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E-commerce in Developing Countries: Opportunities and Challenges for Small and Medium-sized Enterprises

Report by World Trade Organization, 2013

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This publication focuses on how e-commerce and mobile telephony have transformed the lives of many people in developing countries. It examines different ways of using e-commerce, and looks at specific sectors where Small and Medium Entreprises tap into important market information for their business.

e-commerce in
developing countries


opportunities and challenges for
small and medium-sized enterprises




World trade organization
The World Trade Organization is the international body dealing with the global rules of trade
between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely
as possible, with a level playing field for all its members. The WTO aims to place developing
countries’ needs and interests at the heart of its work programme.


What is e-commerce?
For the purposes of the trade focus of this brochure, e-commerce is the sale or purchase of
goods or services conducted over computer networks by methods specifically designed for
the purpose of receiving or placing of orders. Even though goods or services are ordered
electronically, the payment and the ultimate delivery of the goods or services do not have to be
conducted online.


An e-commerce transaction can be between enterprises, households, individuals, governments,
and other public or private organizations. Included in these electronic transactions are orders
made over the web, extranet or electronic data interchange. The type of transaction made is
defined by the method of placing the order. Normally excluded are orders made by telephone
calls, fax or manually typed e-mails.


Workshop on e-commerce, development and small
and medium-sized enterprises
A workshop at the WTO on 8 and 9 April 2013 highlights the relationship between e-commerce
and development and examines how small and medium-sized enterprises (SMEs) in developing
countries have been using e-commerce to promote, market, service and sell their products
nationally and abroad. The workshop focuses on both the opportunities and the challenges
facing developing countries and assesses how such issues concerning adequate levels of
telecoms infrastructure, regulation and investment either help or hinder SMEs from finding new
opportunities through e-commerce.


This document has been prepared under the responsibility of the WTO Secretariat and is without
prejudice to the positions of WTO members and to their rights and obligations under the WTO.




1


Many small and medium-sized enterprises
(SMEs) in developing countries have the
possibility to benefit enormously from mobile
telephony, the internet and other forms of
information and communication technology
(ICT) in their day-to-day business activities.
This has already resulted in enhanced
productivity in a number of areas.


However, SMEs in these countries are
not always maximizing the use of ICT.
Governments and their partners, including the
private sector, need to take greater advantage
of the opportunities emerging in the new
ICT landscape. Also, governments need to
ensure that users benefit not only from being
connected to the internet but also from any
technological evolutions that increase the
speed of data flows and that can help reduce
costs to consumers.


e-commerce and smes


In both developed and developing countries,
SMEs make up a majority of business and employ
the majority of workers in both manufacturing
and services sectors. SMEs cater mostly to their
domestic market and their contribution to GDP,
although normally very small, can vary greatly
depending on the value of the goods or services
they produce. While less than 6 per cent of the
formal work force is employed in manufacturing
in SMEs in Azerbaijan, Belarus and Ukraine, this
share is more than 50 per cent in other developing
countries such as Ghana, Turkey and Ecuador.
Research has indicated that countries with
large SME sectors also tend to benefit from the
significant contribution which SMEs make to GDP.


A study by the United Nations Conference on
Trade and Development (UNCTAD) has shown
that SMEs, while generally lagging in ICT, have
the most to gain from increases in productivity
thanks to e-commerce. SMEs, however, actually
run the risk of missing opportunities in both
productivity and profitability by not engaging in
e-business. SMEs also have a large role to play in
the economies of developing countries because
it is these same countries that have the greatest
potential to benefit from e-commerce. The extent
of ICT use by SMEs is dependent on both sector


and size of the business. Typically, those SMEs
which are export or import-oriented as well
those involved in the tourist sector have stronger
incentives to invest in implementing ICT in their
respective businesses.


E-commerce has been hailed by many as an
opportunity for developing countries to gain
a stronger foothold in the multilateral trading
system. E-commerce has the ability to play an
instrumental role in helping developing economies
benefit more from trade. Unlike the requirements
necessary to run a business from a physical
building, e-commerce does not require storage
space, insurance, or infrastructure investment on
the part of the retailer. The only pre-requisite is a
well designed web storefront to reach customers.
Additionally, e-commerce allows for higher profit
margins as the cost of running a business is
markedly less.


Another advantage provided by e-commerce
is that it allows for better and quicker customer
service. In some cases, customers could have
direct access to their own personal accounts
online and can avoid calling companies on the
phone. This can save both time and money.
Adding customer online services such as
overnight package delivery services can also
have commercial benefits. These can be
complemented by package tracking services
which allow customers to check the whereabouts
of their packages online. This helps provide good
levels of customer satisfaction with very little
effort from the side of the business.


introduction




2
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


The first decade of the new millennium witnessed
a profound change and dramatic increase in the
way business and trade takes place electronically.
Each day, more users in least-developed and
developing countries are accessing the internet
through terminals. A growing percentage of
users are now also accessing the web through
mobile technology. It is predicted that the internet
and especially the use of mobile applications
will expand exponentially in the decades ahead.
There is enormous potential for using ICT to
contribute to the social and economic progress of
developing countries worldwide. A key role in this
regard is played by SMEs.


UNCTAD’s recent Information Economy
Report 2010 shows how ICT use by micro
enterprises and SMEs has improved not only
business performance but has helped improve
livelihoods in some of the world’s poorest
regions and communities. Many entrepreneurs in
developing countries now have a real possibility
to benefit from ICT in their business activities.
In many cases, this has resulted in gains in
enhanced productivity.


By improving communication channels, both
domestically and internationally, the application
of relevant ICT can greatly enhance the
competitiveness of business. Government
efforts to further improve, upgrade and expand
ICT use by the private sector should, therefore,
be reinforced. UNCTAD’s study finds that
governments and their various partners, including
the private sector, are far from taking full
advantage of the opportunities that are emerging
in the new ICT landscape. This is evident in part
from the relatively limited attention that has been
given to ICT in strategies aimed at promoting
private sector development.


Of all the internet users in 2011 (see Chart 1),
1.3 billion were from the Asia-Pacific region, the
Middle East, Africa or Latin America, indicating
a shift in the regions with the most people
online. However, in spite of this growing trend in
internet use, developed countries still continue to
surpass developing countries in terms of number
of connections.


Chart 2 highlights the number of individuals using
the internet per 100 inhabitants. While the Africa
region has a penetration rate of 12.4, Europe
has the highest penetration rate, with 68.4 out of
every 100 Europeans having access.


growth of the internet


Chart 1


number of people using the internet, 2001-11


Chart 2


individuals using the internet per
100 inhabitants, 2011


Source: International Telecommunication Union (ITU)


* Commonwealth of Independent States


Source: ITU World Telecommunication / ICT Indicators
database


2,500


2,000


1,500


1,000


500


0


Million


20
01


20
02


20
03


20
04


20
05


20
06


20
07


70


60


50


40


30


20


10


0


Eu
ro


pe Th
e


Am
er


ica
s CI


S*


W
or


ld


Ar
ab


S
ta


te
s


As
ia


&


Pa
cifi


c
Af


ric
a


68.4


29.1


40.7


12.4


53.4


25.5
32.5


20
08


20
09


20
10


20
11




3


There is no question that e-commerce has grown
rapidly since the first users started to browse the
worldwide web in search of goods and services.
Today, sales realized over the internet represent
a significant proportion of overall commercial
sales. In 1991, the internet had less than 3 million
users around the world and its application to
e-commerce was non-existent. Almost a decade
later, by 1999, an estimated 300 million users
accessed the internet and approximately one-
quarter of them made purchases online from
electronic commerce sites, worth approximately
US$ 110 billion. This year, global business-to-
consumer e-commerce sales are set to pass the
US$ 1.25 trillion mark.


B2B, B2c or B2g?


There are numerous types of commercial
transactions that occur online, from buying goods
such as books or clothes to purchasing services
such as airline tickets or making hotel or car
rental reservations. Since the main focus of this
brochure is on how SMEs use the internet, the
discussion here concerns only a few services
which relate closely to SME economic activity.
These include electronic communications in the
area of business to business (B2B), business to
consumers (B2C), business to government (B2G)
and mobile e-commerce.


Business to business (B2B)
B2B is e-commerce between businesses such
as between a manufacturer and a wholesaler, or
between a wholesaler and a retailer. This is the
exchange of products, services, or information
between businesses rather than between
businesses and consumers.


Global B2B transactions comprise 90 per cent of
all e-commerce. According to research conducted
by the US-based International Data Corporation
(IDC), it is estimated that global B2B e-commerce,
especially among wholesalers and distributors,
amounted to US$ 12.4 trillion at the end of 2012.
If the expansion in e-commerce continues at this
rapid pace in developed markets as is expected,
B2B and B2C e-commerce transactions will
account for about 5 per cent of all inter-company
transactions and retail sales by 2017.


Business to consumers (B2C)
B2C e-commerce entails businesses selling to
the general public, typically through catalogues
that make use of shopping cart software.
Although B2C e-commerce receives a lot of
attention, B2B transactions far exceed B2C
transactions.


growth of e-commerce




4
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


According to the IDC, global B2C transactions
were estimated to reach US$ 1.2 trillion at
the end of 2012, ten times less than B2B
transactions. Although B2C e-commerce
accounts for only a small share of e-commerce
as a whole, it continues to grow. B2C
e-commerce is highest in Norway, Denmark,
Sweden, the United Kingdom and the
United States and covers mainly computer-
related products, clothing and digitized products.


Despite the low value of its transactions, B2C
e-commerce has received the most attention,
partly because issues such as consumer trust
and data protection have received considerable
concern from policy makers.


Business to government (B2G)
Business to government (B2G) commerce is
generally defined as e-commerce between
companies and the public sector. It refers to
the use of the internet for public procurement,
licensing procedures, and other government-
related operations.


In B2G e-commerce, the public sector
generally assumes the pilot role in establishing
e-commerce in an effort to make its procurement
system more efficient. The size of the B2G
e-commerce market as a component of total
e-commerce is still rather insignificant as
government e-procurement systems still remain
comparatively undeveloped.




5


The most popular ICT in developing countries
and one which is progressing very rapidly in
Africa and Asia, in particular India, is the mobile
phone. Mobile phones are increasingly playing
a larger role in the expansion of e-commerce in
developing countries, especially among users
without terminal connections.


Chart 3 shows that in the past ten years, mobile-
cellular subscriptions in developing countries
have increased nearly tenfold. Not only have they
helped to improve how businesses are run, they
are also helping to close the poverty gap. Mobile
phones are making it possible for rural farmers
to engage in mobile money services, allowing
them to open saving accounts, earn interest on
their deposits and access a variety of credit and
insurance products.


In many developing countries, mobile phones are
still mostly used for voice communication and
texting. Recently, however, they are increasingly
being used for data applications such as
m-commerce and m-banking. In a number of
African countries, notably Kenya, South Africa,
Tanzania and Zambia, mobile telephones are
being used to do personal banking services.


Entrepreneurs are using calling and texting
services to acquire locally relevant information
and services. In the near future, internet-enabled
phones may help to deliver the same services but
more efficiently. Micro enterprises and SMEs, many
of which are in the informal sector in developing
countries, appear to be the most positively affected
by the adoption of mobile telephony.


In the agriculture and fisheries sectors in Asia
and Africa, for example, mobile phones are now
frequently used to conduct sales and purchases,
to establish delivery times and destinations and
to negotiate prices. While these are classic
transactions normally carried out over personal
computers, they are being done on location using
mobile technology. For fishermen, mobile phones
are regularly used to check weather reports and
to receive early warning announcements of severe
weather conditions on land or at sea.


What are the prospects of
the global mobile market?


Developing countries – particularly major emerging
economies – will continue to drive growth of the
global mobile phone market. This is due to their
large population, low penetration rates and rising
disposable incomes although the true growth
potential depends also on government policies to
help liberalize the market and enhance competition
among network providers.


During 2011-20, the number of mobile
subscriptions in Africa and the Middle East is
forecast to grow at an average rate of 5.6 per
cent per year, compared with the global average
of 3.7 per cent. However, the expected growth
in Africa and the Middle East is from a relatively
low base: in 2010, the mobile penetration rate in
Africa stood at 56.5 per cent of the population.


Accessing the worldwide web through
mobile telephony


Chart 3


mobile-cellular subscriptions per 100 inhabitants,
2001-11


Source: ITU World Telecommunications/ICT Indicators database


140


120


100


80


60


40


20


0


Developed


World


Developing


20
01


20
02


20
03


20
04


20
05


20
06


20
07


20
08


20
09


20
10


20
11




6
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


The Asia-Pacific region will continue to be the
largest regional mobile phone market, with
3.9 billion subscriptions in 2020 (up from 2.4
billion in 2010). China will continue to be home
to the world’s largest number of mobile phone
subscriptions, with 1.3 billion subscribers in 2020
(up from 839 million in 2010).


However, India – currently the world’s second-
largest mobile phone market – will have significant
growth potential not only in the Asia-Pacific region
but globally, with the number of mobile phone
subscriptions forecast to grow at an average
annual rate of 5.7 per cent during 2011-20, to
reach 1.1 billion in 2020. From a luxury product
used primarily in developed countries, mobile
telephony has become universally available. It is
now an integral part of life for many.


Meanwhile, in the developed world, the
commercial deployment of next-generation
technologies and devices will increase usage
of advanced mobile services, which in turn
will open up many new, e-commerce business
opportunities and especially in developing
countries. Meanwhile, more data applications
are now regularly being used in developing
countries to conduct business (m-commerce),
engage in retail or commercial banking activities
(m-banking) and to find work (m-labour).


mobile phone
revolution


The number of mobile phones
in use worldwide between 2000
and 2012 grew from less than
1 billion to more than 6 billion.
The mobile revolution is
transforming livelihoods, helping
to create new businesses,
and changing the way we
communicate, work and earn
and spend income. The mobile
phone network is already “the
biggest machine” the world
has ever seen, and now that
machine is being used to deliver
development opportunities on
a scale never before imagined.
During this second decade of
the new millennium, maximizing
the potential of mobile phones
is a challenge that will engage
governments, the private
sector, and the development
community alike.


Source: World Bank, Information and
Communications for Development 2012:
Maximizing Mobile




7


How do poorer countries benefit from
mobile telephony?


Mobile technology can be utilized by SMEs
operating in the agricultural and fisheries
sectors. It also has uses for labour and transport
mobilization, for micro-credit services and for
mobile money. This section provides an overview
as to how mobile technology is being used by
SME business operators in various sectors in
developing countries.


Agriculture


Greater productivity can help boost farmers’
income, especially for small-scale farmers and
fishermen, who have limited resources to grow
and market their produce. Creating a more
efficient value chain at local or national levels
also requires engaging many stakeholders, from
farmers growing crops and raising cattle to
suppliers and distributors.


Farmers in developing countries are increasingly
utilizing mobile technology to increase their
commercial potential. According to a World Bank
study released in 2012, the benefits for farmers
who use mobile phones includes access to
agricultural information concerning stock piles and
prices, data visibility for value chain efficiency and
being able to tap into new and existing markets.


When farmers have access to information about
prices and stocks, it helps them to reduce the
risk of under-selling and of either over or under-
supplying their crops in a given market. The World
Bank study shows that access to price information
by farmers has helped to increase farming income
by 24 per cent. Sellers realized even greater gains
of up to 57 per cent, with overall price reductions
for consumers of around 4 per cent.


Case study


sara maunda, groundnut farmer
malawi


“In June 2011, a grain trader arrived at my gate
offering me 30 kwacha per kilo for my peanuts”,
Sara Maunda said. “My SMS from Esoko told me
that the price was more than four times the trader’s
price. When I showed him, he said, ‘These people
are lying to you — you will go very far and find that
you have lost money.’”


Maunda trusted both her instincts and the text
messages. She and four neighbours rented a pick-
up truck in Madisi, the nearest town, and headed
south to Lilongwe, 80 kilometres away, to sell their
groundnut crop themselves. She said: “the market
price there was five times the vendor’s offer. My
share of the sale cleared 24,000 kwacha ($130)
after all expenses. If I had sold to the vendor at my
village I would have made only 4,500 kwacha ($27).”


Source: USAID Frontlines July/August 2012


Information transmitted by mobile phone also
includes access to early warning systems to
mitigate the risk of losses due to extreme weather
conditions or to the spread of disease.


online data and information
services


Mobile services can also enable better access
to markets and other value-chain stakeholders.
Sellers are increasingly using their websites to
relay online information on transport and logistics,
with some of these services being provided on
mobile phones.


For example, through the use of voice and
SMS in Morocco, farmers coordinate with local
truckers to improve product transport and to
identify where the best locations are for them to
deliver their products. Some farmers also make
use of two-way trade by bringing products back
from larger, regional markets to sell in their own
rural communities.




8
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


Product traceability has become increasingly
relevant to those developing countries that
want to gain or expand into new export markets.
The use of ICT has led to improved consumer
protection and food safety on the one hand and
better livelihood outcomes for farmers on the
other. Radio frequency identification (RFID) chips
are also used to trace animal movement, enabling
the monitoring of animals from cradle to grave.
The use of the system in Namibia to replace
traditional paper-based recording has increased
the accuracy of the data and the speed in which
it is disseminated, leading to higher monetary
returns on livestock.


RFID has also been used for the prevention of
animal poaching. Governments are now able
to trace elephant and rhino herds and can take
steps to mitigate illegal poaching activities.
Such approaches are increasingly showing
positive results in Africa and are contributing
to sustainable development and to continued
prospects for tourism.


Fisheries


Fishermen and merchants buying and selling
fish communicate through voice calls, via SMS
messages or by accessing specialist Wireless
Application Protocol (WAP) services. WAP is a
technical standard for accessing information over
a mobile wireless network.


The WAP browser technology was created for
older mobile devices. It allows users to access
adapted web information and other data even
if they do not have newer generation “smart”
phones. New generation phones and higher
bandwidth access are supplanting WAP in most
developed countries. However, the need for
low-cost mobile services and low penetration
of newer phones has thus far kept WAP alive in
many developing countries.


Case study


manobi telecoms
company senegal


In 2003, in collaboration with
Sonatel (the Senegalese
phone operator), Alcatel, IDRC
and InfoDev, the Senegalese
telecommunications company
Manobi began to provide
fishermen with real time weather
reports and market prices using
WAP and SMS technology via
mobile phones.


The interactive technology
enabled fishermen to input fish
stock information for marketing
as well as departures and
estimated times of return so
that local fishing unions could
be alerted in emergencies. The
project successfully persuaded
Sonatel to install a phone base
station near the beach, ensuring
network coverage up to 14 km
from the shore.


In 2005, Manobi launched
a Geographic Information
System (GIS), using GPS and
GSM technologies to increase
protection at sea for fishermen
and their boats, in partnership
with insurance companies.
It provides precise real-time
localization up to 45 km offshore.
Fishermen pay an insurance
premium based on time spent
at sea, with their mobile phones
acting as security for both them
and the insurance company.




9


Mobile money services are increasing in
popularity. They have helped to improve how
businesses operate and now they are also
contributing to helping to close the poverty gap.
One of the major barriers to poverty reduction is
access to formal financial systems for the poor.
The use of informal instruments means that the
poor are limited in their ability to save, borrow,
repay debt and manage risk responsibly.


Mobile money services in developing countries
are gaining in prominence mainly due to their
effective way of conducting payments and
providing access to finance, particularly in areas
where access to physical bank branches or even
ATM machines is minimal (see Chart 4). They are
helping to increase productivity and efficiency
while at the same time reducing transaction costs.


One of the most successful and fastest
growing mobile banking services is M-Pesa,
founded in April 2007 by Safaricom, a Kenyan
telecommunications company.


Safaricom launched the new mobile phone-
based payment and money transfer service to
offer its customers an array of services, ranging
from depositing money into an account stored
on a customer’s cell phone to sending balances
using SMS technology to other users (including
sellers of goods and services) and to redeem
deposits for regular money. It also allows users to
settle their bills. Users are charged a small fee for
sending and withdrawing money using the service.


mobile money


M-Pesa has spread quickly and has become the
most successful mobile phone-based financial
service in any developing country. By 2012, a
stock of about 17 million M-Pesa accounts had
been registered in Kenya.


M-Pesa is a branchless banking service, meaning
that it is designed to enable users to complete
basic banking transactions without the need to
visit a bank branch. The continuing success of
M-Pesa in Kenya has been due to the creation of
a highly popular, affordable payment service with
only limited involvement of a bank.


Chart 4


number of mobile money deployments by region,
march 2012


Source: GSMA Mobile Money Tracker 2012


140


120


100


80


60


40


20


0


De
ve


lo
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d


Eu
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&




Ce
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M
id


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rth


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tin


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an


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Su
b-


Sa
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ra
n


Af
ric


a


11
16


5


56


3


20


13




10
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


What restricts smes from making fuller
use of e-commerce?


E-commerce is generally presented in very
positive terms but along with the potential benefits
come potential problems for developing countries.
The adoption of e-commerce in developing
countries differs greatly from one country to the
other. But many face a number of similar obstacles
to e-commerce. These mainly include a lack of
financial, legal and physical infrastructure for the
development of e-commerce.


The development of various types of e-commerce
depends primarily on the existing structure of
an industrial sector and how it fits into a given
sectoral value chain. Additionally, the difference
of cultures and business philosophies across
developing countries has also been seen to
limit the applicability and transferability of
the e-commerce models designed by some
developed countries.


Case study


Business development
department, thailand


Thailand’s Department of Business Development
(DBD) is encouraging SME operators to seek new
opportunities via e-commerce while introducing
the DBD Registered symbol to ensure security for
online shoppers.


Deputy Minister of Commerce Siriwat
Kajornprasart revealed that he has assigned the
DBD to support Thai SMEs in doing business
via e-commerce. Due to the huge growth and
increasing popularity of e-commerce, he said
that Thai SMEs should consider expanding
their businesses online in order to find new
opportunities and reduce production costs at the
same time. E-commerce can also help enhance
the potentials of Thai companies to compete in
the international market.


Source: Thai Financial Post published on 6 August 2012


Although SMEs have numerous reasons for
engaging in e-commerce, the security concerns
of the customers remain an important impediment
to expanding e-commerce services and business.
Probably, the biggest drawback is the reluctance
of customers to provide online information about
their credit cards.


Ensuring both trust and familiarity through a well-
functioning website has proven to be one of the
major e-commerce success factors. In the same
vein, the growth of broadband has created a
greater need for users to protect their security and
privacy in an “online” environment. Both individual
users and businesses report that computer viruses
are the “malware” they encounter the most.
Security continues to be a problem for online
businesses as customers have to feel confident
about the integrity of the payment process before
they commit to the purchase.


The potential of e-commerce can only be
achieved given adequate infrastructure. In most
developing countries, this constraint presents
a major obstacle. Smaller, low-income internet
markets in developing countries, particularly in
Africa, have been unable to attract sufficient
investment in infrastructure. Combined with
lack of competition, this results in bandwidth
cost that can be up to 100 times higher than in
developed countries.




11


In most cases, these countries remain outside
the reach of fibre optic cables and must turn to
satellites for international – and sometimes even
domestic – connectivity. This happens even in
spite of significant improvements brought about
by technology.


Another area of concern is the lack of technical
skills which keeps SMEs from realizing their full
e-commerce potential. Many developing countries
do not have a workforce that has sufficient
training in ICT and mobile technology. This greatly
disadvantages many SMEs that may be seeking
to diversify or to branch out into e-commerce.


Making sure enterprises possess the required
set of skills and capabilities to use relevant
technologies productively is key to securing
the economic benefits of e-commerce. Many
entrepreneurs in developing countries, and
especially in least-developed countries, lack the
necessary capacity or awareness to take full
advantage of ICT (see Chart 5).


Even if entrepreneurs in developing countries
have access to mobile phones or the internet,
they may not know how best to leverage them for
their business operations. In some circumstances
they may even fail to see the value of investing in
the technology required so as to be able to take
advantage of the opportunities of e-commerce.


Case study


peruvian
government,
fibre-optic initiative


The Peruvian government has
announced that it will support the
deployment of a national fibre-
optic backbone for broadband
access, Andina reports. The
announcement followed the
passing last week of the Law
for the Promotion of Broadband
and Construction of Optical Fibre
Backbone.


Telecoms regulator Osiptel will
oversee the rollout, and ensure
access is competitive, whilst the
Agency for the Promotion of
Private Investment (ProInversion)
has been tasked with selecting
a company to carry out the
installation. Osiptel is understood
to be drawing up technical criteria
for the network, which will link
all provincial capitals, and have
connections to all districts.


Further, the broadband bill
ensures net neutrality, making
it illegal for an internet service
provider (ISP) to block, interfere
with, discriminate against or
restrict the right of any user to
use an application, regardless of
origin, destination or nature.


Source: TeleGeography, published on 25
July 2012


Source: World Bank Enterprise Surveys


Chart 5


enterprises with their own website, 2006-09 (in %)


90


80


70


60


50


40


30


20


10


0


W
or


ld


Ea
st


As
ia


&


Pa
cifi


c


Ea
ste


rn
E


ur
op


e


&
Ce


nt
ra


l A
sia


Hi
gh


-In
co


m
e


oE
CD


La
tin


A
m


er
ica


&


th
e


Ca
rib


be
an


M
id


dl
e


Ea
st


&


No
rth


A
fri


ca


Su
b-


Sa
ha


ra
n


Af
ric


a


So
ut


h
As


ia


35.1
44.845


20


29.2
37.7


76.7


22.8




12
E-commerce in developing countries
Opportunities and challenges for small and medium-sized enterprises


This brochure has focused on how e-commerce and mobile telephony have
transformed the lives of many people in developing countries. Access to the
internet and mobile phones help improve the livelihood of the poor through
better communications and greater access to information. Many poor farmers
are now able to receive better prices for their crops because they have access
to information on market prices. The African company TradeNet, a Ghana-based
trading platform, is a key example.


The internet and mobile phones have also spawned a wealth of micro-
enterprises, offering work to people with little education and few resources,
such as selling airtime and repairing or refurbishing handsets. When farmers
have access to information about prices and stocks, it helps them to reduce
the risk of under-selling and of either over or under-supplying their crops in a
given market. Information transmitted by mobile phone also includes access
to early warning systems to mitigate the risk of losses due to extreme weather
conditions or to the spread of disease.


This brochure has examined different ways of using e-commerce and has
looked at some specific sectors where SMEs tap into vital market information
on which their businesses depend. Others still are involved with the
development or the dissemination of mobile services such as mobile banking,
credit and insurance services.


It is important to remember, however, that SMEs are not alone in their
involvement with e commerce. The government and the private sector have vital
roles to play not only in allowing e commerce to take place but to ensure that it
grows and benefits not only SMEs but also consumers. Much of the support to
e-commerce depends on having or providing the right infrastructure, regulations
and the policy mix allowing e-commerce to thrive.


High-quality and reliable transactions over the internet need advanced
telecommunications systems and ones that offer broadband and mobile
broadband services at affordable prices to both companies and private
users. This requires an enabling environment where competition between
telecommunications providers is robust. Also required is a workforce with solid
ICT skills. Such skills are crucial for the further development of e-commerce
and other mobile applications. The latter are critical in the quest to produce
relevant and high-quality applications. Here too, governments can play a vital
role in ensuring that secondary and vocational schools teach the necessary
skills to help build a viable digital economy and one that is capable of adapting
to the needs of its users.


conclusions




ISBN 978-92-870-3864-7
©World Trade Organization, 2013


World Trade Organization
Centre William Rappard
Rue de Lausanne 154
CH-1211 Geneva 21
Switzerland
Tel.: +41 (0)22 739 51 11
Fax: +41 (0)22 731 42 06
email: enquiries@wto.org
website: www.wto.org


PHOTO CREDITS


Front cover from left to right:
©Getty/Joseph Van Os
©Getty/Zubin Shroff
©Getty/Luca Sage


Back cover from left to right:
©Bloomberg via Getty Images
©Richard Lord
Page 1: ©U. Baumgarten via Getty Images
Page 3: ©India Today Group/Getty Images,
©Richard Lords
Page 4: ©AFP
Page 6: ©M. DeFreese/CIMMYT
Page 7: ©Getty/Joseph Van Os
Page 8: ©Bloomberg via Getty Images
Page 9: ©Gamma-Rapho via Getty Images
Page 10: ©Bloomberg via Getty Images


Design: Audrey Janvier Designs




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ISBN 978-92-870-3864-7




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