E-commerce and the digital economy in LDCs: At breaking point in COVID-19 times

Two years have passed since the beginning of the COVID-19 pandemic. As the economic fall-out is still being felt all around the globe, its impacts are not fully captured. In particular, the accele­rated digital transformation, with digital solutions developed and used to facilitate economic and social activities from a distance, has been accom­panied by a surge in e-commerce, with potentially long-lasting effects. It has also revealed wide gaps in digital readiness, especially in the most vulne­rable economies. UNCTAD’s research has shown that the pandemic has further exposed gaps in policy areas central to improving digital readiness in least developed countries (LDCs).

Many LDCs are being challenged by the fast transition needed but have realized the vital impor­tance to develop digital infrastructures and policies to support e-commerce and the digital economy, as well as the education and health sectors. Both the public and private sectors have important roles to play in creating an enabling environment for the creation of jobs through ongoing digital innovation that is changing our economies - producing new products and services for national, regional and international markets. It is now more urgent than ever to ensure that those trailing in digital readiness can catch-up. The alternative is even greater inequalities.

Digitalization is affecting all the Sustainable Development Goals (SDGs), bringing both oppor­tunities and challenges. With less than 10 years remaining on the 2030 timeline to achieve the Goals, the international community needs to scale up dramatically its assistance to the most vulne­rable countries. The importance of digital inclusion was recently recognized by member States in the ‘Bridgetown Covenant’ at the occasion of UNCTAD’s 15th quadrennial Conference (October 2021). They agreed for the second time to stren­gthen UNCTAD’s work on enhancing development gains from e-commerce and the digital economy. The added urgency for Governments and the inter­national community to respond to narrow the digital divides between countries was also recognized in the ‘Zero draft of the Doha Programme of Action for LDCs for 2022-2031’1, and in the report of the UN Secretary-General on the ‘Implementation of the Programme of Action for the Least Developed Countries for the Decade 2011–2020’2. With the right set of policies and coordinated support from governments, the private sector, civil society and development partners, digitalization can lead to structural transformation and economic diversifi­cation.

This note looks at key challenges facing LDCs on their digital development path and draws from our research and technical assistance especially in the area of eTrade Readiness Assessments. It provides testimonies from the public and private sectors of smart and innovative initiatives by stakeholders in various LDCs.

UNCTAD, through its E-commerce and Digital Economy Programme, is committed to being a key partner for LDCs, including in the implementation of the upcoming LDC5 Programme of Action to be considered in 2022. I would like to thank especially our core donors, the Governments of Germany, the Netherlands, and Switzerland, which are partnering with UNCTAD to support the digital transfor­mation of developing countries, including LDCs. Let me also thank the eTrade for all partners who are contributing with their respective expertise in our technical cooperation work, including eTrade Readiness Assessments and the implementation of priority actions, and E-commerce Strategy development.

Shamika N. Sirimanne
Director, Division on Technology and Logistics,