility studies, community consultations, and other project development activities.
The South Centre provided its comments to the OECD Inclusive Framework’s Task Force on Digital Economy (TFDE) on the Draft Model Rules for Domestic Legislation on Scope. These rules are part of the overall OECD project on the taxation of the digitalized economy known as Pillar One. They determine the amount of a Multinational Enterprise’s (MNE) profits that will then be partially redistributed to market jurisdictions, which are expected to be largely developing countries.
The Model Rules for Domestic Legislation on Scope are of importance as this affects which Multinational Enterprises (MNEs) will come under the scope of the “digital” tax, known as “Amount A” of Pillar One. In other words, they determine which companies will finally pay the tax.
The South Centre’s comments have been reproduced below.
The South Centre is the intergovernmental organization of developing countries that helps developing countries to combine their efforts and expertise to promote their common interests in the international arena. The South Centre has 54 Member States coming from the three developing country regions of Africa, Asia, and Latin America and the Caribbean. It was established by an Intergovernmental Agreement which came into force on 31 July 1995. Its headquarters are in Geneva, Switzerland.
The South Centre in 2016 launched the South Centre Tax Initiative (SCTI). This is the organisation’s flagship program for promoting South-South cooperation among developing countries in international tax matters.
The South Centre offers its comments to the OECD Inclusive Framework’s Task Force on Digital Economy (TFDE) on the Draft Model Rules for Domestic Legislation on Scope.
As a procedural matter, the extremely rapid pace of discussions is a matter of great concern for developing countries, a matter also raised by the African Tax Administration Forum (ATAF). While an urgent solution is needed to the taxation of the digitalization of the economy, this must mean one which incorporates the interests of developing countries.
Providing lengthy policy documents to Inclusive Framework delegates for inputs with minimal response time, sometimes just a single day, will have the practical result of the Two Pillar solution reflecting solely the interests of developed countries and snatching away the taxing rights of developing countries. This will further undermine the legitimacy of the Two Pillar solution, which is already on shaky ground, and further encourage developing countries to reject Pillar One and opt for alternative measures, which they are in their full sovereign rights to do.
The South Centre therefore strongly urges that delegates from developing countries be given adequate response time for documents, and the same principle must be applied for documents provided for public consultation.
- Prior Period Test
Para (2)(b)(ii) of the draft rules provides for the pre-tax profit margin of the group to be greater than 10% in “two or more of the four Periods immediately preceding the Period”, called the ‘prior period test’. There was no mention of such a test in the 8 October 2021 political agreement on the Two Pillar solution. The relevant section on scope from that agreement says,
“In-scope companies are the multinational enterprises (MNEs) with global turnover above 20 billion euros and profitability above 10% (i.e. profit before tax/revenue) calculated using an averaging mechanism…”
Thus, only an averaging mechanism was agreed upon. The prior period test violates this political agreement and has been “slipped in” to the draft rules. This amounts to a contravention of what the Inclusive Framework (IF) delegates agreed to.
Practically, the prior period test will be an additional filter that will reduce the number of companies in the scope of Amount A, which will mean reduced tax revenues to be redistributed to the developing countries.
Recommendation: The prior period test should be removed from the draft rules.
- Average Test
Para (2)(b)(iii) of the draft rules provides for the pre-tax profit margin of the group to be greater than 10% “on Average across the Period and the four Periods immediately preceding the Period”, called the ‘average test’.
A five-year period for averaging is too long and will have a higher chance to reduce the number of companies in-scope. Since the objective was to target the largest and most profitable companies in the world, an extremely high threshold of EUR 20 billion was agreed upon. This was despite developing countries finding even the EUR 750 million threshold too high. There is no reason why further exemptions must be included which allow these hugely profitable companies to escape.
An overly long duration of five years is also administratively burdensome for the MNEs and tax administrations.
Recommendation: The duration of the average test should be not more than two years preceding the tested period.
Para 2(b) of the draft rules ask whether averaging should be applied only to profitability or also to total revenues.
The rationale behind averaging as mentioned in the draft rules is to bring neutrality and stability and ensure that MNEs with volatile profitability are not brought into scope. Volatility is a characteristic which does not apply to revenues which remain stable while profitability can be volatile between periods.
Revenue averaging thus has no rationale. It is unnecessary and will in fact act as yet another filter to allow MNEs to escape the scope with the implication of reduced tax revenues for developing countries.
Recommendation: Averaging should be applied only to profitability.
Permanent Feature or Entry Test
Para 2(b) of the draft rules ask whether the average test should apply permanently or whether it should only be an ‘entry’ test. A permanent averaging mechanism would mean the MNE carries out the test each year while the entry test means once it is in-scope it remains in-scope and will be out of scope only in those specific years when its revenues and profit margins do not meet the criteria.
The other building blocks of Pillar One already take the ‘entry’ test approach. The loss-carry forward rules on tax base determination for example say that the losses of an MNE will be carried forward even from those years when it is not in scope. Thus, the same approach should be applied here.
Such an approach will also make the administration of Amount A more stable and reduce compliance costs. MNEs will only need to consider the revenues and profit margins in that particular year. It will also be easier for tax administrations.
Apart from the obvious simplicity and superiority of the entry test approach, there is an important reason why the permanent averaging mechanism should not be considered.
Paras 488-491 of the Pillar One Blueprint discuss the concept of “profit shortfalls” in the context of the carry-forward regime. The idea is that if an MNE’s profitability falls below the Amount A threshold for a given period, which could be a number of years, the difference should be treated as a “loss” that can be carried forward and reduce the taxes to be paid. The developed countries argue in its favor while developing countries argue against it, with various reasons such as the fact that a profit below the Amount A threshold is still a profit and not a loss. Para 491 of the Blueprint concludes by saying a decision is required to determine whether to include profit shortfalls in the Amount A carry-forward regime.
The decision was reflected in the 8 October 2021 political agreement which did not mention profit shortfalls. Thus, it was to be completely removed both in form and substance from the design of Pillar One.
However, the permanent averaging mechanism appears to be an attempt to re-introduce profit shortfalls, as the underlying structure is the same, i.e averaging of profitability over a number of years as a permanent feature and using that to reduce the amount of taxes to be redistributed to the developing countries and delay the distribution of profits by the Amount A mechanism for MNEs who were already in scope of Amount A.
Thus, introducing the permanent averaging mechanism would also mean going beyond the 8 October 2021 political agreement, by surreptitiously including the profit shortfall mechanism which was explicitly rejected by the IF Members.
Recommendation: The averaging mechanism should function solely as an entry test.
Mergers and Demergers
The applicability of the averaging mechanism to business reorganizations such as Group mergers and demergers mentioned in para 3 may be complex and likely to raise compliance costs.
Recommendation: A simple, efficient and easy to administer approach would be to exclude averaging for mergers and demergers.
- Anti-Fragmentation Rule
- MNEs that are close to the scope but do not use Qualified Financial Accounting Standards
Para 7 of the draft rules says:
“Where the UPE of a Group does not prepare Consolidated Financial Statements in accordance with a Qualifying Financial Accounting Standard, it must produce Consolidated Financial Statements, for the purposes of this Act, that would have been prepared if it had been required to prepare such statements in accordance with a Qualifying Financial Accounting Standard.”
The draft rules ask whether a materiality threshold should be included to capture MNEs that would have been in-scope if they used a Qualifying Financial Accounting Standard but presently do not.
The risk that using different financial accounting standards can affect the determination of profit (called a “material competitive distortion”) is also recognized in the draft rules on tax base determination.
Recommendation: A materiality threshold should be devised which is relatively close to the Amount A scope thresholds.
MNEs that are close to the scope but do not use Qualified Financial Accounting Standards
- Definition of Excluded Entity
The 8 October 2021 political agreement solely mentioned Extractives and Regulated Financial Services as excluded from the scope of Pillar One. However, the definition of an “Excluded Entity” on page 8 includes new entities such as pension funds, investment funds and real estate investment vehicles.It is problematic to see that the rules on scope include many elements which have been “slipped in” and are a violation of the political agreement reached by IF delegates. An expansion of the exclusions of scope only means fewer taxpayers and lesser tax revenues for the developing countries. Such undemocratic changes further undermine the legitimacy and trust of the Inclusive Framework, which already suffers from a lack of transparency and accountability as a forum of international tax standard-setting. It sends out the signal that IF political agreements do not really matter and will be undermined to appease the developed countries.
Recommendation: The definition of excluded entity should be limited to extractives and regulated financial services.
The forthcoming Schedule “F” relating to Exclusion of Revenues and Profits from Extractives must ensure that it is substantive and comprehensive; i.e complete exclusion. Many developing countries, especially from Africa, demanded an exclusion of extractives from scope as it would negatively affect their taxing rights, and this must be reflected in the design of the rules.
The definition of an entity is also meant to be one “where at least 95% of the value of the Entity is owned (directly or through a chain of Excluded Entities) by one or more Excluded Entities…”
However, it is not clear what ‘value’ refers to.
Recommendation: It must be specified that the value refers to shareholding. This will make it precise and easier to administer.
The National Digital Payments Roadmap (‘the Roadmap’), prepared by Government of Bangladesh’s flagship program Aspire to Innovate (a2i) program and UN-based Better Than Cash Alliance, provides a high-level plan to expand the adoption of responsible digital payments in a way that is agile, inclusive, and helps achieve the Sustainable Development Goals (SDGs).
It is designed to accelerate collaboration between the public and private stakeholders, presenting a framework for using new approaches and technologies to transform the payment ecosystem. The Roadmap builds on the UN Principles for Responsible Digital Payments (‘UN Principles’) and recommends drivers for foundational elements: environment, infrastructure, processes, policies, and actions. The solutions are mapped to the national vision and aligned with the capabilities of the ecosystem participants.
The solutions presented here have been derived from an analysis of the 2022 Country Diagnostic, conducted by the Better Than Cash Alliance, which evaluates the state of digital payments.
The National Digital Payments Roadmap should be read in conjunction with the Bangladesh digital payments diagnostic study.
The Office of the SG’s Envoy on Technology and ITU call for fast, affordable digital technology access for all
The Office of the United Nations Secretary-General’s Envoy on Technology and the International Telecommunication Union (ITU) have announced a new set of UN targets for universal and meaningful digital connectivity to be achieved by 2030.
The 15 aspirational targets, developed as part of the work of the UN Secretary-General’s Roadmap for Digital Cooperation Roundtable Group on Global Connectivity, co-chaired by ITU and UNICEF, prioritize universality, technology and affordability to ensure that everyone can fully benefit from connectivity. The Roadmap had called for establishing a connectivity baseline and targets to aid in advancing a safer, more equitable digital world and a brighter and more prosperous future for all.
“Universal connectivity alone is not enough to achieve the Sustainable Development Goals and ensure that every person has safe and affordable access to the Internet by 2030,” said ITU Secretary-General Houlin Zhao. “These targets will help countries guide their efforts towards effectively ensuring we meet our goal of universal and meaningful connectivity by the end of the decade.”
Universal and meaningful connectivity is the possibility for everyone to enjoy a safe, satisfying, enriching, productive and affordable online experience.
UN Assistant Secretary-General and Acting Secretary-General’s Envoy on Technology, Maria-Francesca Spatolisano, said: “By setting clear targets, we give ourselves goals and aspirations to work towards, especially in this Decade of Action to achieve the SDGs. Though certainly these indicators may be refined further, as expectations evolve and the world changes; it is important that we take a bold step forward now to set a basic understanding of what universal meaningful connectivity should look like, especially as we work towards next year’s Global Digital Compact.”
Unlocking sustainable digital transformation
The targets reflect the spirit and ambitions of the SDGs, the UN Secretary-General’s Roadmap for Digital Cooperation, and the ITU’s Connect2030 Agenda, setting out specific values to achieve each action area measured. They are also meant as a contribution towards the forthcoming Global Digital Compact, as proposed in the UN Secretary-General’s Our Common Agenda report.
The new targets are meant to help countries and stakeholders prioritize interventions, monitor progress, evaluate policy effectiveness, and galvanize efforts around achieving universal and meaningful connectivity by 2030.
“Meaningful connectivity is key to achieve digital transformation,” said Doreen Bogdan-Martin, Director of ITU’s Telecommunication Development Bureau. “Among today’s estimated 4.9 billion Internet users, many have to limit their usage because connectivity is unreliable, too slow or too expensive; they share a device; or a lack of digital skills prevent them from getting the most out of their devices and services. ITU is committed to working with all relevant stakeholders, through all connectivity efforts including our Giga initiative in partnership with UNICEF to connect every school to the Internet, and leveraging our newly launched Partner2Connect Digital Coalition, to ensure that these targets are not just aspirational, but achievable.”
Key target areas
The meaningful connectivity targets provide concrete benchmarks for sustainable, inclusive global progress in specified action areas.
In the world of 2030 envisaged in the plan, everyone aged 15 or older uses the Internet, all households have Internet access, all businesses use the Internet, and all schools are connected, while 100 per cent of the population is covered by the latest mobile networks, and everyone 15 or older owns a mobile phone.
Among those people, over 70 per cent would possess basic digital skills (like being able to send e-mails) and over 50 per cent would have intermediate digital skills (like installing new software or apps).
Another universality target is digital gender parity, with women and men using the Internet, owning and using mobile phones, and possessing digital skills in equal proportions.
By 2030, all fixed-broadband subscriptions should be 10 megabits per second (Mb/s) or faster, every school should enjoy minimum download speeds of 20 Mb/s and 50 kilobits per second (kb/s) available per student, and every school should have a minimum 200 gigabytes (GB) of data allowance.
In 2030, broadband Internet should be affordable for all, and meet the UN Broadband Commission affordability target of an entry-level broadband subscription to be less than 2 per cent of monthly gross national income per capita. A second affordability target states that the cost should not exceed 2 per cent of the average income of the bottom 40 per cent of the population.
The targets, along with forthcoming baseline indicators, emerged through multistakeholder consultations led by ITU and the Office of the UN Secretary-General’s Envoy on Technology among a broad range of digital development stakeholders, and as part of the UN Secretary General’s Roadmap Roundtable Group on Global Connectivity that is co-chaired by ITU and UNICEF.
A first assessment of how the world currently stands in relation to the targets will be reported in the Global Connectivity Report 2022, set for release in June at ITU’s World Telecommunication Development Conference (WTDC).
Resources and background information:
Join the conversation on social media using the hashtags:
#DigitalTransformation, #MeaningfulConnectivity, and #DigitalCooperation
Please tag @ITU & @UNTechEnvoy on social media
For more information, please visit:
For more information on the UN Secretary-General’s Roadmap for Digital Cooperation, please visit: https://www.un.org/en/content/digital-cooperation-roadmap/
The 2022 Edition of the Middle East & Africa (MEA) Innovation Awards recognized ITFC for its First Cash Against Document Transaction on the Bolero Platform
The International Trade Finance Corporation (ITFC) (www.ITFC-idb.org) was announced as the winner of the ‘Outstanding Use of Technology – Paperless Initiative’ category at the MEA Innovation Awards 2022 held virtually on March 31, 2022. The award recognized ITFC’s commitment to digitization and the promotion of innovation and paperless transactions in the banking and finance sectors.
We reaffirm our commitment to advancing trade in our member countries through digitalization
ITFC executed a ‘Cash Against Documents’ transaction between SOFITEX and Louis Dreyfus Company (LDC), using an electronic bill of lading issued by the CMA CGM Group, a world leader in shipping and logistics. The transaction, which was the first transaction processed through Bolero’s digital trade finance platform, covered a cotton shipment originating from Burkina Faso and shipped by CMA CGM Group from the Port of Lomé in Togo.
ITFC is committed to being a catalyst for trade development among the Organization of Islamic Cooperation (OIC) Member Countries and is a recognized leader in the use of technology to make international trade dealings paperless and more efficient. By applying an innovative approach to trade transactions, the Corporation will continue to increase the socioeconomic impact of trade finance operations.
Receiving the award on behalf of ITFC, Mr. Alhasan Basalamah, Senior Manager, Business Development said: “It is an honor to receive the MEA Innovation Award, and We would like to thank and recognize our partners in this deal: Sofitex, Bolero, LDC & CMA CGM, and we look forward to scaling up the implementation. We reaffirm our commitment to advancing trade in our member countries through digitalization.”
In this episode Matthew and Cindy look at how standards support the digital transformation of developing countries.
Cindy speaks to Torbjörn Fredriksson of the UN Conference on Trade and Development (UNCTAD) and Nick Williams of the African Development Bank (AfDB).
Torbjorn and Nick share the story about a new partnership between BSI, UNCTAD and AfDB forged through the eTrade for all initiative. The initiative is focused on leveraging the value of international standards to address the barriers to digital transformation.
They also discuss a new standards-based digitalization toolkit – a key recommendation of a recent BSI Whitepaper on digital transformation – and UNCTAD’s upcoming ecommerce week. unctad.org/eweek2022
In this episode, there’s also news of a new series – Standards in 10 Minutes.
What are the factors affecting the digitalization of the labor markets and the widening skills gap?
One + one (1+1) is not equal to successful digital transformation. Performance and cost are two key drivers of technological development. As transistors increasingly fit into smaller spaces, processing power is increased and energy efficiency improved, all at a lower cost for the end user, according to Moore’s Law. These developments have enhanced existing industries and increased productivity, and have also spawned whole new industries empowered by cheap and powerful computing.
Moore’s prediction has set the pace for innovation and development for over 50 years. This foresight laid a fertile foundation from which all modern technology could spring, including the broad rise of digitization and personal electronics. The inexpensive, ubiquitous computing rapidly expanding all around us is fundamentally changing the way we work, play, and communicate.
Can technology by itself take over?
The business implication of Moore’s law is that the steady doubling of computer power every 18 to 24 months, and its availability at a similar price point, means that businesses will see prices go down and performance go up for all manner of digital goods. Computer power is a driver for digital transformation and an opportunity to compete in different markets – but it is not just about technology. Research confirms that digital transformation initiatives are often challenging to implement, in both high and low technology sectors, and are often marked by very low success rates and little to no improvement in overall organization performance.
But why? Having these technologies available is only one part of the story. McKinsey’s research points to a set of factors that might improve the chances of a digital transformation. These factors fall into five categories: i) having the right, digital-savvy leaders in place, ii) building capabilities for the workforce of the future, iii) empowering people to work in new ways, iv) giving day-to-day tools a digital upgrade, and v) communicating frequently via traditional and digital methods.
Studies confirm that developing worker talent and skills throughout the organization—a fundamental action for traditional transformations—is one of the most important factors for success in a digital change effort. We could therefore say that there won’t be a sustainable digital transformation unless governments and companies design strategies with specific actions to reduce the digital gap in the work force. These two pillars are foundational for a proper transition towards a digital society, but they need to couple with the institutional framework that make the transition possible.
Technological adoption is here to stay…
Emerging studies confirm that COVID-19 has sped up technological adoption across many sectors and placed them light years ahead in terms of digital transformation. Overall, investments in innovation and advanced technology, are speeding up.
But Latin America and the Caribbean still faces some challenges to full adoption such as high-speed internet access, an essential driver of socioeconomic development.
Many citizens in our region spend more than 20% of their income to access broadband services, an amount that is 3% over the threshold recommended by the International Telecommunication Union for these services to be more widely accessible. This makes it incredibly difficult to see many of the gains of digital transformation in Latin America and the Caribbean.
How are we doing in Latin America and the Caribbean?
Recent research from the IDB suggests that there is considerable room for improvement in terms of access and availability of digital technologies across Latin America and the Caribbean, especially when seen in comparison to the world’s leading advanced economies.
While in many cases gaps between countries in the region and OECD economies are large, focused investment in related areas has the potential to yield large improvements in growth, productivity, and, by implication, development outcomes.
As highlighted in Figure 1 (above), this research suggests that for all countries in Latin America and the Caribbean, the benefits associated with closing digital infrastructure gaps in terms of cumulative increases in economic output (GDP) would outweigh the associated investment costs.
But such improvements in productivity and growth would require accompanying efforts to reskill and upskill the workforce, taking into account differing digital maturity levels across countries, so that both the public and private sectors can take full advantage of new technology.
1+1 is not equal to successful digital transformation…
Bridging digital infrastructure gaps goes hand in hand with reducing the skills gaps. The convergence of the fourth industrial revolution, unequal access to digital infrastructure and services, and the ongoing pandemic have also amplified the skills gaps and the urgency to fill those gaps.
The World Economic forum estimates that 85 million jobs are likely to be displaced worldwide by continuous advances in technological development, and 50% of all current employees will need reskilling by 2025. Deployment of digital technologies and reductions in digital infrastructure gaps are only one part of the story. The very technological advancements responsible for the changes to the workforce, are also key in creating new jobs and providing the tools needed to upskill and reskill current workers.
As our region reduces these infrastructure gaps, companies ought to embark on adopting new technologies, as digitization, automation, and AI reshape whole industries. And the only way to realize the potential productivity dividends from that investment will be to have the people and processes in place to capture it. Managing this transition well, in short, is not just a social good; it’s a competitive imperative.
Now hiring: Digital skilled and soft skilled workers needed…
It is fundamental to prepare for the coming skill shifts. Given the complexities of implementing the new technologies, companies will, of course, need people who can design the right algorithms and interpret the data. But they will also need so-called “softer” skills to do the work that machines cannot do.
Research suggests that demand for social and emotional skills will grow by about one-quarter by 2030, and we will also see a clear shift toward higher cognitive skills, including creativity and complex information processing. Critical thinking, and problem-solving skills must follow closely behind, while self-management skills are becoming commonplace for the 21st century workforce. Digital skills such as technology use, design, monitoring and control have become an essential attribute for the modern workforce, but most economies are failing to bridge the divide.
Like the digital infrastructure gap, the digital skills gap comes at a cost. Estimations suggest that by 2028, some advanced economies could miss out on $11.5 trillion of GDP growth if the digital skills gap is not addressed.
If investments in digital infrastructure is to result in double-digit GDP gains, then investment in relevant skills is needed to support these productivity gains.
To become more resilient and sustainable in the face of transitions, and maximize the return on technology investments, it is important to improve the way people work and to update their skills in order to take advantage of new technologies. Sustaining digital transformation goes hand in hand with developing the right talent and capabilities for digital transformation. Empowering people to work in new ways and providing the right tools to leverage innovation is the only way to move forward.
As the fourth-most populous country globally with a large working-age population, Indonesia has tremendous potential to gain from the development of the digital economy. Enhancing the digital literacy of its citizens and strengthening the digital skills of its labour are two pillars to enable the country to achieve more inclusive digital transformation. This is the key message of a diagnostic report titled ‘Digital Skills Landscape in Indonesia’ and a strategy primer titled ‘Accelerating Digital Skills Development in Indonesia’. These two documents were recently released and jointly prepared by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP); the SMERU Research Institute; Indonesia and the Blavatnik School of Government, University of Oxford, United Kingdom.
The diagnostic report aims to assess digital skills situation in Indonesia and discusses the challenges and constraints facing digital skills development. The strategy primer recommends possible cross-sectoral and sector-specific interventions that can be undertaken by the government, the private sector and civil society to increase digital literacy and skills in Indonesia.
“Digital technologies have been a lifeline to many during the pandemic, enabling people access to digital and health services and platforms to continue to run their businesses. However, many have been left behind and lack the digital skills to engage in the digital economy”, said Armida Salsiah Alisjahbana, United Nations Under-Secretary-General and Executive Secretary of ESCAP. “I am very honored that ESCAP was invited by the Ministry of Communications and Informatics (MCI) of the Republic of Indonesia as a partner in developing the digital skills strategy in Indonesia. I hope this work will serve as a useful tool to support the MCI in its role as the Chair of G20 Digital Economy Working Group.”
“Based on the diagnostic result, formal education, vocational training, and on-the-job training are three channels for enhancing digital literacy and digital skills,” noted Widjajanti Isdijoso, Director of The SMERU Research Institute.
“The report and primer aim to act as a guide for the government to support the design of initiatives, which ensure job-specific skills upgrading, lifelong learning, and broad digital literacy development,” added Elizabeth Stuart, Executive Director of Oxford University’s Digital Pathways programme.
As a leading sector of Indonesia’s digital transformation agenda and also Chair of G20 Digital Economy Working Group, the Ministry of Communications and Informatics (MCI) believes that digital transformation must be inclusive and empowering. “We are particularly aware that identifying the development of digital literacy and digital skills in various sectors are necessary for Indonesia to keep-up with the rapid technological advancements. The diagnostic report and strategy primer document would serve as a guide to support us in identifying the society’s level of digital competencies, existing gaps in digital literacy and digital skills, as well as identify suitable strategies to optimize the people’s digital readiness,” highlighted Johnny Gerard Plate, the Minister of Communications and Informatics of the Republic of Indonesia.
When one examines the national digital agenda, Uganda appears to have it all correct at the policy level – and yet this is not having the expected results of “leaving no one behind” in the digital era.
Uganda is not alone in this: many developing countries have tried different approaches to addressing exclusion from the digital economy. To bridge this gap, Uganda has for example undertaken a multiplicity of efforts under the Universal Service and Access Fund (formally Rural Communications Development Fund). The private sector, also recognising the opportunity for increased revenue, as well as network value to users, have for long used “Pay as You Go” models, along with small volume data and airtime packages, to ensure that more people can access the different platforms.
And yet, despite some gains over time, major aspects of exclusion still remain as demonstrated by the findings of the 2021 assessment based on the Inclusive Digital Economy Scorecard (IDES). IDES helps in shining new light into the barriers to digital inclusion, enabling governments that use this tool to identify where these occur along the causal chain of inclusion. However, such insights remain useless unless the next crucial step is taken: a rethink, which can indeed lead to discarding previous approaches to inclusion, so that there is new action guided by the IDES mapping.
This is the course of action taken by Uganda, where the 2021 IDES assessment has led to a practical shift in thinking at the policy and strategy level – in some instances igniting new initiatives, or creating more synergy and better direction in existing initiatives. Some of these are shared here.
Increased Focus on Coordination at the Policy and Strategic Levels
The Ministry of ICT and National Guidance, the lead Ministry for Uganda’s digital agenda, is addressing the effectiveness of the Digital Transformation Programme Working Group by taking steps to ensure top level representation that addresses coordination at the policy and strategic level. The Programme Working Group is composed of permanent secretaries in the ministries, heads of governmental agencies, and representatives of development partners, service providers, and civil society. Working together, this group can address gaps, inconsistencies, and contradictory approaches at the national policy and strategy levels.
Addressing Implementation Gaps
At the implementation level, the Ministry has now required that they (the Ministry) and all its agencies approach the annual planning and budget cycle in a synergetic fashion to address sector priorities. This is a departure from the previous approaches where each unit in the Ministry, as well as the agencies, developed annual workplans and budgets in silos, often with duplication.
Addressing Inclusion at the Policy Level
Uganda IDES 2021 was released at time when a programme was already underway to refine the Digital Uganda Vision, guided by a review of the Uganda National ICT Policy, and to amend the Uganda Communications Act as well as the Uganda Broadcasting Corporation Act. IDES established that while significant progress has been made in addressing inclusion for women and youth, other marginalised groups, especially refugees and many rural localities still lag far behind national levels. This timely data has created opportunity for these gaps to be addressed at the highest policy levels, and within some of the laws that impact the national digital agenda.
Dealing with the Challenge of Skills
IDES revealed three categories of skills gaps:
- The shortage of the requisite strategic skills required to drive the national digital agenda within the Government. Further exploration of this gap led to the finding that those frontline ministries and agencies responsible for driving digitally enabled social services (education, health, etc.) also have major digital skills gaps.
- The shortage of digital skills within the population with respect to innovation and exploiting ICT enabled services
- The shortage of digital skills (among the general population) required to benefit fully from digital opportunities.
The action decision taken was to carry out a digital skills gap analysis within government as well as nationwide, and based on that, come up with remedial measures – some addressing staff in government Ministries, Departments and Agencies (MDAs); others addressing the general populace; and others being more foundational by addressing curricula and learning methodologies from the earliest levels of schooling.
Related to digital skills variations in MDAs was the identified need to establish consistent skills level requirements across government, and elevate the profile and competence of ICT staff in recognition of their critical roles in the success of Uganda’s digital agenda.
The IDES was developed to support countries in better understanding the status of their digital transformation together with main priorities to accelerate the development and make it more inclusive: by translating the findings into a programme of action to address identified gaps, Uganda has actualised this objective.
As observed by Dr Aminah Zawedde, the Permanent Secretary of the Ministry of ICT and National Guidance during a meeting with the UNCDF Team: “The initial steps might be small, but they are the start of what will be a sustained effort of transformation of people, methods, and processes so that through full inclusion and a digitally empowered population, Uganda’s development aspirations can be achieved.”
Widespread acceptance of digital trade documents could generate an additional US$1.2 trillion in trade by Commonwealth countries by 2026, a report has found.
The analysis covers each economy in the 54 Commonwealth nations and presents a picture of the potential for cost reductions and trade increases if digital trade documents are accepted in the same manner as their paper equivalent.
New Commonwealth report
The report from the Commonwealth Connectivity Agenda found that widespread use of digital trade paperwork could increase trade by Commonwealth countries by an additional US$1.2 trillion through the impact of cost reductions and greater access to trade finance.
Developing economies across the spectrum – emerging, small states and least developed countries – see the greatest reduction in costs from these changes.
Kirk Haywood, Head of the Commonwealth Connectivity Agenda, said: “The Covid-19 pandemic has left deep economic scars across the globe, and while countries are now looking to rebuild, many are likely to struggle for years to come.
“Commonwealth trade is set to grow by an average of just 0.2 per cent a year between 2021 and 2026. Of the 20 countries with the slowest growth projections, six of these are emerging African economies and only seven are not SIDS.
“It is vital that viable opportunities to boost trade are explored and acted upon if all member nations are to see increased prosperity.
“Commonwealth leaders have already committed themselves to the goal of increasing Commonwealth trade to US$2 trillion by 2030. This report clearly illustrates how the adoption of digital trade paperwork across the Commonwealth can help us reach this goal.
“In the current challenging fiscal environment, such regulatory interventions can support post-Covid recovery without relatively large government expenditure. The UNCITRAL Model Law on Electronic Transferable Records provides a good starting point for countries looking to undertake such interventions.”
Trade costs are currently prohibitive for many countries across the Commonwealth. For four Commonwealth economies (Vanuatu, Tonga, Gambia, and Papua New Guinea) costs are higher than 100 per cent of the revenues received from trade, while another 34 economies are burdened with costs that exceed 50 per cent of their revenues.
These figures come from costs associated with border crossing and transport alone. Adding raw materials, production, sales, and distribution costs means more countries are likely to find exporting prohibitive.
Move to paperless trade
Moving toward paperless trade will cut these costs, helping to open new markets and stimulate trade where previously very little existed.
For all Commonwealth economies, accepting electronic documents will bring significant improvement in trade from two factors:
- Reduction in trade costs, which enables more exporters to access trade routes.
- Improvement in access to finance, which has the effect of creating markets, especially for MSMEs who are currently excluded because they are unable to access traditional forms of trade finance because of due diligence costs involved.
Paper forms of trade documents such as bills of lading, bills of exchange, promissory notes, warehouse receipts, guarantees and standby letters of credit are overwhelmingly used across the world.
An estimated four billion paper-based documents are being processed at any one point in time around the world according to the International Chamber of Commerce (ICC).
There are challenges associated with moving to an electronic trade system.
The non-standardised and manual nature of a bill of lading makes border processes complex for the exporter.
Additionally, lower levels of digital literacy pose a major challenge for some groups.
The Commonwealth Secretariat is working to address the digital divide across member states through the Commonwealth Connectivity Agenda – a platform for countries to exchange best practices and experiences in trade and investment to prompt domestic reform.
Specific targets for action were also outlined in the Declaration on the Commonwealth Connectivity Agenda for Trade and Investment made by Commonwealth Heads of Government in April 2018.
Last week the Commonwealth Secretariat held a three-day workshop in Nepal for grassroots female entrepreneurs to help them leverage digital infrastructure opportunities for E-Commerce and Digital Marketing.
The women attending the workshop hailed from countries across South Asia including India, Pakistan, Bangladesh, Sri Lanka and the Maldives. During the workshop, many participants spoke of the challenges they faced in running their businesses during the Covid-19 pandemic, some had been forced to close their businesses whilst others had to shift their business online in order to keep trading.
The workshop was held by the Commonwealth Secretariat’s Physical Connectivity Cluster of the Commonwealth Connectivity Agenda in collaboration with the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) South and South-West Asia Office, the South Asian Women Development Forum and the Enhanced Integrated Framework.
This workshop is a part of the implementation of the Agreed Principles of Sustainable Investment in Digital Infrastructure for the Physical Connectivity Cluster of the Commonwealth Connectivity Agenda, which is led by The Gambia.
In her special address the Commonwealth Secretary-General Rt. Hon. Patricia Scotland QC said:
“The pandemic caused entire economies across the Commonwealth to effectively shut down and the economic disruption continues. The 32 Commonwealth Small States were disproportionately affected, and women have been the hardest hit. A key focus of the Commonwealth Connectivity Agenda is closing the digital divide. The Commonwealth Secretariat has engaged in peer-to-peer learning, knowledge exchange and capacity building. We launched a new e-learning course on digital infrastructure and the digital divide, and we’ve developed community partnerships with tech companies such as Oracle. These initiatives help to shape policies to provide practical skills to help overcome the digital divide.”
During the workshop, participants learnt about www.wesellonline.org a trading platform exclusively for women entrepreneurs to sell their products online. At the end of the workshop 81 women entrepreneurs registered on the platform.
The training was delivered by Dr Radika Kumar, Adviser infrastructure policy from the Commonwealth Secretariat and resource persons from ESCAP Asia Pacific.