Faster, better and together: the road to inclusive e-commerce in Africa

19 July 2017

Written by Mukhisa Kituyi, Secretary-General of UNCTAD

"Small is beautiful, small is powerful”. This is the creed embedded in the foundation of a global e-commerce giant: Alibaba. But the creed not only defines the genesis of a company. It also reflects the power and scope of e-commerce around the globe.

This is what makes e-commerce so formidable: the possibility of turning a small firm into a global giant; the possibility of bringing new, better and cheaper products to consumers; the possibility of opening new markets to anybody with a good idea, Internet and a computer -- and this includes your mobile phone.

Today, you do not need to be big to be global. The Internet changed that forever. But we have to be smart to make sure we do not miss the opportunity e-commerce represents: both as an engine of growth and as a source of inclusiveness.

This is the message that Jack Ma, UNCTAD’s Special Advisor for Young Entrepreneurs and Small Business, and I will deliver this week to Africa’s leaders, young people and aspiring entrepreneurs during our visit to the continent.

In 2015, the value of e-commerce worldwide was estimated at more than US$25 trillion. This is more than the GDP of the USA in the same year. E-commerce is big business. But there are sharp differences on how countries use it and profit from it. This contrast is nowhere more evident than in Africa, where way below 5 percent of the population shops online. In Europe this share is as high as 60-80 percent.

Mukhisa Kituyi
Mukhisa Kituyi, Secretary-General of UNCTAD at YouthConnekt Africa Summit
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According to UNCTAD's e-commerce index, Africa is trailing far behind in terms of readiness to engage in and benefit from e-commerce.

The index is composed of four factors:

  1. Internet use

  2. Credit card penetration

  3. Postal reliability

  4. The number of secure, encrypted Internet servers per capita

The average score for developed countries is 71. For Africa, it is 24. And even in comparison to other developing regions, Africa is at the bottom in all four areas.

On top of this, Africa's inadequate regulatory framework is not conducive to foster trust online, which is an essential element of any well-functioning market. In fact, less than 40 percent of African countries have established data protection and consumer protection laws.

As more and more consumers and firms turn to the Internet, to buy and sell goods and services, online presence becomes vital. And in a few years, if firms do not exist on the web, they will not exist at all. In Africa, under the current circumstances, e-commerce can exacerbate exclusion rather than inclusion, putting African entrepreneurs at a disadvantage in the evolving digital economy. This is something we have to avoid.

We, the international community, governments, private sector and the civil society, have to pave the road for the inclusive digital commerce we want, where men and women, of all ages, can benefit from inclusive digital trade, or as we call it: "eTrade for all."

Building this road is not an easy task, and how we do it is as critical as the efforts we put into the endeavour. We have to do it "faster, better, and together".

We need to respond faster to the gaps and challenges that prevent people and small businesses from profiting from e-commerce. For instance, accessing the Internet is one of these issues. In Africa, nearly 75 percent of the population does not use or have access to Internet. And if you are a woman you are even less likely to have access. These gaps matter and we have to narrow them down.

In response, UNCTAD has created a "Rapid e-Trade Readiness Assessment" to help countries to quickly identify barriers to further e-commerce development. Liberia is the first country in Africa that will undergo such an assessment and we expect many more countries from the region to follow in the coming months.

But responding faster is not enough. We also have to do it better. And this implies learning from the past to better seize the opportunities e-commerce presents. We have learned that trade creates winners, but also losers and, left alone, that it can widen disparities rather than closing them.

This time we need to take policy measures that ensure e-commerce does not only benefit the big firms, but also the smaller ones.

As Jack Ma has said, “We must enable a mother in Africa to sell her handmade baskets to a customer in Argentina; a farmer in the Philippines to sell mangos to the UK; and any hard working man or woman in this world to benefit from global trade.”

And there is only one way we can undertake such an endeavor: together.

Today there are many organisations - national, regional and international -- that offer assistance in different areas of e-commerce to developing countries. But current efforts are simply inadequate. They are highly fragmented and insufficient in scale.

We can achieve much more together, and this was the genesis of the UNCTAD-led eTrade for all initiative.

The initiative raises awareness of opportunities, challenges and solutions related to e-commerce in developing countries. It mobilises financial and human resources for e-commerce projects and strengthens coherence and synergies among partners' activities.

The main tool is the online platform, which helps developing countries and donors navigate the supply of technical and financial support available to foster e-commerce and digital trade, learn about trends and best practices, and to raise visibility for the various partners' initiatives and resources.

Since its launch in July 2016, 24 organisations have joined the initiative and more than 30 private sector entities - including giants like Alibaba and eBay as well as smaller businesses like Burundishop and Kapruka - have also joined the Business for eTrade Development initiative, and we expect the groups to expand further in 2017. This reflects the wide consensus that we can go further if we go together.

E-commerce has the potential to make a difference for development. But this will only be the case if we move faster, react better and move together. Only then will the prospects of e-trade become a real opportunity for all in Africa.