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A side event at the COP27 climate summit in Sharm El-Sheikh, Egypt on 10 November organized by the WTO and other international organizations focused on ways sustainable trade can address the specific challenges of developing and least-developed countries (LDCs) in their transition towards low-carbon economies.

The event “Accelerating the Low-Carbon Transition Through Sustainable and Inclusive Trade,” brought together experts from international organizations working on sustainable trade as well as civil society advocates to explore how the transition to low-carbon economies can be a tool for development and support national efforts to achieve their nationally determined contributions (NDCs). Each party to the UN’s 2015 Paris Agreement, which sets the target of limiting global warming to 1.5°C, is required to establish an NDC action plan and update it every five years.

The event was organized by the WTO; African Export-Import Bank; the International Trade Centre (ITC); the UN Conference on Trade and Development (UNCTAD); the UN Environment Programme (UNEP);  the UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UNOHRLLS);  and the World Intellectual Property Organization (WIPO).

Aik Hoe Lim, WTO Director of Trade and Environment, echoed Director-General Ngozi Okonjo-Iweala’s COP27 interventions by stating the role of trade is a missing piece in the climate discussions and said this year’s World Trade Report tries to fill that gap.

Recognizing that greener markets and greener logistics of trade are necessary for a fast low-carbon transition, Mr Lim said there were two ways to make this happen: the first is through energy and energy supply, and the second is through technology. He called on countries to use trade policies to enhance NDCs and lower the cost of green technologies needed for the energy transition.

UNCTAD Secretary-General Rebeca Grynspan cited the urgent need to transition to low-carbon economies and encouraged developing countries and LDCs to explore ways of diversifying their exports to include “climate-conscious” products. She said product standards are a considerable barrier for developing countries but that there were some companies that are ready to make the transition that should serve as an example.

Ms Grynspan called on multilateral development banks to “crowd in” investment and provide technical assistance to promote effective technology transfer practices. This call was amplified by Pamela Coke-Hamilton, Executive Director of the International Trade Centre, who noted that 40 per cent of African companies are ready to do something to avert the effects of the climate crisis but that the remaining 60 per cent need access to finance and technologies.

María Cecilia Quaglino, an Argentine climate advocate, called for joint efforts aimed at transforming current business practices and economic models. She acknowledged that before speaking about sustainable business practices, structural obstacles like poverty need to be addressed.

For more information, please visit the recording of the side event.

  • Central banks are increasingly exploring the idea of having their own digital currencies.
  • There are 3 key arguments in favour of such a move, including the need to evolve monetary systems as transactions involving physical cash decline.
  • There are potential challenges and implications for monetary policy, but benefits could include improved privacy standards around payments.

Central banks around the world are exploring the case for central bank digital currency (CBDC) – essentially a digital version of cash (Nielpelt 2021). In a new paper (Ahnert et al. 2022a), we provide an overview of the economics of CBDC. First, we outline the economic forces that shape the rise of digital money and motivate the current debate. We then look at the implications for monetary policy and financial stability before discussing policy issues and challenges. Finally, we highlight several areas where our understanding of digital money could be improved by further research.

How to pay in a digital world?

You can’t use cash to pay online. This is one of the reasons why physical currency is losing its appeal as an efficient means of payment in the digital age. The proliferation of online shopping and digital payments has been accompanied by a steady decline in cash use over the past one and a half decades (see Figure 1). Broadly speaking, digitalisation of economic activity profoundly affects how people pay for things.

Figure 1 Growth in e-commerce and the declining use of cash

Graphs showing growth in e--commerce and the declining use of cash.

Cash is public money – it is a liability of the central bank and thus perfectly safe. Image: CEPR.

Most people don’t see a difference between cash and digital payments, beyond the obvious fact that paying with cash involves exchanging physical money, whereas digital transactions do not. But there is also a subtler difference. Cash is public money – it is a liability of the central bank and thus perfectly safe. By contrast, digital money originates in the private sector, most commonly in the form of bank deposits. Despite being the liability of a private entity, money issued by banks can always be converted to cash at face value thanks to financial regulation and deposit insurance. This is why people consider it to be safe and useful as a means of payment.

The rise of digital platforms as a dominant business model of the information age is challenging the central role of banks in the payment system. Large technology firms and financial startups are bundling payments with digital services, such as online marketplaces, messaging apps and financial services (for example lending and insurance). While banks continue to provide the underlying payment rails for these solutions, they are losing access to the customer interface. Further disruption is potentially looming on the horizon, caused by rapidly developing and complex payment innovations. This includes distributed ledger technology, which provides the basis for ‘stablecoins’ (crypto-assets designed to maintain a stable value) that could be used as means of payment.

Why central bank digital currency?

The declining use of cash and the potential for a growing role of new forms of money outside the regulated banking sector have led to calls for the introduction of a digital version of cash, often referred to as central bank digital currency (CBDC). 1 There are at least three key arguments that support these calls.

First, public money plays a special role as the anchor of the monetary system. People are willing to accept payments in private money (credit cards and bank transfers) because they know that it can be exchanged easily for perfectly safe public money (cash). However, if cash is no longer used widely, the promise of perfect convertibility loses bite. In this scenario, a digital version of cash would ensure the continuation of the current monetary system.

Second, the issuance of CBDC helps to preserve the central bank’s control over the currency (Brunnermeier et al. 2019). Thanks to their global reach, digital platforms may become large issuers of private digital money. 2 If, in an extreme scenario, private money crowds out public money as the monetary unit in contracts and transactions (the ‘unit of account’), the central bank can no longer conduct effective monetary policy or safeguard financial stability by acting as lender of last resort. 3 A CBDC could prevent such a scenario by offering a public version of digital money to meet demand.

Third, a CBDC could help to preserve privacy. Private enterprises typically seek to profit from the personal data they can collect when people make digital payments, which can discourage their use in the first place – an inefficient outcome. A CBDC could be designed to provide users with more control over their data, for example over whether they choose to share personal data with third parties to receive more personalised services. This can foster efficiency and welfare in the digital economy (Ahnert et al. 2022b).

How might central bank digital currency affect monetary policy?

The introduction of a CBDC without any safeguards could lead to a significant shift in a monetary system. It is a potential concern that savers may withdraw funds from banks en masse and deposit them in CBDC with the central bank. This could make it more difficult for banks to provide loans, one of their key economic functions (Keister and Sanches 2022). But other research has shown that these concerns may only materialise if the banking sector is perfectly competitive. When banks enjoy market power, the introduction of CBDC presents an alternative to deposits. Accordingly, banks are forced to compete more by increasing the interest rates paid on deposit accounts. In turn, this would attract more deposits and enable banks to extend more credit to firms and households (Andolfatto 2019, Chiu et al. 2022).

CBDC was not proposed with the intention of developing a new monetary policy tool. Nonetheless, it might provide an additional lever for central banks. For example, it could improve the extent to which central bank policy rates are passed on to savers by increasing competition in deposit markets. 4 Similarly, it may enable the central bank to separately target specific frictions in the financial system, and thus stabilise inflation and the overall economy more efficiently (Assenmacher et al. 2022).

Introducing a CBDC could imply changes for central banks’ operations and their balance sheets. In particular, following a substitution of bank deposits for CBDC, central banks may need to channel funds back to the banking sector through lending operations (Brunnermeier and Niepelt 2019). More broadly, the introduction of CBDC would also affect the way that monetary policy is implemented in practice. For example, volatility in CBDC demand could render interest rate control in a traditional corridor system more challenging, and thus favour a floor system with an ample level of reserves (see Malloy et al. 2022). If non‐banks were to distribute CBDC to the public, they might require direct access to the central bank balance sheet and this could necessitate changes to the counterparty framework.

How might central bank digital currency affect financial stability?

As with monetary policy, the effects of CBDC on financial stability would be channelled through the banking system. If banks experience an increase in funding costs, as discussed above, this may lead to a reduction in profit margins. Consequently, this may encourage banks to take on more risk on the asset side of their balance sheets, for example by extending more risky loans or investing in more speculative securities (Keeley 1990).

On the liability side, the availability of CBDC alters banks’ exposure to the risk of runs, where large numbers of depositors rush all at once to withdraw their funds in cash. In Ahnert et al. (2022c), two countervailing effects are at work. On the one hand, given its nature as safe and interest-bearing investment, the availability of CBDC increases depositors’ incentives to run, relative to an economy where cash is the only alternative to bank deposits (‘direct effect’; see Figure 2). On the other hand, to retain deposits, banks respond to the introduction of CBDC by raising interest rates; this makes deposits more attractive and thus reduces fragility (‘indirect effect’). As a consequence, the overall effect of CBDC on bank fragility varies with the relative strength of these two forces. For low (high) levels of CBDC remuneration, the indirect (direct) effect dominates, so that an increase in remuneration reduces (increases) financial fragility.

Figure 2 The direct and indirect effect of CBDC remuneration on bank fragility

Charts showing the direct and indirect effect of CBDC remuneration on bank fragility.

CBDC design features may also play an important role for financial stability. Image: CEPR.

CBDC design features may also play an important role for financial stability – for example, by improving the effectiveness of policies aimed at stabilising the financial system. It is well-known that the timing and the design of policy interventions such as bailouts and liquidity support are crucial. Policymakers can make better decisions if they have better information. Movements in CBDC accounts held by the central bank could provide real-time information about the health of the financial system, which could improve the effectiveness of central bank interventions, and thus overall financial stability (Keister and Monnet 2022).

What challenges remain for central bank digital currency?

CBDC may be able to maintain the role of public money as a monetary anchor in the digital age and it could help to set privacy standards in payments. However, broader challenges, particularly in relation to privacy in the digital economy, go well beyond the remit of central banks. Tighter regulation can, and must, address the most pressing concerns related to the financial stability issues surrounding new technologies, such as stablecoins. The recent failure of Terra provides a good illustration of the underlying risks. 5 While the EU’s Markets in Crypto‐Assets Regulation represents a step in this direction, Gorton and Zhang (2022) go further by proposing a public monopoly on ‘circulating money’.

Up to now, discussion of the potential risks of introducing a CBDC has largely focused on the scenario of excessive take-up and the potential implications for credit supply and financial stability. In this context, policymakers have proposed safeguards, such as making large CBDC holdings unattractive by way of very low (and possibly negative) interest rates (Bindseil 2020), or imposing direct limits on the amount that individuals may hold (ECB 2020).

However, there is also a risk of too little adoption if CBDC turns out not to be a sufficiently attractive product. Ultimately, success requires sufficient use by both merchants and consumers, owing to the two-sided nature of payment markets (Rochet and Tirole 2003). While cost considerations are likely to dominate for merchants, the possibility of integrating payments with other digital services, such as data analytics, may become more important over time. Consumers tend to value convenience and universal acceptance most. However, the role of privacy and the implications of safeguards to limit user demand are not yet well understood. Central banks need to design CBDC carefully to strike the right balance between excessively high and low demand.

Conclusions: The state of play on central bank digital currency

The debate on central bank digital currency has gained traction. According to a recent survey by the Bank for International Settlements, almost all respondent central banks are actively investigating the potential for a CBDC (Kosse and Mattei 2022). In some sense, the introduction of digital cash is a natural evolution, in line with many other aspects of life moving into the digital sphere (Panetta, 2021). However, as discussed above, the underlying economics and the potential implications for the financial system are complex and warrant further study.

Authors’ Note: This column first appeared as a Research Bulletin of the European Central Bank. The authors gratefully acknowledge the comments from Ulrich Bindseil, Jonathan Drake, Michael Ehrmann, and Alex Popov. The views expressed here are those of the authors and do not necessarily represent the views of the European Central Bank or the Eurosystem.

References

Ahnert, T, K Assenmacher, P Hoffmann, A Leonello, C Monnet and D and Porcellacchia (2022a), “The economics of central bank digital currency”, ECB Working Paper Series, No 2713.

Ahnert, T, P Hoffmann and C Monnet (2022b), “The digital economy, privacy, and CBDC”, ECB Working Paper Series, No 2662.

Ahnert, T, P Hoffmann, A Leonello and D Porcellacchia (2022c), “CBDC and Financial Stability” unpublished working paper.

Andolfatto, D (2021), “Assessing the impact of central bank digital currency on private banks”, The Economic Journal 131(634): 525-540.

Assenmacher, K, L Bitter and A Ristiniemi (2022), “CBDC and business cycle dynamics in a New Monetarist New Keynesian model”, unpublished working paper.

Bindseil, U (2020), “Tiered CBDC and the financial system”, ECB Working Paper Series, No 2351.

Bordo, M and A Levin (2017), “Central bank digital currency and the future of monetary policy”, NBER Working Paper No 23711.

Brunnermeier, M K and D Niepelt (2019) “On the equivalence of private and public money”, Journal of Monetary Economics 106: 27-41.

Brunnermeier, M K, H James and J P Landau (2019), “The digitalization of money”, NBER Working Paper, No 26300.

Chiu, J, S M Davoodalhosseini, J Hua Jiang and Y Zhu (2022), “Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment”, Bank of Canada Working Paper Series.

Driscoll, J C and R Judson (2013), “Sticky deposit rates”, Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C.

Garratt, R J and M R Van Oordt (2021), “Privacy as a public good: a case for electronic cash”, Journal of Political Economy 129(7): 2157–2180.

Gorton, G and J Zhang (2022), “Protecting the sovereign’s money monopoly”, unpublished wWorking paper.

Keeley, M C (1990), “Deposit Insurance, Risk, and Market Power in Banking”, American Economic Review 80(5): 1183-1200

Keister, T and C Monnet (2022), “Central Bank Digital Currency: Information and Stability”, Journal of Economic Dynamics and Control, forthcoming.

Keister, T and D Sanches (2022), “Should Central Banks Issue Digital Currency?”, Review of Economic Studies, forthcoming.

Kosse, A and I Mattei (2022), “Gaining momentum–Results of the 2021 BIS survey on central bank digital currencies”, BIS Papers, No 125.

Lilley, A and K Rogoff (2020), “The case for implementing effective negative interest rate policies”, in J Cochrane and J and Taylor (eds), Strategies for Monetary Policy, Hoover Institution Press, pp. 27-90.

Malloy, M, F Martinez, M F Styczynski and A Thorp (2022), “Retail CBDC and U.S. monetary policy implementation: A stylized balance sheet analysis”, Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System.

Neumark, D and A S Sharpe (1992) “Market structure and the nature of price rigidity: evidence from the market for consumer deposits”, The Quarterly Journal of Economics 107(2): 657-680.

Niepelt, D (2021), “Central bank digital currency: Considerations, projects, outlook”, VoxEU.org, 24 November.

Panetta, F (2021), “Evolution or revolution? The impact of a digital euro on the financial system”, Bruegel online seminar, 10 February.

Rochet, J C and J Tirole (2003), “Platform competition in two-sided markets”, Journal of the European Economic Association 1(4): 990-1029.

The coronavirus disease (COVID-19) pandemic has caused trade disruptions; a drop in foreign direct investment; and scarring effects on poverty, education, and women in many nations. However, it has also had beneficial features. Factory Asia has continued to produce and export during the pandemic, in contrast with North America and Europe. COVID-19 has boosted digitalisation, notably in information and communication technology (ICT). The adoption of ICT has boosted economic growth. Maintaining the competitiveness of international production networks and utilising digitalisation are essential to the region’s future post-COVID-19.

Based on this understanding, the Economic Research Institute for ASEAN and East Asia (ERIA) has developed the Comprehensive Asia Development Plan 3.0 (CADP 3.0). Since the previous version (CADP 2.0) in 2015, nearly seven years have passed. CADP 3.0 addresses the above-mentioned urgent concerns and discusses economic growth and social problem-solving in the region from the viewpoints of (i) integration, (ii) innovation, (iii) inclusiveness, and (iv) sustainability.

This research was the focus of the Symposium co-organised by ERIA and the Ministry of Commerce of the Royal Kingdom of Cambodia. In his Welcoming Remarks, His Excellency PAN Sorasak, Minister of Commerce for the Kingdom of Cambodia, commended ERIA for this research: ‘We, the Royal Government of Cambodia, are focusing our efforts on all aspects of digitalisation. This study provides greater clarity to our efforts. I appreciate Prof. Nishimura and thank him and all the ERIA experts who have contributed to CADP 3.0, successfully providing a theoretical framework for the digital development of Asia along with comprehensive and valuable policy recommendations.’

Elaborating on the contents of the book, he said ‘CADP 3.0 addresses these issues ranging from emerging industries to energy, showing the way forward. I strongly agree with the idea that digitalisation is the key to upgrade traditional industries such as agriculture, generating vast opportunities for new businesses. The deployment digital technology for social welfare concerns will help solve all kinds of complex social problems. I am confident that today’s event will be beneficial to all the participants interested in what we must do for the future.’

Prof Hidetoshi Nishimura, President of ERIA, expressed ERIA’s deep gratitude to the Minister and the Ministry of Commerce for their continued support of ERIA. ‘The event today also celebrates that special relationship between Cambodia as the Chair of ASEAN and ERIA.’ He then provided an overview of the CADP 3.0: ‘CADP 3.0 presents that possible future of Asia, which will be more integrated, innovative, inclusive, and sustainable through digitalisation. To realise the vision set out in CADP 3.0, ASEAN and East Asia need to build a digital ecosystem where firms, governments, and public institutions employ shared data.’

He went on to announce the new Centre for Digital Innovation and Sustainable Economy which ERIA will launch next year.

Mr Koji Hachiyama, ERIA’s Chief Operating Officer, introduced the new Centre in more detail during his closing remarks: ‘The new Centre will provide a public-private platform to create unified rules across the region such as a common data platform and legal systems for securing data free flow and cybersecurity.’ Second, the platform will share information on digital and carbon-neutral economies. Third, it will serve as a training platform for industries on new business models, tools, and case studies. Lastly, it will provide practical policy advice that reflects the needs of the private sector.

To learn more about the event, click HERE.

For copies of presentations, click HERE.

From 25 to 27 October, ESCWA and its partners organized a consultative conference and an expert meeting on the Arab Digital Agenda and the Arab International Digital Cooperation and Development Forum (DCDF).

The meetings, held in Dubai, gathered experts and relevant stakeholders from different countries in the region who provided necessary inputs to update the Arab Digital Agenda, paving the way for its adoption and subsequent launch.

The event was organized with the League of Arab States (LAS), in partnership with the Mohamed Bin Rashid School of Government, the Telecom and Digital Government Regulatory Authority of the United Arab Emirates, the Arab Federation for Digital Economy, and partners to the joint ESCWA-LAS project to producing, developing and implementing the Arab Digital Agenda. It also featured preparations for the second DCDF in 2023.

Read more

First conceived at COP25, and further developed at the Blockchain4Climate networking event in Dubai in March 2022, the Digital Innovation & DigitalArt4Climate Pavilion arrives at COP27 with the aim of bringing together digital solution providers and the global climate action and governance community. The pavilion’s agenda combines the thematic days, designated by the COP27 presidency, with the general theme of digital innovation, opening space for discussions on the role and potential of digital technologies such as blockchain, AI, and IoT in the fight against climate change. Through the DigitalArt4Climate initiative, special attention has been paid to blockchain technology and its transformative potential for youth and citizens climate action empowerment.

The pavilion is expected to have a positive effect on the results and solution proposition of this year’s UN Climate conference, consolidating its presence in next year’s COP28.

We are pleased to announce grant funding to five organizations to promote digital inclusion through the Strengthening Communities, Improving Lives and Livelihoods (SCILLS) program. Established in 2020, the SCILLS program aims to expand economic growth and increase educational opportunities by supporting individuals and communities to more knowledgeably and skillfully use the Internet. The long-term aim of the program is to play a key role in digital transformation.

The selected projects, which have been renewed for two additional years of funding are:

Bangladesh

  • Tech Soup in partnership with Teach for Bangladesh – $267,498 to promote the use of mobile Internet for learning in Bangladesh, building the necessary knowledge, skills, and behaviors for 5,000 marginalized children, 200 teachers, and 2,000 parents to adopt online learning.

Colombia

  • Asociación Colnodo in partnership with Fundación Capital –$267,500 to promote the resilience of 500 female micro-entrepreneurs through digital trainings, and personal coaching sessions.
  • Makaia – $249,552 to close the digital gender gap and build IT and programing skills among 165 NEET (not in Education, Employment, or Training) youth in rural areas.

Senegal

  • Croissance TIC Dakar – $249,943 to build entrepreneurial skills and digital competency, as well as facilitate access to finance for 500 early stage and growth-oriented entrepreneurs.

The SCILLS program is currently active in Bangladesh, Colombia and Senegal, and will expand to Brazil, Ghana and Indonesia in 2023. Through these grants, the Internet Society Foundation looks forward to supporting communities in acquiring critical digital skills that hold the potential to improve education and economic outcomes.

UNIDO is supporting Member States to design policies and to help firms to improve productive activities with digital transformation and artificial intelligence (AI). As part of the UNIDO project, “Digital transformation, innovation, and 4IR: Regional Studies”, UNIDO has convened a series of discussions with experts from different continents.

The goal is to produce analytical reports, differentiated by a macro-region, that will help UNIDO develop an understanding of how it can support productive transformation and small and medium-sized enterprises (SMEs) in each region, and identify the main bottlenecks for innovation.

In 2023, UNIDO will proceed with consultations with Members States and organize support for policy design and decision-making so that countries can better adopt frontier technologies, digitalization and AI for policy, and so that firms can benefit from toolkits and methodologies.

For more information, please contact:
Marco Kamiya
Chief of Digital transformation and AI Strategies Division

Africa must invest in Science, technology, engineering, and mathematics (STEM) education for women and girls, disciplines which would boost their economic empowerment and access to digital finance.

Keiso Matashane-Marite, Acting Chief of the Gender Equality and Women’s Empowerment Section, Gender, Poverty and Social Policy Division at the United Nations Economic Commission for Africa (UNECA) says women and girls are marginalized economically. Women and girls face deep barriers in financial inclusion because they do not have the requisite skills and knowledge that STEM careers avail.

Ms. Matashane-Marite, speaking at a media briefing to present the results of the African Women’s Report on ‘Digital Finance Ecosystems – Pathways to Women’s Economic Empowerment in Africa’, lamented the many  barriers that prevent financial access for women in Africa. The study was done to promote economic empowerment of women and girls.

“Without economic empowerment of women, substantive empowerment of women is an issue,” Ms. Matashane-Marite,” noted, arguing that economic empowerment for women is the right step in ensuring women are empowered in the social and political spheres.

Tied to its mandate, the ECA was providing technical support to member countries in promoting women empowerment through policy implementation and the transformation of the financial system. The Gender, Poverty and Social Policy Division at ECA has developed a result area on digital transformation to ensure that gender informs digitalisation in every aspect.

“We have set out a number of pillars where we are starting…the first one is on STEM because we want to see African member states institutionalizing STEM education for girls and to see a movement just beyond policy pronouncement to implement the policy undertakings that have been done on STEM. STEM is critical,” said Ms. Natashane-Marite.

Furthermore, the ECA is working with the African Union Commission in a campaign on financial inclusion for women.  Ms. Natashane-Marite revealed that the ECA was undertaking research on digital transformation in ‘making a case for ensuring that STEM does take root’.

Digitalization, particularly in the financial sector, has the potential to be a critical backbone for economic and social transformation in Africa where the digital economy is envisaged to reach $300 billion by 2025 as a result of a fivefold increase in digitalization and internet use.

“Digitalization is critical to the realization of all components of women’s empowerment,” said Mr. Syed Ahmed, the Lead author of the three-year study conducted jointly with the Graca Machel Foundation, highlighting that digital finance has a critical role to play in women’s economic empowerment’.

Digital finance refers to digital forms of credit, savings, insurance and financial transfers.

Mr. Ahmed noted that digital and mobile connectivity, digital finance readiness and ICT usage have enabled women’s access to digital finance. However, women have limited access to internet usage than men across Africa. Furthermore women have other limitations such as affording digital tools, poor digital literacy, poor digital skills and restrictive social norms.

The study recommended concrete policy responses to overcome these barriers such as lowering the risks of accessing credit by women, removing inherent, invisible and unwitting barriers to women’s access to financial products and services.

Besides, financial laws at all levels of government should be amended to encourage mobile money uptake particularly for women, across Africa, thereby increasing savings ratios and enhancing their economic empowerment Mr. Ahmed urged.

“Although mobile money services are more common in Africa than in other regions of the world, only 29 per cent of women in sub-Saharan Africa use mobile Internet, compared with 48 per cent of women globally,” said Mr. Ahmed, adding that “In Africa as a whole, approximately 12 percent of women have sufficient digital finance-related ICT skills, which is below the global average. Capacity development programmes are therefore clearly needed to enhance digital finance skills.”

The collaboration will help boost e-commerce in small island developing states by improving digital economy knowledge and capacity.

The eTrade for all initiative has gained a new member – the Pacific Islands Forum Secretariat (PIFS), raising the initiative’s membership to 35 partners.

PIFS will help strengthen e-commerce capacity-building and knowledge-sharing activities in the region and bring the Pacific region’s experiences to other partners and stakeholders.

“I am proud to lead this unique partnership that connects the dots between countries, partners and donors, and leverages the digital economy for inclusive and sustainable development,” said Shamika N. Sirimanne, director of UNCTAD’s division on technology and logistics.

“We look forward to engaging further with PIFS and other partners to expand the current support for e-commerce and digital development in the Pacific region for the benefit of all,” she added.

Playing a leading role in the Pacific’s development

PIFS is the region’s premier political and economic policy organization.

Founded in 1971, it comprises 18 members: Australia, Cook Islands, Federated States of Micronesia, Fiji, French Polynesia, Kiribati, Nauru, New Caledonia, New Zealand, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

PIFS is a leader in trade-related matters in the Pacific region, including in e-commerce.

“We are pleased to be the latest addition to the eTrade for all initiative and to join forces with partners to improve digital trade readiness in the Pacific,” said Mere Falemaka, ambassador of the Pacific Island Forum to the World Trade Organization and the United Nations in Geneva.

“The COVID-19 pandemic presented both challenges and opportunities for the world, including our region. It is therefore essential that Pacific businesses are well-equipped to face this new digital era to avoid the risk of falling behind,” she added.

PIFS initiated the Pacific E-commerce Initiative in 2017. E-commerce is one of the four priorities of the Pacific Aid-for-Trade Strategy 2020-2025, given its potential to narrow distances and trade costs, and to promote the diversification of Pacific economies.

Between 2017 and 2021, PIFS partnered with UNCTAD to conduct five eTrade readiness assessments and further leverage the related methodology, promoting and developing harmonized e-commerce assessments in six additional countries, with the latest conducted in Nauru in June 2021.

The findings of the assessments informed the development of a Pacific regional e-commerce strategy and roadmap, outlining the Pacific consensus on the priority regional measures to boost e-commerce readiness in the region and help businesses make the most of global online markets.

PIFS coordinates the implementation of the regional strategy, supported by numerous partners including the Pacific Digital Economy Programme, a joint initiative by the UN Capital Development Fund, UNCTAD and the UN Development Programme, with financial support from Australia.

Through this programme, UNCTAD assisted the Solomon Islands in developing its first national e-commerce strategy.

The Pacific e-commerce portal, a regional information repository on e-commerce development in the Pacific, was launched in August 2022.

Fostering partnerships to enhance capacity

Created in 2016, the eTrade for all initiative serves as a global helpdesk for information and contacts on technical assistance in policy areas key to the development of e-commerce and the digital economy in developing countries.

It has since generated widely acknowledged and vital spin-offs, such as the eTrade readiness assessments and the eTrade for Women initiative.

The initiative marked a new milestone in April 2022 with the enrolment of the International Chamber of Commerce as its principal private sector counterpart. This partnership leverages a global network of businesses and resources to maximize the impact of the digital economy.

The initiative’s various cooperation and spin-off activities have been funded by Australia, Estonia, Finland, Germany, the Republic of Korea, the Netherlands, Sweden, Switzerland and the United Kingdom.

The pandemic exposed the weaknesses in Indonesia’s service delivery system. There is a pressing need to adopt digital technology and modernize the public sector for a more inclusive and resilient society. A new World Bank report explores how this can be achieved.

During the COVID-19 pandemic, governments worldwide sought to harness digital technology to maintain service delivery and provide social assistance. While Indonesia has made strides on this front, it also faced significant obstacles. For example, obtaining reliable data on the state of the pandemic was both challenging and time intensive as existing government information systems were, and are still, fragmented, and outdated.

The Indonesian government announced several programs aimed at softening the financial shocks from the pandemic. However, the roll-out was often delayed due to difficulties in identifying and verifying target beneficiaries. It illustrated how poor tech adoption and outdated business processes can pose challenges to policy deliberation, design, delivery, and monitoring and evaluation. Therefore, there is now a pressing need to develop a robust digital environment and leverage it for a more inclusive and resilient society.

The World Bank’s  Beyond Unicorn report proposes three recommendations for this: (1) develop a national digital identification (digital ID) framework; (2) transition away from e-government towards GovTech; and (3) embrace a whole-of-government approach for data-management policy.

Let’s take a look at each of these:

1. Develop a Digital ID framework

Digital ID systems allow people to prove their identity remotely, by relying on identity data and a trusted verification mechanism. This is important for inclusion; because accessing public services often requires people to prove their identity. Digital ID systems also enable people to confidently participate in the digital economy because they know they are interacting with the right person, and that their transaction is protected by law.  In Indonesia, the first step towards this would be to enhance its existing electronic national identification system (KTP-el) to become the platform for a digital ID system. Leveraging this existing system can simplify and reduce the cost of introducing digital ID.

At the same time, it is important to provide safeguards and accountability for the collection, use, and sharing of personal data, as well as formalize the rights of the people whose data is being collected and stored. Indonesia recently passed its long-awaited privacy and data protection law. However, work remains to be done in building citizen trust, given the core function of personal data in the digital ID system, the digital economy, and public sector.

2. Towards GovTech, Away from e-Gov

In the past decade, Indonesia has taken concrete steps towards e-government, for example by establishing e-filing services and enabling online payments for motor vehicle taxes.  Several ministries have launched ambitious public digital initiatives. This has resulted in a plethora of digital apps. Indonesia’s Ministry of Communications and Informatics (KOMINFO) estimates that there are 27,400 government applications, which raises concerns about coordination and efficiency.

Figure 1 illustrates the evolution of public sector digital transformation. E-Government is Indonesia’s first initiative to leverage ICT to improve public service delivery; it currently tends to focus on specific programs, resulting in progress that is siloed. GovTech is the latest generation of digital transformation; it emphasizes universal accessibility and a whole-of-government approach, thus deepening the citizen-government relationship and building the enablers to drive the digital transformation agenda.

Figure 1: GovTech is the latest iteration in the digital transformation of the public sector

GovTech is the latest iteration in the digital transformation of the public sector

Source: World Bank; extending the OECD’s presentation of digital transformation in Digital Government, 2019

An important step towards GovTech is to develop a comprehensive national digital transformation agenda and to place a central government authority in the driving seat to consolidate the needed political and bureaucratic support.  This also means adopting a whole-of-government approach to digital transformation, which is coordinated and spearheaded by an agency with multi-ministry oversight.

3. A Whole-of-Government Approach for Data-Management Policy

This is key to any digital transformation agenda. A whole-of-government approach means eliminating fragmented data management and addressing the lack of cross-sectoral data sharing. The availability of reliable data varies widely across government departments and the lack of data standards and interoperability obstruct overall effective government.

Encouragingly, Indonesia has One Data regulations that address the key elements of data management. However, its implementation is still in its preliminary stages. In practice, Indonesia does not yet have an effective means to coordinate the execution of these regulations, few agencies have appointed their One Data trusties, the bulk of government data is not standardized, and platforms remain interoperable (Islami, 2021). Seeing through the regulation’s implementation will require leadership, in the form of developing of subsidiary regulations, mobilizing support to implement the policy in priori­ty sectors, appointing data stewards for priority sectors, and so on.

Indonesia’s structural constraints to development persist, even in the context of harnessing technology for the poor. Technology and public sector modernization are complementary to addressing these development challenges, not replacements. In paving the path towards increased effectiveness, the government needs to ask: how can this ensure a more resilient and inclusive Indonesia?

 

This blog post is part of a series discussing the digital divide in the context of broadband internet accessmobile internet access, and digital economy relying on results of the World Bank’s Beyond Unicorn report.

One major lesson for Africa from the Covid-19 pandemic is that it had an outsize negative impact on workers in jobs that cannot be performed remotely.  Such jobs are typically in the informal sectors that dominate Africa’s economies. Services and other sectors more amenable to remote work were far less affected, which reduced the need for government social safety net interventions.

The pandemic also accelerated the digital transformation known as the Fourth Industrial Revolution (4IR), which was already underway across the globe.  As 4IR advances, Africa cannot afford to be left behind. ICT technologies can overcome gaps in a number of key sectors including agribusiness, communications and financial growth, unlocking better jobs, more effective tracking logistics for supply chains and even improved healthcare outcomes.

Fortunately, the continent presents an immense opportunity across a range of areas including mobile services, broadband infrastructure, and data storage. The continent’s young and fast-growing population, which has come of age in the digital era, is hungry for tools and technologies to meet their strong creative and entrepreneurial needs. And the absence of legacy infrastructure in many countries offers an opening to adopt the latest standards and innovations.

Strong coordination between business, governments and other actors such as civil society and regional agencies will be needed.

Days ahead of the opening of its Market Days 2022 event, the Africa Investment Forum is well placed to play an integral role in channeling investment into information and communication infrastructure.

Africa Investment Forum founding institutions, the African Development Bank and the European Investment Bank, supported the West Indian Ocean Cable Company(link is external) to deliver high-capacity connectivity of over 550 locations in 30 African countries with key financial and commercial centers around the world.

Demand for mobile services—particularly smartphones — is forecast to continue growing rapidly across Africa. The GSMA, an association of the world’s largest number of mobile operators, projects that about 600 million Africans will subscribe to mobile services by 2025, up from 456 million in 2018. Mobile broadband will spur demand not only for creative industries(link is external), but for services in fintech and telehealth, creating a knock-on effect.

There is also surging demand for so-called backbone ICT infrastructure, which comprises many different sorts of equipment. This includes root servers, fiber broadband lines, networking switches and routers and cellular towers, to name a few.  Building out of all of these elements represent opportunities for investors to meet rampant demand but also significant job creation potential in construction, installation and services.

The IFC and Google report, eConomy Africa 2020(link is external), projects an African Internet economy that could reach $180 billion by 2025, accounting for 5.2% of the continent’s GDP. By 2050, the potential contribution could reach $712 billion, or 8.5% of the continent’s GDP.

Another challenge that the Africa Investment Forum is working to overcome is the perception that investing in Africa is risky. Working with partners like United States Trade and Development Agency, The Africa Investment Forum prepares projects in its pipeline, getting them ready for investment.

Given the theme of the 2022 Market Days—building economic resilience through sustainable investments—transactions involving smart and resilient infrastructure are likely to enjoy the spotlight.

The event, which takes place from 2-4 November, will showcase billions of dollars of ICT energy, agribusiness and healthcare deals to investors. It will also promote sectors where Africa has a comparative advantage, such as creative industries, music, film, textiles, and sports.

Since its inception in 2018, the Africa Investment Forum platform has mobilized investment interests in excess of $100 billion.

The platform is an initiative of the African Development Bank and seven other development institutions: Africa 50; the Africa Finance Corporation; the African Export-Import Bank; the Development Bank of Southern Africa; the Trade and Development Bank; the European Investment Bank; and the Islamic Development Bank.

Ahead of the Global Manufacturing and Industrialisation Summit (GMIS) 2023, UNIDO ITPO Shanghai, in collaboration with the Chinese Federation of Industrial Economics (CFIE) and GMIS, hosted a webinar on “Lessons from the Lighthouses: How is China’s Digital Revolution Impacting Industrial Development?”.

The webinar highlighted the success of Chinese companies in deploying advanced manufacturing at scale, generating new value and customer experiences within the factory or across value chains. These industrial lighthouses are showing the way for the digital transformation in China.

Bernardo Calzadilla-Sarmiento, Director of the Division of Fair Production, Sustainability Standards and Trade, opened the session, noting that while industrial lighthouses provide much needed productivity benefits and added value, “…the full benefit of the Fourth Industrial Revolution in manufacturing can only be realized if complete value chains and production ecosystems are transformed . He stressed, “SMEs in developing countries face distinct challenges related to low technological levels, a lack of skilled workforce, and weak access to modern technology and affordable ICT infrastructure, including the latest communication standards like 5G. The situation is even more complex for women-owned firms, as they often have limited access to financial resources and technical support for digital transformation.”

Xiong Meng, Executive Vice Chairman and Secretary General, CFIE noted that in China, advanced technology had “greatly enhanced the stability and modernity of [the] industrial supply chain”.

Namir Hourani, Managing Director, GMIS, observed that the adoption of digital innovations had “quickly transformed China into one of the largest digital economies and e-commerce markets”.

The panel discussion moderated by Xiaolei Zhao, Head, UNIDO ITPO Shanghai noted UNIDO’s commitment to assisting industry with digital transformation from the perspectives of sustainable development and international standards.  UNIDO has the expertise to deliver the necessary tools to support this endeavour.  With China contributing one-third of the 103 industrial lighthouses globally, the panel featured disruptive manufacturers, Hao Jingxian, General Manager of SAIC Maxus Automobile Company; Huang Luchuan, Co-Founder and Chief Operating Officer, ROOTCLOUD Technology Company; and Zhou Xiaoxun, Executive Vice President, Siemens China.

Drawing on the experiences of the respective speakers in building lighthouse factories within the Chinese industrial ecosystem, the panel shared their solutions. Speakers stressed a number of important elements for a successful transition to lighthouse production. This included a systematized and standardized approach to construction and the need to focus on the entire value chain, going beyond the factory floor. Flexibility of digital tools used in the supply chain was also highlighted. The need for people-centric digitalization and the integration of sustainability goals in the system were also raised as important elements.

The webinar is the first of a series of digital and in-person expert roadshows, leading to the GMIS 2023 Summit. It can be viewed following registration at the following link: https://gmisummit.com/registration

For further information: Email

60 authorities from 25 countries will participate in the Seventh Digital Transformation Summit in Lima on November 10th and 11th

Top government authorities from the Americas, Asia, and Europe will convene on November 10th and 11th in Lima for the region’s most important meeting on electronic government.

The Seventh Digital Government Ministerial Meeting of Latin America and the Caribbean will be held in conjunction with the 16th Annual Meeting of the Electronic Government Network of Latin America and the Caribbean (GEALC Network), which is organizing this summit in collaboration with the Inter-American Development Bank (IDB), the Organization of American States (OAS), and the Peruvian Secretariat of Digital Government and Transformation.

The event will foster discussion about innovative solutions to make public administrations more efficient and strengthen their capacity to meet citizens’ needs. It will also be a space for sharing experiences and best practices. This meeting comes at a pivotal moment for Latin America and the Caribbean: following the pandemic, its digital transformation is gaining high-level momentum to achieve regional integration and reinvigorate an inclusive and productive economy and society.

The meeting’s keynote speaker will be Fernando de Pablo Martín, General Director of Digital Government of Madrid (Spain), a city that tops the United Nations’ digital transformation rankings. The summit will also feature presentations from countries in other regions, like Korea, Estonia, and Portugal, as well as international bodies like the IDB, the OAS, the Organization for Economic Co-operation and Development, and the International Telecommunication Union.

The summit’s plenary sessions will be open to the public and anyone involved in technology, public policy, academia, civil society, and the private sector can participate. Those interested can sign up at: https://facilita.gob.pe/t/3047.

Peru-based journalists interested in covering the event should contact Francis Flores Azaña at fflores@digital.gob.pe. Journalists from other countries should send an email to fflores@digital.gob.pe to coordinate their registration.

About the agenda

On the first day of the summit, the IDB will unveil its Guide to Digital Transformation for Governments. This document is one of the most complete guides to digital transformation, and it aims to support the public sector in Latin America and the Caribbean as it undertakes a crosscutting, comprehensive and citizen-centered digitization process

Also during the first day, event participants will vote to choose the winners of the excelGOB award for excellence in digital government. The award has two categories: 1) digital transformation and cross-border digital services, with special mentions for gender-sensitive approaches and emerging technologies; and 2) open data. The excelGOB awards showcase the best solutions for citizen-centered public management implemented by the region’s governments, and they disseminate and systematize the region’s best practices in digital government.

The second day will include the first test run of the regional scheme for cross-border electronic signatures. By allowing countries to recognize each other’s digital signatures, this mechanism will enable reliable and secure electronic transactions between countries and further the region’s integration.

See the full event agenda here.

About the Summit

This ministerial summit advances the Regional Program for Digital Transformation approved at the Ninth Summit of the Americas, organized by the OAS in Los Angeles (United States) on June 8-10. This program commits to pursuing innovative digital ecosystems, open and digital government, cybersecurity, and “inclusive, resilient, efficient, and equitable” economic recovery “using digital technologies.”

Since the GEALC Network was established 19 years ago, senior officials from member countries have attended bi-annual ministerial meetings and annual meetings to chart a path for using information and communication technologies in the region’s public policies.

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. Access our virtual tour.

About the GEALC Network

The Electronic Government Network of Latin America and the Caribbean (GEALC Network), backed by the OAS and the IDB, is the main mechanism for governments in the region to coordinate and exchange knowledge on digital policies.

Marking World Cities Day on 31 October, UNCTAD shines a light on how urban entrepreneurs can help make cities and human settlements inclusive, safe, resilient and sustainable.

A new report by UNCTAD explores how urban entrepreneurs, or urbanpreneurs, use innovative solutions to tackle challenges triggered by rapid urbanization and drive the expansion of smart cities.

The report entitled “Urban expansion, an entrepreneur’s playground”, published on 31 October, showcases replicable examples of urbanpreneurs worldwide tackling the socioeconomic and environmental challenges associated with ongoing rapid urbanization.

By 2050, nearly 70% of the global population will live in urban areas, putting to the test the capacity of cities to accommodate them.

“Entrepreneurs are stepping in to help cities meet the needs of their rising populations,” said Arlette Verploegh, who leads UNCTAD’s entrepreneurship development team that produced the report.

“As game changers and innovators with strong roots in their cities, they see first-hand the challenges that exist. These urbanpreneurs are in a good position to offer solutions,” Ms. Verploegh added.

Driving sustainable urbanization

The report highlights the contribution of micro, small and medium-sized enterprises (MSMEs) in boosting innovation and creating jobs, especially in developing countries.

It points to urban farming in Johannesburg, South Africa, to illustrate green entrepreneurship and business ingenuity.

There, urbanpreneurs transform underutilized rooftops into farms, hire locals to produce food sourced from the city and work with partners to scale up green infrastructure.

“Fostering entrepreneurship and innovation for urban development is important and can inspire more business-led innovations for resilient and sustainable cities in the future,” the report notes.

Empowering communities

When it comes to urban problem-solving, urbanpreneurs take advantage of networked ecosystems, powered by greater internet connectivity and digital resources that cities can offer.

In Sao Paulo, Brazil, a local fintech start-up is making a difference in a slum by improving financial literacy, expanding financial inclusion, facilitating MSME credit for its dwellers and helping them access loans with lower interest rates.

In Subang Jaya, Malaysia, urbanpreneurs are helping mom-and-pop shops – small, family-owned retailers – embrace digitalization. Such MSMEs account for about 97% of the country’s businesses, with many needing help to implement digital technologies.

Thanks to local entrepreneurs, more MSMEs can digitize their operations, better manage their inventories and get financial assistance.

Leveraging multistakeholder collaboration

Modern cities embrace collaboration as a fundamental principle for growth, the report says.

Innovative partnerships among entrepreneurs and other city stakeholders, including universities, policymakers and enterprise development centres such as incubators and accelerators, are accelerating the rise of city clusters.

Built on collaboration, a new Pan-African digital hub in Kigali, Rwanda, is boosting entrepreneurship and the city’s overall competitiveness, thanks to readily available information, talent and capital.

In Monterrey, Mexico, a networked business ecosystem that prioritizes innovation is rapidly emerging, enabling urbanpreneurs to pool knowledge, technology and resources.

The Tecnológico de Monterrey System is a government-backed collaborative venture connecting businesses and educational institutions.

With a digital future in mind, it aims to spur economic growth by awakening students’ entrepreneurial spirit and enhancing cooperation between start-ups and other firms.

Success ingredients

The report outlines how cities can better leverage the power of entrepreneurship.

It calls on policymakers to attract urbanpreneurs – by nurturing talent and making resources available – and recognize them as partners in addressing urban challenges.

It underscores the need to create a collaborative, multistakeholder ecosystem in which new technologies are harnessed to tackle the challenges of rapid urbanization.

Amid uncertainty and global crises, the report says, cities with strong collaborative foundations have the potential to become fertile grounds for entrepreneurs to do what they do best: innovating to promote community wellbeing.

Digital technologies offer new avenues for economic growth in Africa by accelerating job creation, supporting access to public services and increasing productivity and innovation. However, major challenges remain. The lack of connectivity in remote and rural regions and the low use of digital technologies in connected areas is further disadvantaging the poor, women, and small businesses. Increased cyber risks and lack of data protection have brought new risks and vulnerabilities to businesses, governments, and people.

Government policies and regulations are key to enable greater use of digital services while mitigating risks. But how to intervene in a timely manner in a changing technological environment? Agile enabling regulations are needed to quickly respond to market developments, facilitating entry of new competitors for the benefit of consumers. In Kenya, collaboration between the competition authority, the central bank and the telecom regulator allowed digital financial service providers to access telecom services to offer mobile money services along mobile network operators. Consumers benefitted with greater availability of options for mobile payments. Later, the collaboration also facilitated interoperability between mobile money providers and banks, allowing consumers to seamlessly transfer funds between providers, top up saving accounts or use digital credit.

Such new approach is required to support the development of agile and collaborative regulations. A shift from planning and controlling to piloting and implementing policies in a multi-stakeholder setting for rapid feedback and iteration is necessary. Feedback loops allow policies to be evaluated against the backdrop of the broader ecosystem to determine if they are still meeting citizens’ values and needs and considering the impact on the industry and private participation. To implement this approach, a change of mindset is first needed. This approach is particularly appropriate for dealing with digital transformation, which by its nature is changing and evolving, and would otherwise be hampered by rigid policies and regulations.

Some African countries are already implementing agile regulation principles to address various issues. Ghana and South Africa responded swiftly to COVID pandemic demand for higher bandwidth by quickly adjusting current regulations and made it easy for companies to offer higher bandwidth to citizens. Kenya and Zimbabwe were quick to remove roadblocks and supported the roll-out of applications that allowed citizens to quickly access mobile money transfers and other financial apps. The African Union has consulted perspectives from businesses, civil society and academia to develop policy frameworks on data and on digital identities. This inclusive multi-stakeholder approach resulted in workable frameworks that encourage innovation through data sharing and cross-border data flows for African eCommerce while protecting rights of individuals. These African Union frameworks on data and on digital identities are important cornerstones to build an African Digital Single Market – the vision of the Smart Africa Alliance that is endorsed by all members of the African Union.

The African Union’s Agenda 2063 envisions a people-driven development for Africa, relying on the potential of African people, especially its women and youth. That’s why digital skills are prioritized in the African Union Digital Transformation Strategy 2020-2030, where the goal is to “build inclusive digital skills and human capacity across the digital sciences […] and technology policy & regulation”. African leaders recognize the pivotal role of policies and regulations in shaping societal and business practices and – if done correctly – how policies can support and encourage digital transformation.

German Development Cooperation and the Digital Development Partnership of the World Bank, in partnership with Smart Africa, have started piloting this agile approach under the Agile Regulation for Digital Transformation program (AReg4DT), a program linked to the Smart Africa Digital Academy, the digital skills vehicle for Smart Africa, and atingi – an online learning platform developed by GIZ, the implementing organization of the German Federal Ministry for Economic Development and Cooperation. The pilot is equipping policymakers and regulators in Africa with the knowledge and tools to regulate digital markets in Africa to support digital transformation. The results so far have been promising with a combination of online and face-to-face training events to allow for learning and knowledge exchange within and for Africa. This partnership is testing the development of capacity building activities in an agile and iterative way and tailoring the content to the local context, as well as gaining a practical understanding about implementation challenges and the training ecosystem in Africa. Prof. Dr. Yeboah-Boateng from Ghana’s National Communications Authority also appreciated the chance for peer-to-peer exchange during the event in Abidjan. In particular, he noted the “value of better harmonization of policies and regulations across Africa that would benefit the continent as a whole.”

Regulators across the world are developing and testing new policies and regulatory tools, while also adapting existing ones for new purposes, particularly in face of the COVID pandemic. In many cases, the same technologies that challenge traditional regulation also offer many opportunities to reinvent rule making, oversight, inspections, and enforcement.

The AReg4DT program supports the implementation of the Digital Economy for Africa (DE4A) initiative and aims at facilitating regional integration through a common understanding of challenges, opportunities and solutions that can be implemented at the national and regional level, thereby ushering Africa, into the dawn of the single digital market.

This article is part of:Shaping the Future of Digital Economy and New Value Creation

Fifty-two participants, consisting of Rwandan diplomats and government institutions officials and staff, have successfully completed DiploFoundation’s capacity building programme Emerging Digital Diplomacy and Foreign Policy.

The training, sponsored by Malta’s Ministry for Foreign and European Affairs and Trade and supported by Rwanda’s Ministry of Foreign Affairs and International Cooperation, was held from 3 to 14 October 2022.

The online training discussed the impact of digitalisation on diplomacy and analysed the main trends in geopolitics, major negotiations, and the use of practical tools.

Speaking at the launch of the training, Malta’s Minister for Foreign and European Affairs and Trade Dr Ian Borg explained that it is vital for small countries to harness the power of cyber diplomacy. He added that after running a similar programme for Namibian diplomats, Malta was delighted to share its experience by working with Rwanda through Diplo in this exciting new field. Borg concluded by highlighting the strong relationship being developed between Malta and Rwanda in various sectors and that he is looking forward to further collaborations.

Rwanda’s Minister for Foreign Affairs and International Cooperation Dr Vincent Biruta thanked Malta and Diplo for the training. He highlighted the critical role of digitalisation in today’s diplomacy and how the emergence of digital policy topics has increased the complexity of diplomacy at all levels. Biruta also spoke of the friendship and growing bilateral relations between Rwanda and Malta, the Commonwealth background shared by the two countries, and the commitment towards a continued collaboration in various sectors.

Diplo’s Executive Director Dr Jovan Kurbalija thanked both ministers for their role in encouraging capacity-building training such as this one and congratulated all the participants for their active participation, comments, questions, and insights.

About DiploFoundation

Diplo is a Swiss-Maltese non-governmental organisation that specialises in capacity development in the field of internet governance and digital policy. Established in 2002, Diplo, among other things, works to improve the role of small and developing states in global diplomacy by:

  • Training officials through online courses, workshops, and simulation exercises
  • Developing capacity on internet governance, cybersecurity, data, artificial intelligence, and other emerging tech issues
  • Promoting and developing digital tools for inclusive and impactful governance and policymaking

Over the years, Diplo has successfully trained over 6,600 alumni from 203 countries and territories, including individuals working in governments, the private and civil sector, media, and academia.

More about Emerging Digital Diplomacy and Foreign Policy

The capacity-building training Emerging Digital Diplomacy and Foreign Policy is a tailor-made programme created by Diplo in cooperation with Rwanda’s Ministry of Foreign Affairs and International Cooperation.

The aim of the training is to provide participants with the skills and knowledge to:

  • Advance the country’s interest in digital geopolitics and geoeconomics
  • Negotiate new digital policy topics such as cybersecurity and e-commerce in multilateral and bilateral negotiations
  • Use new digital tools such as social media, online conferencing, data, and artificial intelligence

Concerted global efforts are needed to help developing economies leverage technological innovations for sustainable development.

Sustainable and frontier technologies can enable the developing world to fast-track greener and inclusive development, but international collaboration is required to realize this prospect.

That was the main message from the UN Commission on Science and Technology for Development (CSTD) at a meeting it held on 25 and 26 October.

“There is a critical role for international cooperation to provide technical and financial support to developing countries, so that they can benefit from these green windows of opportunities,” said Shamika N. Sirimanne, director of technology and logistics while opening the meeting.

UNCTAD provides substantive support to the CSTD, the UN “torch-bearer and focal point for science, technology and innovation (STI) for development.”

Discussions at the meeting focused on two priority themes: how STI can boost cleaner and more competitive production and ensuring safe water and sanitation for all.

Late-mover advantage for developing countries

Green, sustainable technologies can open a window of opportunity for developing economies to achieve technological leapfrogging, the meeting noted.

Unencumbered by legacy systems, countries lagging behind are more agile in adopting such technologies at lower costs and avoiding risks associated with experimentation, research and development, and slow initial uptake experienced by advanced economies.

Besides, changes to policies, funding availability and global demands – fuelled by the world’s urgent push for sustainability – can also help reduce barriers to entry, accelerating the adoption of these technologies in the developing world.

Making economies cleaner and more productive

Technological innovations can bolster developing countries’ role in greening global value chains as well as diversifying and moving towards more sustainable economic sectors – provided enabling policies and collaborations are in place.

For example, successful models to speed up the development of renewable energy technology have been institutional in nature, with countries using new environmental laws to encourage public-private sector cooperation on green transitions.

In China, the 2006 renewable energy law fostered the creation of the country’s biomass industry.

Egypt’s 2014 renewable energy law has enabled the private sector to partner with the government to produce electricity from renewables.

Another example in energy production is the global green hydrogen economy.

Developing nations such as Chile, Panama and South Africa already have advanced green hydrogen strategies consistent with sustainable development.

With richer countries lacking labour to produce electrolysers, which is key to creating green hydrogen, their developing counterparts have an opportunity to meet future demand in Europe, Japan and South Korea.

Pursuing universal access to water and sanitation

Even today, safe drinking water and sanitation remains a challenge to many vulnerable communities worldwide.

Rapid advances in frontier technologies – including the bioeconomy, artificial intelligence, big data, the Internet of things (IoT) and nanotechnology – all have the water and sanitation sector as a potential primary beneficiary.

These solutions make it possible to reach last-mile populations, as off-grid decentralized solutions become increasingly affordable and can be run and maintained locally with minimal training.

For instance, Swiss Fresh Water has developed a low-cost and low-power desalination system enabling small-scale production of cheap drinking water in developing countries, especially in Africa.

Similarly, UN Women has helped pilot a solar water pumping project – now managed by community members – for drinking and irrigation in Mozambique.

Actions needed to realize ‘green windows of opportunity’

For developing countries to unlock opportunities from STI, the meeting renewed calls to bridge the divide in digital capacity – largely driven by uneven investment in research and development between wealthier and poorer economies.

Meanwhile, international cooperation on innovation will require more equitable partnerships, going beyond traditional donor-recipient relationships.

When planning for technology transfer, it’s important to consider a range of key factors and make such transfer part of a holistic effort to build up broader socioeconomic infrastructure in developing nations.

On policy recommendations, the meeting emphasized cultivating and empowering local innovation ecosystems, notably by including women and marginalized groups in design and project implementation.

It also underscored the need for STI policies that support concrete solutions to advance sustainability and climate resilience.

The International Telecommunication Union (ITU) has emerged from its latest Plenipotentiary conference with a budget boost worth CHF 3.9 million per year, or nearly USD 3.9 million per year at current exchange rates.

New pledges from contributing countries both large and small will strengthen ITU’s budget, help maintain key radiocommunication, telecom standardization and digital development activities, and ensure the organization can meet the goals outlined in its latest four-year strategic plan.

During the recent ITU Plenipotentiary Conference (PP-22) in Bucharest, Romania, four countries announced they would raise their annual budget contributions to the UN specialized agency for next year and beyond.

Delegates from the United States, Brazil, Guinea, and Papua New Guinea each announced increases during national policy statements in the first week of the conference.

Financial commitments are denominated in Swiss francs (CHF) and expressed in annual contributory units. These units, each worth CHF 318,000 serve as the basic fee payable each year for a Member State to maintain voting rights and participate fully in ITU conferences.

Developing countries may pay half-unit contributions, with lower amounts for the least developed countries, landlocked developing countries, and small island developing states.

United States: Top contributor, up by nearly 17 per cent

US delegate Don Graves pointed out several key goals for the international community, namely: “to achieve universal affordable connectivity; to close digital divides, including the gender digital divide; to equip people with digital skills; [and] to promote a secure and resilient digital environment.”

With these aims in mind, the United States will increase its contribution by CHF 1.59 million per year – or from 30 units to 35 units – starting with next year’s budget, Graves announced in the US policy statement.

This makes the US the largest single contributor to ITU for the coming period.

Brazil: More than tripling

South America’s largest country pledged to increase its support from three units to eleven, or from CHF 954,000 to CHF 3.5 million each year. The added funds are meant to strengthen the agency and its projects, help overcome challenges, and “reinforce Brazil’s commitment to ITU,” national delegate Carlos Manuel Baigorri said in Brazil’s policy statement.

The increase places the country among ITU’s top contributors, alongside 14 others committed to providing 10 or more contributory units.

The pledge increase reflects confidence “that advances could be achieved in critical contemporary topics as cyber security, artificial intelligence, and outer space sustainability,” Baigorri said.

Guinea: Eight-fold increase

The West African country represented by delegate Ousmane Gaoual Diallo pledged to support the ITU budget with one full contributory unit – a substantial commitment for one of the world’s 46 least developed countries.

In fact, the CHF 318,000 unit was eight times more than the country’s commitment up to now, he noted in Guinea’s policy statement.

Beyond giving more funds, the country aims to “actively participate in ITU’s Partner2Connect initiative and in the construction of the world information society,” Diallo said.

Papua New Guinea: Doubling commitment

Increasing regional responsibilities motivated Papua New Guinea to double its promised ITU budget contribution from a quarter to half a unit yearly, said delegate Timothy Masiu, calling his country “an emerging nation in the Pacific region.”

ITU needs to rethink its approach to global cooperation over the next four years, as individual countries need to tackle digital transformation differently, he added.

In delivering Papua New Guinea’s policy statement, Masiu proposed upping ITU’s direct Pacific presence with the “establishment of a sub-regional office in the Pacific.”

ITU’s lifeblood

Most of ITU’s 193 Member States pledged to maintain their voluntary annual budget contributions, which should continue to account for about two-thirds of the funding for the United Nations specialized agency for information and communication technologies.

Five countries indicated fractional reductions amounting to 2 1/16 units, worth CHF 655,875.

Assuming current pledges materialize, ITU’s budget will increase by 3.6 per cent next year.

Effective mobilization of funds keeps the ITU budget healthy and helps support less developed countries in their quest to join the global digital community.

The quadrennial Plenipotentiary – where ITU strategic and financial plans are adopted and top ITU officials are elected – also serves as the main occasion for member states to reaffirm or adjust their annual contributions.

See the full set of policy statements and plenary speeches delivered at PP-22.

Learn more about how ITU is funded.

One Swiss franc (CHF 1.00) was worth just under one US dollar (USD 0.997) according to the UN Operational Rates of Exchange in October 2022.

The annual dialogue, held during Parcel+Post Expo in Frankfurt on 17 October, explored cross-sector collaboration under the theme, “Partner to transform – Powering postal digital (r)evolution”.

Opening the forum, UPU Deputy Director General Marjan Osvald noted that the discussions came at a “pivotal moment for the UPU” as the organization explores potential avenues for cooperation with the private sector.

“The UPU has recently opened up additional opportunities for our wider postal sector colleagues to add their voice to the deliberations of the UPU through the Consultative Committee,” he said.

The forum’s first panels explored the digital readiness of the postal network, bringing together Zimbabwe Post Acting General Manager for Operations and Marketing Venencia Sigauke, SAP Industry Manager for Postal and Parcel Services Christoph Kopka, and UPU Coordinator for Digital Policies and Trade Paul Donohoe.

They highlighted the power of the Post’s physical network, which could be used to deliver a number of digital services in support of socioeconomic development and business goals. Raising awareness among potential partners, as well as educating postal employees and customers, would be key to harnessing this potential, they said.

“We need to change perceptions and continuously market digital platforms. People are not used to access services digitally, they are used to accessing [postal] services physically,” said Sigauke.

Donohoe noted that the UPU was working to raise awareness of this potential amongst key partners, including international development agencies, governments, and the private sector, through programmes such as its digital readiness assessments.


The second panel examined how emerging advanced technologies could reshape the sector, bringing together Posta Shqiptare CEO Anisa Kaltanji, Analysis Mason Partner and Head of Postal Practice Ian Streule, International Association for Trusted Blockchain Applications Executive Director Ricardo Simões, and UPU Financial Inclusion Programme Manager Saleh Khan.

Panellists demonstrated how advanced technologies were opening up immense opportunities for the Post to move ahead, at the same time advising the sector to keep sight of its most valuable asset – customers’ trust. The Post could therefore enhance the uptake of cutting-edge services with its physical presence and closeness to customers.

Kaltanji recalled the important role the Post’s physical presence played during the pandemic – a time when digitization accelerated rapidly. “The only human touch most of us faced during COVID was the postman,” she said.

“People trust the postal system to deliver a wide set of services,” said Khan, adding that Posts had an “appetite for exploring this topic, seeing what can be done to leverage distributed ledger technologies, and innovate within this field.”

Panellists suggested the UPU could play a key role in enabling the right regulatory environment and standardization to implement new technologies and provide a seamless customer experience.

The forum’s final panel looked at leveraging partnerships to drive change across the sector, with Ship2MyID CEO and Founder Santosh Gopal, Escher Group CEO Brody Buhler, UPU Consultative Committee Chair Walter Trezek, and UPU Resource Mobilization and Stakeholder Engagement Programme Manager Alexander Thern-Svanberg.

They narrowed in on the ways the UPU, its member countries, and the private sector could benefit from each other’s insights and solutions, particularly in light of the recent opening of the UPU Consultative Committee to private sector companies. The Committee allows those from the wider sector to add their voice to UPU decision-making processes.

Buhler shared recent research from Escher, showing the changes in customer expectations since the beginning of the pandemic and underscoring the importance of a seamless e-commerce parcel delivery experience.

Gopal highlighted that the UPU could act as a focal point to collect data from not only members, but wider postal sectors participating in the Consultative Committee, emphasizing that “data is what makes money for everybody.”

The panellists discussed how exchanges between UPU members and private partners on data exchange, standards and regulation via the Consultative Committee could drive the UPU to modernize faster to help Posts and their partners respond to and anticipate customers’ needs.

Technology showcase

Later in the day, Stéphane Herrmann and Gustavo Damy, representatives from the UPU’s Postal Technology Centre, provided a more in-depth look at its technological solutions offering, including its electronic data interchange systems and big data platform. They noted that many of the UPU’s technical solutions were now open to wider postal sector players.

“Our strength is our diversity – we have all the players together to create the basis for innovation and the products that go with it,” said Damy.

In a special roundtable discussion, representatives from new Consultative Committee members Zonos, Ship2MyID, Geomain, Stampsdaq, Logistic Natives and Eurora highlighted their solutions as well as how they could interface with the UPU and its membership to add value.

They again underlined their willingness to work with the UPU to enable the right conditions to drive the sector forward.

Watch the 2022 World Leaders Forum & Technology Showcase recordings here.

The new report is aimed at helping countries harness technology and innovation for faster and more inclusive and sustainable economic growth.

UNCTAD has released a catalogue that, for the first time, identifies over 45,000 potential new products with export potential that can help diversify 233 economies.

The catalogue is aimed at informing governments, the private sector and other stakeholders who make up national innovation systems about possible product areas where technology can be used to diversify economies for structural transformation.

“The ability to identify new industries with potential could greatly help innovation and industrial policies,” said Shamika N. Sirimanne, director of UNCTAD’s technology and logistics division.

“This handy catalogue identifies such industries based on a country’s productive structure and level of development, and the demand for these products in the global market,” Ms. Sirimanne added.

From low- to higher-value products

Economic diversification is an essential feature of development. The more developed a country is, the more diversified its economy is likely to be, and the higher its technological level. Economic diversification is ultimately the result of innovation.

Research shows that structural transformation – the process whereby a sustained period of rising income and living standards coincides with changes in the distribution of economic activity – increases economic growth and competitiveness, moving jobs from low- to high-value-added products.

In other words, a country needs to be able to produce not only new products but also those that are more sophisticated, using higher skilled labour and more advanced technological applications.

This requires the diversification of economic activity towards more complex products. And development policies should be designed to facilitate this process.

Achieving this requires the selective promotion of new economic activities through targeted industrial, technology and innovation policies. To do this, policymakers should identify and target appropriate sectors and products, based on the productive structure of each country and changes in global demand.

The catalogue uses indices based on the economic complexity of a country to estimate the level of technology that goes into manufacturing different products, and aggregates information on the level of diversification and exports.

More complex products require higher levels of technology.

The index of product complexity is based on information about the bilateral trade of 233 economies, including small islands and territories, in over 45,000 product lines differentiated by unit price ranges.

Supporting transformative policies

The list of products serves as a basis for an inclusive process of identifying, evaluating and selecting economic activities for export diversification, and allows for strategic government interventions for the formulation of industrial strategies.

For example, in Angola the top three sectors in terms of potential for export diversification are mechanical appliances, pharmaceutical products and plastics.

Since the production of plastics is closely linked to oil production and given Angola’s position as the second-largest oil producer in Africa, this possibility for economic diversification is clearly linked to the country’s endowments.

The catalogue presents information on four main areas:

  1. Basic statistics on diversification.
  2. Potential new sectors for diversification covering all products, and the markets that offer growing export opportunities.
  3. Potential new sectors for diversification covering only agribusiness products and the markets that offer growing export opportunities.
  4. Examples of potential new products with higher export opportunities.

In addition to accessing the full catalogue, users can download fact sheets corresponding to individual economies from the UNCTAD website, and the full dataset of possible new exports.

Non-EU citizens trying out the digital nomad lifestyle can have a digital base for their business in Estonia, thanks to e-Residency.

 


There are many benefits to getting Estonian e-Residency if you’re a non-EU digital nomad – i.e., you don’t happen to be a European citizen or have an EU passport.

This includes being able to digitally enter the EU market even though you’re not a citizen. It also means you can access advanced digital e-governance and business administration tools so you can manage your affairs from anywhere. And the simplicity and ease of doing business with an Estonian registered company means you save time, money and paper.

Table of contents

Thanks to Estonian e-Residency, virtual business migration to the EU is a reality. This means that you don’t need to physically live in Estonia to take advantage of all the benefits of having a business in the EU. Tech-savvy nomads can thus rely on digital technology to manage your business, while living a location-independent life anywhere in the world.

Gone are the days of needing to physically travel back to where your business is based to submit returns, do online banking, or manage your business affairs.

What are the benefits of e-residency for a non-eu digital nomad?

There are many benefits to becoming an Estonian e-resident. If you’re a non-EU citizen and a digital nomad, then these are some of the biggest benefits to being an e-resident:

1. Register an EU-based business

One of the biggest benefits of becoming an Estonian e-resident is the fact that you can then register a company in Estonia, an EU member state. You don’t need a special visa or local director in Estonia to do this and you can do it all remotely.

As a non-EU citizen this may not otherwise be possible. By starting a company in the EU, you can then access the EU’s single market – which is the third largest economy in the world.

It’s also very easy, inexpensive and quick to register a company in Estonia. The process is 100% online, which means you won’t need to travel to Estonia to do it. Plus there is flexibility in terms of business forms and areas of activity.

Take Christelle from South Africa, as an example. She found this to be the case and says: “With e-Residency, you can easily register an EU business online without relocating and free from bureaucracy: great for remote entrepreneurs!”

And Jacob from Singapore says: “E-Residency allowed us to expand to the EU market quickly & affordably. Now, we have a steady increase of clients coming from Europe & beyond.”

2. Run your business completely online with ease

If you want to live the digital nomad lifestyle, the ability to conduct all your business affairs online is one of the necessary prerequisites. But not all countries are set up for digital e-services.

Estonia is a world leader in e-governance and as an e-resident you can manage all of your business activities online. You can cut down on paperwork. Stop paying for notaries. No need to travel to Estonia at all – a huge perk if you’re planning to be nomadic.

In addition, because Estonia is part of the EU, that means that EU regulations apply such as the Single Market free movement of goods and services. That helps to cut down on admin when doing business with any countries in the EU.

3. Access Estonia’s advanced e-services

When you become an e-resident, you get access to a variety of digital public services in Estonia. These e-services enable you to manage your company online, so that you can work from anywhere.

Some of the e-services that you can access include the ability to:

  • Digitally sign documents;
  • Send encrypted documents safely and securely;
  • Start and Manage your Estonian company 100% online;
  • File Annual Reports; and
  • Declare company taxes online.

4. Easy and affordable e-Residency registration process

Becoming an e-resident is a quick, simple and affordable process. You can submit the application online form anywhere you may be travelling in the world.

The application takes less than an hour to fill out, and the application fee is €100-120. Your application should be processed within a month. Once you receive confirmation that your application has been approved and your personal digital ID card delivered to your chosen pick-up location, you’re ready to collect it. The card comes in your e-Residency kit which also includes a smart card reader, as well as pin and puk codes to use when transacting online. The card is valid for 5 years.

5. Access business banking & payment solutions in Europe

Another drawcard to becoming an Estonian e-resident is the fact that you can access European business banking and payment solutions for your Estonian company. This helps you to manage your EU-based business, transact globally with clients and business partners, pay contractors, and get paid by customers.

The e-Residency Marketplace is THE source for e-residents when it comes to finding the perfect business banking and payment solution. Choose from fintechs like Intergiro, Wise or OuiTrust, to payment gateways Stripe, DECTA or Payoneer. If your business has a strong connection with Estonia, you might also consider getting a business bank account with Estonian banks LHV or Coop Pank.

6. Ease of doing business in a transparent environment

Estonia is one of the easiest countries to do business. Its business environment is transparent and its economy and politics are stable, which makes it a trusted place to base your business. Its openness makes it easy to conduct due diligence and participate in a safe and secure business ecosystem.

Non-EU citizen e-residents are generally drawn to the program because they want to be able to enter the EU market, trade in Euros and access EU funding. Another attraction is Estonia’s relatively liberal regulatory framework, which many business owners find enticing. It’s designed to reduce bureaucracy and red tape for entrepreneurs as much as possible.

7. Language compatibility

Managing a business in a foreign jurisdiction can be daunting. That’s particularly the case if a foreign language is involved, and you can’t speak it.

Many foreigners who decide on e-Residency are excited to learn that Estonia’s startup network is typically very English-speaking. All of Estonia’s digital services are provided in English (as well as Estonian and Russian) and the vast majority of Estonian Government websites and legislation are translated into English.

8. Simple taxation system

Estonia’s tax system is known for being simple to use and navigate. That’s probably why it has ranked at the top of OECD’s Tax Competitiveness Index for close to 10 years.

In Estonia, you can submit all your taxes online. Tax regulations are simple and straightforward, which means you won’t need to pay a fortune to maintain tax compliance and in bookkeeping fees. There are also a range of corporate tax benefits to running a company in Estonia.

Be aware that you may have foreign tax liabilities in other countries, depending on your citizenship, residence and where you live and work. You can read all about this in our Complete Digital Nomad Tax Guide.

Final thoughts on e-residency for a non-eu digital nomad

Deciding which country to start your company in, and manage its affairs can be a complex decision. If you’re a non-EU citizen, you don’t have to assume that starting a company in the EU is impossible. In fact, it’s actually quite easy – especially if you apply as an Estonian e-resident.

For digital nomads who travel the world with no fixed plans on where you may live next, it’s important for business continuity that you have a solid plan in place about where to register your company and pay taxes. You’ll also want to find a trustworthy, transparent and tax-efficient legal system that makes it simple to manage a business online.

These are just some of the reasons why thousands of people around the globe are turning to the Estonian e-Residency program. For non-EU citizens, the ease of doing business, access to the EU market, ability to run a business online, and supportive e-services are just some of the reasons why Estonia is such a popular choice.

Digital technologies offer new avenues for economic growth in Africa by accelerating job creation, supporting access to public services and increasing productivity and innovation. However, major challenges remain. The lack of connectivity in remote and rural regions and the low use of digital technologies in connected areas is further disadvantaging the poor, women, and small businesses.  Increased cyber risks and lack of data protection have brought new risks and vulnerabilities to businesses, governments, and people.

Government policies and regulations are key to enable greater use of digital services while mitigating risks. But how to intervene in a timely manner in a changing technological environment? Agile enabling regulations are needed to quickly respond to market developments, facilitating entry of new competitors for the benefit of consumers. In Kenya, collaboration between the competition authority, the central bank and the telecom regulator allowed digital financial service providers to access telecom services to offer mobile money services along mobile network operators. Consumers benefitted with greater availability of options for mobile payments. Later, the collaboration also facilitated interoperability between mobile money providers and banks, allowing consumers to seamlessly transfer funds between providers, top up saving accounts or use digital credit.

Such new approach is required to support the development of agile and collaborative regulations. A shift from planning and controlling to piloting and implementing policies in a multi-stakeholder setting for rapid feedback and iteration is necessary. Feedback loops allow policies to be evaluated against the backdrop of the broader ecosystem to determine if they are still meeting citizens’ values and needs and considering the impact on the industry and private participation. To implement this approach, a change of mindset is first needed. This approach is particularly appropriate for dealing with digital transformation, which by its nature is changing and evolving, and would otherwise be hampered by rigid policies and regulations.

Some African countries are already implementing agile regulation principles to address various issues. Ghana and South Africa responded swiftly to COVID pandemic demand for higher bandwidth by quickly adjusting current regulations and made it easy for companies to offer higher bandwidth to citizens. Kenya and Zimbabwe were quick to remove roadblocks and supported the roll-out of applications that allowed citizens to quickly access mobile money transfers and other financial apps. The African Union has consulted perspectives from businesses, civil society and academia to develop policy frameworks on data and on digital identities. This inclusive multi-stakeholder approach resulted in workable frameworks that encourage innovation through data sharing and cross-border data flows for African eCommerce while protecting rights of individuals. These African Union frameworks on data and on digital identities are important cornerstones to build an African Digital Single Market – the vision of the Smart Africa Alliance that is endorsed by all members of the African Union.

The African Union’s Agenda 2063 envisions a people-driven development for Africa, relying on the potential of African people, especially its women and youth. That’s why digital skills are prioritized in the African Union Digital Transformation Strategy 2020-2030, where the goal is to “build inclusive digital skills and human capacity across the digital sciences […] and technology policy & regulation”. African leaders recognize the pivotal role of policies and regulations in shaping societal and business practices and – if done correctly – how policies can support and encourage digital transformation.

German Development Cooperation and the Digital Development Partnership of the World Bank, in partnership with Smart Africa, have started piloting this agile approach under the Agile Regulation for Digital Transformation program (AReg4DT), a program linked to the Smart Africa Digital Academy, the digital skills vehicle for Smart Africa, and atingi – an online learning platform developed by GIZ, the implementing organization of the German Federal Ministry for Economic Development and Cooperation. The pilot is equipping policymakers and regulators in Africa with the knowledge and tools to regulate digital markets in Africa to support digital transformation. The results so far have been promising with a combination of online and face-to-face training events to allow for learning and knowledge exchange within and for Africa. This partnership is testing the development of capacity building activities in an agile and iterative way and tailoring the content to the local context, as well as gaining a practical understanding about implementation challenges and the training ecosystem in Africa. Prof. Dr. Yeboah-Boateng from Ghana’s National Communications Authority also appreciated the chance for peer-to-peer exchange during the event in Abidjan. In particular, he noted the “value of better harmonization of policies and regulations across Africa that would benefit the continent as a whole.”

Highlights from the African Drone Forum and Lake Kivu Challenge | ADF 2020

Regulators across the world are developing and testing new policies and regulatory tools, while also adapting existing ones for new purposes, particularly in face of the COVID pandemic. In many cases, the same technologies that challenge traditional regulation also offer many opportunities to reinvent rule making, oversight, inspections, and enforcement.

The AReg4DT program supports the implementation of the Digital Economy for Africa (DE4A) initiative and aims at facilitating regional integration through a common understanding of challenges, opportunities and solutions that can be implemented at the national and regional level, thereby ushering Africa, into the dawn of the single digital market.

National E-commerce Development Programme in Kyrgyzstan endorsed

 

The Government of the Kyrgyz Republic launched an E-commerce Development Programme for 2023-2026 to increase the country’s exports and the competitiveness of its goods, reduce the costs of e-commerce players, ensure safety and security of e-commerce activities, attract investments, expand access to financial services and develop digital entrepreneurship.

The Programme’s main priorities in creating a favorable environment for developing e-commerce include improving the legal framework in e-commerce and e-services, financial infrastructure, electronic payment systems, training personnel, and strengthening companies’ skills to trade online.

At the launch event, Almaz Isanov, Head of the Political and Economic Research Department in the Presidential Administration said: “E-commerce is the realization of all economic freedoms and a new impetus for the growth of the economy of the Kyrgyz Republic.”

While preparing the Programme, the Government has taken concrete steps in supporting the development of the e-commerce ecosystem in Kyrgyzstan: in December 2021, the law on “electronic commerce” came into force, followed by a new Tax Code in January 2022, and simplified taxation for online stores in June 2022. An E-Commerce Association, created in 2020, was involved designing the E-commerce Development Programme and actively supports local companies to trade online.

“The development of digital technology holds the key to a large degree of recent EU prosperity and competitiveness, with e-commerce offering enormous opportunities for business-to-business and business-to-consumers,” said Kavlakonis Panagiotis, Charge d’affaires at the EU Delegation to the Kyrgyz Republic. “The world market is large, growing and, thanks to the Programme, Kyrgyz entrepreneurs will be able to participate and benefit from it.”

Aibek Kurenkeev, President of the E-Commerce Association, added: “Approving the Programme is a big step for the development of e-commerce in the Kyrgyz Republic. We thank ITC’s Ready4Trade Central Asia project for their support. This document is the result of more than a year of joint work of government agencies, experts as well as business and civil society representatives. We really hope for its effective implementation.”

Darius Kurek, Senior Officer for Export Strategy at ITC said: “The National E-commerce Development Programme of the Kyrgyz Republic aims to foster the digitalization of the country’s economy. Impact of the Programme will be achieved through its implementation, and this requires the efforts of each and everyone involved in the digital ecosystem of Kyrgyzstan, including continued public-private cooperation and dialogue, as well as an efficient coordination among development partners.”

The E-commerce Development Programme is based on an analysis of the e-commerce ecosystem in Kyrgyzstan carried out by ITC, as well as on a series of consultations ITC held with relevant agencies, departments and businesses in 2020-2021. The Programme is accompanied by a comprehensive strategic action plan with recommendations to further develop e-commerce in the country.

The Ministry of Economy and Commerce in cooperation with the Ministry of Digital Development, the E-commerce Association and other agencies developed the E-commerce Development Programme in Kyrgyzstan with the support of the International Trade Centre’s Ready4Trade Central Asia project, funded by the European Union.

Is e-commerce the future?

Digital transformation and e-commerce are prioritized in the National Development Strategy of Kyrgyzstan for 2018-2040 (Vision 2040) and the corresponding five-year development programmes, in particular the country’s digital transformation concept “Digital Kyrgyzstan 2019-2023”.

Negotiations are currently underway to establish a specialized free economic zone in Kyrgyzstan for e-commerce, the first of its kind in the Central Asian region. The country can become a logistics and e-commerce hub for Central Asian countries, provided it has innovative logistics and distribution centres.

Kyrgyzstan’s strategic geographic location facilitates transit trade, as well as increases the potential of Kyrgyz exports. There is significant potential to become a transit zone for commercial transport and trade between the region, South Asia and the Middle East.

About the project

Ready4Trade Central Asia is a four-year EU-funded project implemented by the International Trade Centre in close collaboration with national partners, designed to contribute to the overall sustainable and inclusive economic development of Central Asia by boosting intra-regional and international trade in the countries of the region. Beneficiaries of the Ready4Trade Central Asia project include governments, small and medium-sized enterprises, in particular women-led enterprises, and business support organizations.

  • The space economy is worth at least $469 billion, according to a new report.
  • The term ‘space economy’ covers the goods and services produced in space for use in space.
  • Digital infrastructure in the sky has brought benefits to many industries and is helping in the fight against climate change.
  • However, there are concerns about the amount of space debris in Earth’s orbit, which NASA says now totals 9,000 tonnes.

The space race began as a competition between two superpowers, but there are now 90 nations operating in space.

Another change since man first landed on the moon in 1969 is that lower costs mean it’s not just governments that can afford to put rockets and satellites into the skies. A host of private-sector companies are now investing in space programmes, seeking everything from scientific advances to potentially lucrative business opportunities.

It’s estimated that there are now more than 10,000 firms and around 5,000 investors involved in the space industry.

The space economy is booming

The term “space economy” covers the “goods and services produced in space for use in space, such as mining the moon or asteroids for material”, according to the Harvard Business Review. The OECD defines it as any activity that involves “exploring, researching, understanding, managing, and utilizing space”.

The Space Foundation’s The Space Report 2022 estimates that the space economy was worth $469 billion in 2021 – a 9% increase from a year earlier. And over 1,000 spacecraft were put into orbit in the first six months of this year, the report says – more than were launched in the first 52 years of space exploration (1957-2009).

But the space sector is not only a growth sector in itself – it’s also proving a key enabler of growth and efficiency in other sectors. The European Space Agency says the deployment of new space infrastructure has brought benefits to industries including meteorology, energy, telecommunications, insurance, transport, maritime, aviation and urban development.

Most of this money came from the private sector rather than the public sector, the report says, estimating that more than $224 billion was generated from products and services delivered by space companies.

There has also been an increase in state-backed investment in space projects around the world, according to the Space Foundation report. There was a 19% jump in overall government spending on military and civilian space programmes last year. India raised spending by 36%, China invested 23% more and the US pumped another 18% into space ventures.

Top 10 Countries in SpaceTech Sector in 2021 Image: SpaceTech Analytics

Innovation is fuelling the space economy

What’s happening today has been described as a “space renaissance” – a period when technological innovation is significantly reducing costs and creating new capabilities.

The CEO of Planet Labs, Will Marshall, told the World Economic Forum’s Annual Meeting at Davos in May that rocket prices have dropped fourfold in the past decade. Companies that might once have had to pay hundreds of thousands of dollars to put a satellite into space can now do so for a fraction of that, as cheaper components have become available.

Marshall says this means we’re now producing 10 times more Earth imagery by area than five years ago, and 10 times the bandwidth of communications is being transmitted around the planet.

He also says better imaging is increasing accountability. For example, commercial satellite data is providing a bird’s-eye view of the conflict in Ukraine, allowing the world to witness and record events on the ground as they occur.

Satellite imagery can also allow farmers to monitor crops, businesses to track their environmental, social and governance performance, and governments to monitor CO2 emissions, Marshall says.

Solving the space waste problem

However, the almost 9,000 tonnes of equipment that has headed into space is creating problems of its own. There are more than 100 million pieces of space debris – at a size of one millimetre or larger – orbiting the Earth, NASA says.

This debris can include non-functional spacecraft, abandoned equipment, and mission-related debris. Travelling at speeds up to 17,500 miles per hour (28,160 kilometres per hour), even a tiny piece of debris can damage a satellite or spacecraft.

NASA says that an average of one piece of debris has fallen back to earth each day over the past 50 years. However it says these mainly land in oceans or uninhabited regions, and no serious injury to people or significant damage to property has even been confirmed.

Space economy needs responsible behaviour: Increasing space activity means there is also more and more space debris. Image: European Space Agency

The World Economic Forum’s Space Sustainability Rating (SSR) looks to encourage responsible behaviour in space through increasing the transparency of organization’s debris mitigation efforts. The SSR will provide a score representing a mission’s sustainability in relation to debris mitigation and alignment with international guidelines.

  • The Financial Stability Board recently released its proposed recommendations to strengthen regulation of crypto assets and so-called global stablecoins.
  • It recommends that these new assets should be regulated in the same way as more traditional financial assets.
  • This is a significant step in mitigating the risks these assets could pose to the wider financial system.

On 11 October, the Financial Stability Board (FSB) released its recommendations to strengthen international regulation of crypto assets and so-called global stablecoin (GSC) arrangements. The recommendations address risks that crypto assets and GSC arrangements pose to financial stability. Other types of risks posed by these innovations – such as money laundering and terrorism-financing, data privacy, cyber security and consumer protection – are not directly part of the recommendations, and have yet to be adequately addressed.

Referring to the recent turmoil in the crypto asset markets, the FSB emphasized that recent market trends point towards increasing correlation between the crypto asset market and the traditional financial system. This is due to both a tightening of the financial conditions governing these new assets, and the increasing involvement of traditional financial institutions and retail investors in crypto asset-related products.

Stablecoins represent another area with a risk of spilling over into the mainstream economy. They are often seen as the digital native asset that bridges the crypto and traditional financial systems. Stablecoins that are widely used as a means of payment, or store of value, could pose risks to financial stability. In this context, the FSB’s proposals, while still at a consultation stage, are an important development. They seek to provide regulatory clarity, ensuring that crypto and stablecoin innovations do not put the wider financial system at risk.

FSB’s recommendations for regulating crypto assets

The five key takeaways from the FSB’s proposals are as follows:

1. The principle of “same activity, same risk, same regulation”

The FSB has recommended that crypto assets should be regulated in a similar manner to any other kind of asset. This is an attempt to stop traditional financial activities migrating to less regulated crypto asset markets. The proposed rules also protect consumers and investors, and are proportionate to the risk presented by crypto assets, in terms of their size, complexity and systemic importance.

2. Regulatory powers, cooperation and coordination

The FSB recommends that authorities should have the appropriate powers, tools and resources to regulate, supervise, and oversee crypto asset activities and markets. It also recommends that authorities should cooperate and coordinate with each other, both domestically and internationally. Authorities should use existing information-sharing arrangements (such as supervisory colleges, fora, networks, memoranda of understanding or other ad-hoc arrangements) or establish new arrangements. Information may be shared:

  • to facilitate shared understanding of risks and activities of crypto assets and their intermediaries;
  • on a timely basis in case of an adverse situation that may have a wider systemic impact on the financial system; and
  • regarding enforcement actions against activities operating in multiple jurisdictions.

3. Governance and risk management framework

The FSB recommends that crypto asset issuers and service providers should be obliged to establish robust governance frameworks. These should include:

  • clear and direct lines of responsibility and accountability for the functions and activities they are conducting;
  • clear definitions of roles and responsibilities of the management body and the decision-making process; and
  • procedures for identifying, addressing and managing conflicts of interest.

They also need to have effective risk management frameworks that comprehensively address all material risks associated with their activities. This includes adequate resources, policies to prevent money laundering and the financing of terrorism, and effective contingency plans.

The FSB also recommends that authorities should require crypto asset issuers and service providers to have appropriate data management systems. They should provide full and accurate disclosure related to their operations, transactions and risks related to their products. They should take measures to mitigate these risks in an understandable manner. The risk management framework should be proportionate to the risk, size, complexity, and systemic importance of their products, and to the risk that they may pose to the wider economy.


In the absence of adequate regulation, these new crypto assets could pose significant risks to financial stability. Image: World Economic Forum

4. Comprehensive regulation and separation of activities

Crypto asset service providers often engage in a wide range of functions, such as custody, brokerage, lending, deposit gathering, market making, settlement and clearing, issuance distribution and promotion. This resembles the activities of a financial conglomerate. The FSB makes clear that this combination of multiple functions may result in complex risk profiles, as well as conflicts of interest.

Existing market regulations can be applied to mitigate conflicts of interest and investor risks arising from the combination of services and functions. Existing prudential regulation seeks to address the corresponding risks, segregate particular functions and ensure they are resilient. The FSB recommends that this should also be the case for those dealing with crypto assets.

5. Higher standards for global stablecoin arrangements

The FSB has agreed on ten high-level recommendations for the regulation, supervision and oversight of global stablecoin arrangements, both at the domestic and international level. A GSC is a stablecoin that enters the mainstream financial system and is widely used in multiple countries. In the absence of adequate regulation, it could pose significant risks to financial stability. Those who issue GCSs need to conform to high regulatory and transparency standards; for example, upholding redemption rights for stablecoin holders, having an effective stabilisation mechanism and maintaining reserves to ensure stability of value.

GSC arrangements are expected to adhere to all applicable regulatory standards, and to address risks to financial stability before commencing operation, and to adapt to new regulatory requirements as necessary.


A first step

The FSB’s proposed recommendations are a significant first step towards the effective regulation of crypto assets. As the various stakeholders discuss and deliberate, it remains to be seen how they will be adopted, implemented and enforced at the domestic and international level. The Forum’s Digital Currency Governance Consortium, composed of more than 80 organizations, recently released a report on the Macroeconomic Impacts of Cryptocurrency and Stablecoins. It is also examining how to regulate crypto assets through multi-stakeholder consultations, with a view towards developing a global approach while addressing local needs.

Civic tech” broadly refers to the use of digital technologies to support a range of citizen engagement processes. From allowing individuals to report problems to local government to enabling the crowdsourcing of national legislation, civic tech aims to promote better policies and services  – while contributing to more inclusive democratic institutions.


Could civic tech affect public issues in a way that benefits some and excludes others?

Over the decades, the question of who participates in and who is excluded from participation mediated by technology has been the focus of both civic tech critics and proponents . The latter tend to argue that, by enabling citizens to participate without constraints of time and distance, civic tech facilitates the participation of those who usually abstain from engaging with public issues, leading to more inclusive processes. Critics argue that, given the existing digital divide, unequal access to technology will tend to empower the already empowered, further deepening societal differences. Yet both critics and proponents do tend to share an intuitive assumption: the socio-economic profile of who participates is the primary determinant of who benefits from digitally mediated civic participation. For instance, if more men participate, outcomes will favor male preferences, and if more young people participate, outcomes will be more aligned with the concerns of the youth.

In a new paper, we show that the link between the demographics of those participating through digital channels, and the beneficiaries of the participation process, is not necessarily as straightforward as commonly assumed. We review four civic tech cases where data allow us to trace the full participatory chain through:

  1. the initial digital divide
  2. the participant’s demographics
  3. the demands made through the process
  4. the policy outcomes

We examine online voting in the Brazilian state of Rio Grande do Sul’s participatory budgeting process, the local problem reporting platform Fix My Street (FMS) in the United Kingdom, Iceland’s online crowdsourced constitution process, and the global petitioning platform Change.org.

Counterintuitive findings

Change.org has been used by nearly half a billion people around the globe. Using a dataset of 3.9 million signers of online petitions in 132 countries, we examine the number of successful petitions and assess whether petitions created by women have more success than those submitted by men. Our analysis shows that, even if women create fewer online petitions than men, their petitions are more likely to be successful. All else equal, when online petitions have an impact on government policy, the agenda being implemented is much closer to the issues women choose to focus on.

In Rio Grande do Sul’s digital participatory budgeting (PB), we show that despite important demographic differences between online and offline voters, these inequalities do not affect which types of projects are selected for funding – a consequence of PB’s unique institutional design, which favors redistributive effects.

In fact, of all the cases analyzed, none reflect the standard assumption that inequalities in who participates translate directly into inequalities in who benefits from the policy outcomes. Our results suggest that the socio-economic profile of participants predicts only in part who benefits from civic tech. Just as important to policy outcomes is how the platform translates civic participation into policy demands, and how the government responds to those demands. While civic tech practitioners pay a lot of attention to design from a technological perspective, our findings highlight the importance of considering how civic tech platforms function as political institutions that encourage certain types of behavior while discouraging others.

Civic tech, it seems, is not inherently good nor bad for democratic institutions. Instead, its effect is a combination of who participates on digital platforms and the choices of platform designers and governments .

ITC and GSMA launch new Broadband Commission Working Group to drive digital inclusion of micro, small and medium-sized enterprises.

More individuals and businesses are benefitting from digital connectivity than ever before. GSMA’s latest data shows that last year alone, 300 million people started using mobile internet for the first time – the first choice for most people to surf online.

The COVID-19 pandemic highlighted the importance of having access to the internet, which, for instance, enables entrepreneurs to mitigate some of the negative impacts of the pandemic. Yet, there remains a significant digital divide and an urgent challenge to connect the unconnected, nearly all of whom live in developing or least developed countries.

To address this divide, the International Trade Centre (ITC) and the GSMA launched a new Working Group on the digital inclusion of micro, small, and medium-sized enterprises in these countries. The initiative was announced at the Broadband Commission for Sustainable Development’s annual meeting in New York on 18 September 2022. It will support the Broadband Commission’s Advocacy Target #6, which aims to reduce the number of unconnected small businesses by 50% before 2025.

‘‘The Working Group could not be timelier,” says Mats Granryd, Director General at the GSMA. “Mobile internet is critical for many micro or small businesses, as it gives access to digital financial services, or customers and markets, often for the first time. It’s vital that we work together to ensure that every business can benefit from connectivity, especially women entrepreneurs.’’

Micro, small and medium-sized enterprises are key providers of employment and drivers of economic growth. However, most do not yet fully leverage connectivity to run their businesses and engage in trade. Increasing access and the ability to use digital channels and tools could be one of the most powerful mechanisms to boost the resilience of small businesses in the face of economic gloom.

“The future of ‘going global’ is digital,” says ITC Executive Director Pamela Coke-Hamilton. “This is especially true for small businesses: the road to overseas markets will run through digital channels and platforms. The firms who can connect, compete and change will thrive.”

The Working Group seeks to define the opportunities and challenges of getting more companies in developing countries online and engaging in online trade. Core elements of the research will be drawn from a major study underway led by the GSMA on the digital and financial inclusion of women micro-entrepreneurs in Africa and Asia, supported by the Bill and Melinda Gates Foundation.

The study focuses on how women micro-entrepreneurs are currently using mobile for their business, the barriers they face and identifying opportunities and solutions that support them.

Similarly, the new Working Group will explore:

  • The state of connectivity of small businesses in developing countries;
  • Barriers they face;
  • Potential solutions and government policies to help boost connectivity, particularly businesses led by women, youth, the poor or those living in rural areas.

With less than three years left to achieve the Broadband Commission’s 2025 Advocacy Targets, accelerating collective efforts is crucial to bridging the digital divide.

ITC and the GSMA therefore invite other Commissioners and Experts to join us to help small businesses leverage the benefits of digital connectivity.

 

The International Trade Centre recognizes that ‘Partnerships4Purpose’ can contribute to impactful projects and sustainable outcomes. To celebrate the teamwork behind these efforts, ITC is proud to highlight game-changing initiatives that are made possible through strong and meaningful collaboration.

Agribusiness presents a great opportunity to increase value creation in a sector that is two to three times more effective at reducing poverty than any other, including manufacturing and services.

Agribusiness presents a great opportunity to increase value creation in a sector that is two to three times more effective at reducing poverty than any other, including manufacturing and services, according to a report on the progress of the digital transformation of agribusiness in Latin America and the Caribbean (LAC).

There was something in the IDB Invest report, developed in collaboration with Accenture, that caught our eye: our region accounts for 18% of the world’s food production and only 10% of its economic value. These percentages indicate that digital technologies are the most efficient lever to address this key challenge for promoting development.

Achieving Digitalization through a Transformational Vision

The agribusiness sector is increasing its efficiency and production factor because of digital technologies. Additionally, the trend towards more sustainable practices and the reduction of precious resources, such as land, water and labor, make it imperative to find solutions that allow agribusinesses in LAC to compete with their products in international markets.

The study suggests that the digital transformation of agribusinesses in the region is still at an early stage. Most agribusiness chains have some degree of digitalization, often supported by legacy systems that have been adapted to meet specific needs and lack integration capabilities with other systems or a strategic perspective.

In summary, while agribusinesses in the region understand the benefits of digital technologies, they are still looking to develop a visio for digital transformation.

Six Challenges for a Digital Future

Based on digital maturity assessments and interviews with senior executives, the report identifies the top six challenges that agribusinesses face on their digital transformation journey.

Internal challenges:

  • Fragmented strategic vision and lack of governance.

Organizations are not fully aligned, making it difficult to implement and reap the benefits of new digitally-driven initiatives.

  • Inadequate budget and financing.

Insufficient resources to carry out digital transformation initiatives.

  • Difficulty to acquire talent. Employees in agribusinesses do not always have the soft skills or the digital readiness required to drive and understand the benefits of emerging transformation practices.

External challenges:

  • Poor infrastructure and connectivity. As most digital solutions require a stable internet connection, the lack of connectivity and poor infrastructure in the region limit the adoption of applicable technologies.
  • Unstable ecosystem integration. Integrating the agribusiness ecosystem actors is difficult, hindering the solution deployment and development that would benefit all.
  • Supply-demand misalignment. While there is a wide range of digital solutions, organizations state that they are not designed for their specific needs, making them incur excessive adaptation costs that hinder integration.

Digital Solution Benefits

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Digital solutions help agribusinesses be more efficient, productive, safe and environmentally friendly. They can be categorized based on their digital maturity level as Basic, Enabling and Next-level. However, the adoption level depends on the agribusinesses’ unique needs.

Basic solutions help to manage effectively an organization’s resources and collect relevant data that can be leveraged to make better decisions.

Enabling solutions leverage the data generated along the value chain, helping organizations achieve higher levels of efficiency and productivity.

Next-level solutions can further boost an organization’s productivity, helping it gain a considerable competitive advantage and get ahead of emerging market trends.

Regardless of the digital maturity level, a long-term vision and an ambitious digital transformation mindset are key for agribusinesses to reap the benefits of digital solutions.

A Path Toward Digital Transformation

Although the digital transformation challenges are not simple and rely on multiple variables, the report recommends some steps that agribusinesses can take to boost their digital maturity level.

  1. Discover: Set the business goal, a clear vision and specific objectives.
  2. Design and Plan: Promote a digital mindset, plan and design a digital strategy with robust governance practices.
  3. Assess: Develop a pilot to assess the assumption and the benefits before the final implementation.
  4. Scale-up: Classify the solution capabilities based on the pilot results and make changes as needed.
  5. Expand and Manage: Provide feedback on the tool after implementation and establish the best practices to evolve.

Although digital transformation is not a one-size-fits-all path, our study shows that it can help agribusinesses address the challenges and become key drivers of development in the region.

• Download the full report to learn more about these challenges and solutions.

• We have also created a course where you can learn how to apply proven best practices by global companies and make the most of digital transformation in your business.

• Access the report, the webinar we streamed about it and the on-line course here.

The eTrade readiness assessment underway in Peru will help accelerate digital transformation and e-commerce development efforts.

UNCTAD’s ongoing eTrade readiness assessment for Peru – the first in Latin America and the Caribbean – will provide up-to-date diagnostics of how the country is taking advantage of the potential of digitalization and e-commerce for development.

It will also help the country mobilize support and strengthen public-private dialogue as well as inter-ministerial coordination for e-commerce.

“Digital transformation will undoubtedly offer opportunities for Peru to advance its economy. Given the cross-cutting nature of e-commerce, cooperation between development partners and beneficiary countries is critical for effective implementation,” UNCTAD Secretary-General Rebeca Grynspan said.

The Peruvian government is committed to boosting the digital economy, e-commerce, digital entrepreneurship and innovation, especially to benefit small and medium enterprises (SMEs), said Marushka Chocobar, Peru’s secretary of government and digital transformation.

“This assessment is particularly relevant to identify the needs of regional and local governments and drive the advancement of the digital economy in Peru,” Ms. Chocobar said.

The assessment is part of the UNCTAD-led eTrade for all initiative.

Multistakeholder approach

In preparation for the assessment, multistakeholder consultations took place from 4 to 6 October in the Peruvian capital of Lima to map opportunities, challenges and policy solutions.

Partners such as the United Nations Commission on International Trade Law (UNCITRAL) and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) joined the consultations as well as Pierangela Sierra, UNCTAD’s eTrade for Women Advocate for Latin America and the Caribbean.

The assessment is supported by Switzerland’s State Secretariat for Economic Affairs (SECO), a core donor of UNCTAD’s e-commerce and digital economy programme.

“The added value of such an assessment lies in the identification of technical assistance projects that can help the country harness opportunities offered by digitalization,” said Alain Brühlmann, head of economic cooperation and development at SECO Peru. “Therefore, we are willing to explore additional support consistent with the recommendations.”

Burgeoning e-commerce market

Partly fuelled by the COVID-19 pandemic, Peru is recording one of the highest growth rates in e-commerce in Latin America and the Caribbean. Online sales in the country amounted to $9.3 billion in 2021, a 35% increase from 2020, according to the Peruvian chamber of electronic commerce.

With digital payments growing, Peru’s e-commerce market is expected to reach $14 billion by the end of 2022, the United States international trade administration estimates.

Reducing digital gaps

While the country’s internet penetration rate reached 71% in 2021 according to the International Telecommunication Union, UNCTAD and its partners found that only 9% of rural Peruvian households had access to the internet.

The digital urban-rural divide affects online sales, with only roughly 10% of them coming from provinces other than Lima, according to the US international trade administration’s findings.

Policies to improve e-trade readiness

While Peru is yet to develop a national e-commerce strategy, government actors, businesses and international partners have focused on actions required under seven policy areas to improve e-trade readiness.

For ICT infrastructure and services, it’s crucial to adapt the regulatory framework and work with local governments to mobilize private investments to expand internet coverage in rural and remote areas.

For stronger legal and regulatory frameworks, it’s essential to involve all relevant stakeholders of the e-commerce ecosystem in design and reform processes.

Concerning e-commerce logistics, it’s necessary to improve road infrastructure, adapt airport capacity and provide more resources to help postal operators modernize their operations through digital transformation.

On trade facilitation, it’s important to continue implementing paperless cross-border trade procedures, besides adapting and streamlining customs IT systems.

To foster e-payment, there are efforts towards greater interoperability among different solutions, as well as incorporating new players and innovation solutions, which could potentially reduce transaction costs and increase financial inclusion.

To tackle a lack of digital skills, ramping up support for SME digital transformation will be critical to achieving greater scalability and digital entrepreneurship in interior Peru.

Such transformation could also improve access to finance for e-commerce SMEs. To achieve this objective, the country needs to hone a stronger innovation culture among local investors and better prepare ventures towards an acceleration stage.

To strengthen the e-commerce ecosystem, the country has created and within the framework of the eTrade readiness assessment a national technical committee for e-trade, comprising the most relevant national stakeholders, to enhance coordination.

It has become increasingly clear that the absence of global approaches to digital trade is leading to uncertainty and higher costs for businesses and consumers, DDG González said at a roundtable organized by the Business Council for International Understanding and Google on 12 October. She called for more international cooperation to ensure that digitalization creates new trade opportunities, reduces costs and makes trade processes faster and easier for the benefit of all countries.

DDG González noted that digitalization is a golden opportunity for businesses around the world to become more integrated into global value chains. “Digital trade allows business to tap into new markets at lower cost and acquire better technologies and managerial capabilities by becoming part of global production networks,” she said.

“To turn the huge potential of digital trade into tangible benefits, governments must deploy the right policies, including policies to build trust and confidence in the digital economy and help mobilize the massive investments needed to expand the digital economy and shrink the digital divide,” DDG González said. “We have many best practices from which governments can learn.”

“But domestic policies are just one part of the equation,” she said, adding that “we must also intensify work to develop and strengthen international standards, norms and rules to build a truly global and inclusive digital economy that benefits all, including small and women-owned businesses and least developed countries.”

DDG González drew attention to the WTO’s work on digital trade. She highlighted the decision at the WTO’s 12th Ministerial Conference last June to extend a longstanding ban on customs duties on electronic transmissions, ongoing negotiations on global rules on electronic commerce among 87 WTO members and policy deliberations in WTO committees on the trade aspects of a wide range of digital issues, from autonomous vehicles and drones to cybersecurity and artificial intelligence. “Look closely and you will find that digitalization increasingly permeates all areas of WTO work,” she said.

DDG González concluded by calling on the business community to support efforts in the WTO to promote digital trade opportunities, adding that “business engagement is essential to ensure that our activities have real-world impact and can act as a force-multiplier in harnessing the full power of digital trade”.

The roundtable was held on the occasion of the launch of the report “The Digital Sprinters: Boosting Exports through Digital Technologies in Latin America”.