Donors need to do more to ensure that developing countries can meet the challenges, and reap the benefits, of the digital economy.
Donors need to step up collective efforts to help developing nations harness the power of the digital economy, officials told participants at the opening day of UNCTAD’s eCommerce Week 2019.
Speaking at a session on “Enhancing the digital dimension in development cooperation strategies”, UNCTAD Deputy Secretary-General Isabelle Durant said that her agency was keenly aware of the need to ensure that countries are not outstripped by the breakneck pace of the online economy.
“If you only have countries that have bicycles, how can we ask them to join Formula 1? We need to make sure countries have an engine and can contribute in a real way to the digital world,” she said.
UNCTAD is playing its part in this process, she underscored.
“Our role is to work with the countries least prepared for the digital transition to help them acquire the necessary tools to make digitalization a lever for development,” she said.
More attention to the digital dimension of development is needed because of its transformational potential coupled with the fact that it creates both winners and losers.
While the net outcomes of the burgeoning digital economy are hard to predict, those that are the best prepared stand a better chance of doing well in the digital era.
The level of digitalization and the readiness to engage in and benefit from the digital economy will greatly influence whether countries are able to achieve the 17 Sustainable Development Goals (SDGs), a 15-year plan adopted by the international community in 2015 for tackling challenges like hunger, disease and climate change.
The gaps are still huge between the under-connected and hyper-digitalized countries. Divides reflect multiple factors, including insufficient information and communications technology (ICT) access and affordability, lack of technical and digital skills, including on data analytics, absence of relevant content or local language, and safety concerns.
“It is a concern that the digital divide we see today will indeed become a development divide,” warned Shamika N. Sirimanne, who directs UNCTAD’s technology and logistics division.
Only 1% of all funding provided under what are known as Aid for Trade programmes is currently allocated to ICT solutions. Similarly, multilateral development banks are investing just 1% of their total spending on ICT projects, only about 4% of which is being spent on policy development, work that is critical if digital economies are to be well regulated.
If left unaddressed, current divides are set to widen further, exacerbating existing inequalities. This calls for more attention to the digital dimension in the context of development cooperation strategies of both public donor agencies and their private sector counterparts.
“The factors that can contribute to growing the digital economy are clear. But the gap of leaving people behind will only widen if we do not start working together,” said Daniela Zehentner-Capell, who heads the trade policy division at Germany’s Federal Ministry for Economic Cooperation and Development.
Kaitlyn Swain, a senior policy officer at Australia’s Department of Foreign Affairs and Trade, echoed that.
“We know that digital trade offers incredible opportunities,” she said. “While the potential benefits are clear, more needs to be done to enable developing countries to leverage these opportunities.”
Ms. Swain pointed to efforts by Australia to help developing countries in the Indian Ocean and the Pacific harness the power of the digital economy.
To help sharpen the focus on what needs to be done, UNCTAD worked with the German Society for International Cooperation (GIZ) has undertaken a mapping of current and planned efforts by traditional and new development partners to support development gains from digitalization.
Preliminary findings suggest that, while a number of agencies and institutions have relevant strategies in this area, few have assigned clear funding to them and there is yet little knowledge to date about their impacts.
The research found that, where donors have dedicated funding to digital solutions, this has clustered around health (SDG 3), education (SDG 4), decent work and economic growth (SDG 8) and industry and infrastructure (SDG 9), while other areas appear to have attracted relatively little attention.
Ready for eTrade?
Given that challenges are particularly acute for the world’s least developed countries, UNCTAD works with them to produce Rapid eTrade Readiness Assessments, which propose concrete actions for improving the situation in key policy areas.
Madagascar has been among the countries that requested and underwent such an assessment, last year.
“We’re at the very start of our digital economy work,” said Solo Andry Lantosoa Rakotomalala, Madagascar’s trade and industry minister, telling the session that the digital divide and the lack of digital governance were major challenges.
“We’re determined to make the digital economy a core to grow our economy,” she added, citing geolocalization for maritime safety security purposes, digital distance healthcare and education, and digital financial services to improve social inclusion as key elements of the island nation’s strategy over the coming five years.
UNCTAD also kicked off eCommerce Week by unveiling its Rapid eTrade Readiness Assessments of Afghanistan and Bangladesh.
Since the launch of the Rapid eTrade Readiness programme in 2016, UNCTAD has undertaken such assessments of 17 countries: Afghanistan, Bangladesh, Bhutan, Burkina Faso, Cambodia, Lao People’s Democratic Republic, Liberia, Madagascar, Myanmar, Nepal, Samoa, Senegal, Solomon Islands, Togo, Uganda, Vanuatu, and Zambia.
“These can be presented to development partners, saying, ‘This is what we have, and how you can work with us’,” said Ms. Sirimanne.
With the support of key donors – Germany, the Enhanced Integrated Frameworks and the International Islamic Trade Finance Corporation - eight additional countries will conduct assessments in 2019.
The eTrade for all initiative, a multi-stakeholder partnership that helps developing countries find information and resources on e-commerce and the digital economy, supports the preparation of the assessments.
The fifth edition of eCommerce Week is taking place from 1 to 5 April at the Palais des Nations, the UN’s European headquarters in Geneva, Switzerland. The theme of this year’s week, which comprises dozens of sessions, is "From Digitalization to Development".