IDB's Identity Card
The IDB is the main source of multilateral financing in Latin America. It provides solutions to development challenges and support in the key areas of the region.
We have asked a few questions to Antoni Estevadeordal, Manager, Integration and Trade Sector of IDB and eTrade for all focal point, about the challenges that Latin American and Caribbean countries have to face to further engage in e-commerce. We also asked Antoni to tell us a bit more about IDB activities in the region and about IDB activities in the region and about eTrade for all. Check the integral interview here below.
IDB's Exclusive Interview for eTrade for all
E-commerce in Latin America is growing, but remains behind other regions. For example, recent data (2013) shows there were 85 million online buyers in Latin America, just 8% of global online buyers; and B2C e-commerce amounted to $51 billion, only 4% of the global total.
Latin America has seen a growth in the number of people who are online. For example, in 2000 less than 5% of Latin Americans used the Internet, by 2015 50% of the population was online. The fact that only one-half of Latin Americans are online and that even fewer have broadband connections implies major growth opportunities. However, a major impediment is that the region has relatively low broadband penetration rates – just 15% of the population has access to fixed broadband – which slows e-commerce uptake. However, the cost of broadband is similar with that of Europe and 1 North America, suggesting that low usage rates are not a consequence of high costs, but rather of the availability of the Internet. There are major e-commerce opportunities to be seized in the region. However, countries need to invest in upgrading the software and hardware of e-commerce.
Soft solutions include increasing:
- knowledge about e-commerce in SMEs and consumers;
- trade facilitation measures; and introducing legislation on the Internet and e-commerce that creates a legal environment of transparency,
- trust and security for electronic transactions.
Hard solutions involve:
- improving the supply of reliable and affordable ICT infrastructure services through investments in broadband,
- upgrading communication structures with fiber optics that improve service and regional connectivity, – and creating Regional Internet Exchange Points (IXPs).
It is worth highlighting that IXPs are very important to develop advanced ecosystems of the Internet.
Currently, all regional Latin American countries’ Internet traffic passes through IXPs in the United States. It is therefore estimated that up to 2 billion inefficiencies are transferred to Latin American consumers.»
The Integration and Trade Sector of the IDB is working on some of the soft and hard policies mentioned above in an effort to facilitate e-commerce. For example, IDB conducts virtual training course on e-commerce and broadband. We also operate a program called Connect Americas, a social network for businesses in Latin America dedicated to promoting foreign trade and international investment. It seeks to help SMEs strengthen their businesses, by providing them access to communities of clients, suppliers and investors in the region and all over the world, segmented by industry. It also provides useful and simple information about procedures and regulations for international commerce, and about the financing opportunities available in IDB member countries. This platform is a tool for promoting e-commerce and making it more inclusive.
The IDB also helps countries implement trusted trader and security programs for foreign trade operators like the Authorized Economic Operator and Exporta Facil programs. We also helps countries make national single windows interoperable and implement solutions for online payment systems through the RedVUCE program. All these activities contribute to more efficient and expedited shipping, and allow for just-in-time delivery, which in the digital trade world is essential.
Additionally, the Bank is involved in the Pacific Alliance initiative, working with the member countries to develop a Regional Digital Market. For example, the Bank co-organized a 2 Public-Private Dialogue on Digital Trade in May to reduce the digital divide between the countries of the bloc in order to advance the digital inclusive and sustainable development agenda, encompassing digital connectivity, digital government, digital economy and digital ecosystem issues. The Bank will continue to work with the group to implement innovative strategies to enable governments to take advantage of the opportunities offered by technology to deliver better service to citizens.
We know that benefits from e-commerce are significant and important. E-commerce has help break down geographic barriers, and increase penetration in foreign markets, reduce transaction costs, and allow countries to diversify their markets and risks. But we believe that can we do more and have a great impact if we partner with organizations like UNCTAD who are doing pioneering work in the field and helping less developed countries overcome the barriers to e-commerce. The eTrade for all initiative is the next step in our strategy to make e-commerce more accessible to Latin Americans. This initiative will help reduce existing barriers and give countries the opportunity to become more active players in the global e-commerce landscape.
We look for partners that are committed to advancing opportunities for the least developed countries and its neediest citizens. We believe that trade is a powerful tool for development, and we know that UNCTAD and our other partners at the eTrade for All initiative feel the same.
We are excited for the opportunity to work together with the international trade community to raise awareness of the opportunities, challenges and potential solutions to leveraging e-commerce in developing countries; to mobilize and make more effective use of financial and human resources to implement e-commerce projects in developing countries; and to strengthen coherence and synergies among partners’ activities.