3. Cultivating new capacities, the case of e-commerce

Torbjörn Fredriksson
United Nations Conference on Trade and Development
  • Least developed countries lag behind in digital readiness and lack sufficient financial, technical and other resources to capture value from digitalisation.

  • The eTrade for all initiative is helping to identify opportunities for synergies, minimise duplication of effort and ensure more impactful support for e-commerce ecosystems.

  • Development actors need to prioritise limited digital for development funds by engaging in partnerships, providing more catalytic investments and supporting efforts to build digital capacity.

Digitalisation is reshaping economic and social activities globally. More than half the people in the world now use the Internet; 1.5 billion people shop on line (UNCTAD, 2021[1]) and it is expected that Internet traffic in 2022 alone will exceed all Internet traffic up to 2016 (Globe Newswire, 2018[2]). In 2020, thanks to greater use of digital solutions during the COVID-19 pandemic, global Internet bandwidth increased by 35%, exceeding the 26% growth of the previous year (TeleGeography, 2021[3]). The rollout of 5G technology, the expanded use of artificial intelligence and the Internet of Things will further accelerate the shift to a truly data-driven digital economy (UNCTAD, 2021[4]). Yet, gaps in digital readiness and insufficient international financial support for national digital transformations could leave many developing countries on the sidelines of the world’s burgeoning digital economy.

These trends of rapid digitalisation are taking place against the backdrop of highly uneven levels of digital readiness, both between and within countries. In the area of commerce, for example, more than 80% of Internet users in Europe shop on line, while in many least developed countries (LDCs), fewer than 10% do so (UNCTAD, 2021[5]). Indeed, the LDCs are trailing furthest behind in terms of e-commerce readiness: Of the 20 economies with the lowest values on the 2020 Business-to-Consumer E-commerce Index, 18 (all but the Republic of Congo and the Syrian Arab Republic) are LDCs (UNCTAD, 2021[5]). Moreover, the LDCs especially lack sufficient financial, technical and other resources to capture value from digitalisation. The pandemic’s negative impact on economic growth has also strained public funds that might be available for developing these capacities.

Digital transformations of global value chains and consumer behaviour have implications for countries at all levels of digital readiness. If digital transformation is not managed well, businesses in developing countries will miss opportunities to engage in global value chains and digital trade, and digital divides will widen further.

Coping with digitalisation is particularly difficult. The issues involved are cross-cutting in nature and often relatively new to the government departments concerned. Technologies are evolving at such a high speed that policy makers find it difficult to respond effectively. Digitalisation is no longer a matter of concern only for the information and communications technology (ICT) minister. It requires the attention of the government as a whole.

These challenges underscore the importance of international support for digital transformation. The amount of development assistance allocated to ICTs and related development areas remains insufficient. For example, while the share of aid-for-trade resources allocated to the ICT sector is increasing, from 1.2% in 2017 to 2.7% in 2019 (Figure 3.2) it is still below the 3% level observed over 2002-05, during which time the two parts of the World Summit on the Information Society were convened (UNCTAD, 2021[6]).

Building the capacity of low- and middle-income countries to participate in and shape the digital economy will require breaking down silos within governments as well as in the development community. Innovative approaches to delivering development assistance are also needed. In particular, smart solutions based on partnerships and transparency are key to avoid duplication of efforts and keep costs low. The “eTrade for all” initiative led by the UNCTAD is a concrete example of such a solution.

Given the urgency to bridge the gaps in digital readiness and the currently insufficient levels of development assistance in this area, members of the international community, including bilateral development agencies, need to work together in innovative ways. Developing and implementing solutions in many of the areas that must be addressed – such as improving legal and regulatory frameworks to enhance trust on line, building skills for the digital economy, strengthening digital entrepreneurship, and facilitating digital financial inclusion – take time.

Yet, many development co-operation actors only recently started to pay adequate attention to digitalisation through dedicated strategies and resource allocations, according to the 2019 survey conducted by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) (UNCTAD, 2019[7]). While some donors had developed strategies emphasising the potential of digitalisation for promoting inclusive and sustainable economic growth, only a few offered a vision or approach for mitigating potential downside risks such as harmful concentration of market power by global digital platforms; greater digital and income inequality; and state and corporate use of digital technologies to control rather than empower citizens. The survey also found many donor organisations were pondering how best to organise themselves internally to design and implement overarching digital for development strategies in view of the cross-cutting nature of associated issues (see also case studies in Part 4 of this report).

The model of eTrade for all might inspire similar efforts to tailor development assistance to digital transformations in other areas such as health, public services, education, agriculture, urban development and climate change. The collaborative efforts of eTrade for all can provide useful information to international development partners as they consider how to prioritise limited funds in the area of digital for development. Its online platform provides a wealth of information about 34 partner organisations and their strengths that can be leveraged for greater impact (Box 3.1). Its listing of available technical assistance and existing products and programmes can help pinpoint areas that are currently not well covered and in which catalytic investment and initiatives could be particularly useful. For example, in joining eTrade for all in 2021, the British Standards Institution saw an opportunity to strengthen international support related to standards that are of relevance in the digital economy. In that context, the British Standards Institution published a white paper on how to support digital transformation in developing economies,1 and has joined forces with UNCTAD to pilot questions related to standards in an eTrade Readiness Assessment for Kenya.

The relative novelty of digitalisation and the cross-cutting nature of the issues involved make development assistance in the digital area both urgently needed and particularly difficult to organise. While awareness of the importance of digitalisation is growing among most governments, there is often less clarity about what measures to take first to strengthen a country’s digital readiness. For instance, to help translate improved Internet connectivity into development gains, a broad spectrum of policy areas must be dealt with simultaneously. Without a clear understanding of which areas and potential measures to focus on, it is difficult for a government to indicate the type of international support it might seek from development partners. This lack of understanding has sometimes been mistakenly interpreted as a lack of demand for development assistance in the digital area.

The eTrade readiness assessments, a key tool for accelerating countries’ digital journeys, are one spinoff of the eTrade for all initiative.2 They analyse a country’s current state of digital readiness, focusing on seven key policy areas3 plus gender and measuring e-commerce and the digital economy. For each of the 27 countries covered to date, most of them LDCs, an action matrix is available with specific recommendations and steps to be taken to strengthen the country’s readiness to engage in and benefit from e-commerce. For each measure proposed, the matrix further identifies regional or global partners that can be approached if additional support is deemed necessary. In effect, these recommendations aim to help countries develop their digital economy (Box 3.2). They also provide a better basis for countries to engage in regional and international policy processes, such as those related to the African Continental Free Trade Area, the World Trade Organization and the Ministerial Conference of the United Nations.

“[eTrade] provides avenues for countries to take concrete measures to address constraints so as to bring their enterprises closer to the rapidly expanding global e-commerce market”.
Ratnakar Adhikari, Executive Director of the Enhanced Integrated Framework Executive Secretariat at the World Trade Organization.  

A second spinoff of the eTrade for all initiative, eTrade for Women, contributes to advancing inclusive and sustainable economic growth by empowering women in the digital economy in line with Sustainable Development Goals 5 and 8. Its “advocates” participate in policy dialogues at national, regional and global levels. “By bringing all the concerned actors around the table, it will be easier to implement new measures because they have been previously discussed and agreed upon”, noted the Advocate for West Africa, Patricia Zoundi Yao, founder and chief executive officer of QuickCash in Côte d’Ivoire. “In the past, when new laws were adopted, they were difficult to comply with because those affected hadn’t been involved in their formulation.” Another focus of the initiative is to build communities of women digital entrepreneurs. This has made a real difference to Armelle Koffi, founder and project engineer of ORA Technologies et Multimedia in Côte d’Ivoire. “The community is already helping me by providing trainings that are answers to my current needs”, she said. “I have access to a network with women from different countries [and] to partnerships, and I can now offer my services to a bigger audience”.

“By bringing all the concerned actors around the table, it will be easier to implement new measures because they have been previously discussed and agreed upon”, noted the Advocate for West Africa, Patricia Zoundi Yao, founder and chief executive officer of QuickCash in Côte d’Ivoire. “In the past, when new laws were adopted, they were difficult to comply with because those affected hadn’t been involved in their formulation.”
Armelle Koffi, founder and project engineer of ORA Technologies et Multimedia in Côte d’Ivoire.  

Members of eTrade for all also conduct assessments, singly and in collaboration, to deliver more impactful and coherent support. Several partners are providing diagnostic assessments of aspects of countries’ digital readiness. For example, the Universal Postal Union assesses the operational readiness of the postal system for e-commerce; the International Trade Centre looks at how to boost e-commerce by small and medium-sized enterprises; and the World Bank Group undertakes digital economy country assessments. Strengthening such information sharing about each organisation’s products, and exploring synergies when relevant, will reduce the risk of duplication of work (e.g. undertaking similar assessments in the same countries) and increase opportunities for joint work. Already, eTrade readiness assessments are carried out in co-operation with several eTrade for all partners, among them Consumers International, the International Trade Centre, the United Nations Commission on International Trade Law and the Universal Postal Union.

Recommendations contained in these assessments serve as a menu of policy actions that can be supported by eTrade for all partners or other organisations, including bilateral development co-operation providers. They can also support efforts at the regional level. In 2021, for example, UNCTAD, the United Nations Capital Development Fund and the United Nations Development Programme came together to form the Pacific Digital Economy Programme with the support of the government of Australia.4 Similarly, the assessments undertaken for African countries are now feeding into efforts to promote e-commerce strategies for the East African Community and the Economic Community of West African States. Ideally, any African country that so wishes should be able to benefit from these assessments, given that they would add much needed evidence for discussions related to the African Continental Free Trade Area. As of 2021, eTrade readiness assessments had been completed for only 14 African countries.

Going forward, much more and better co-ordination and collaboration are possible in the area of digital for development. It still happens that multiple development organisations approach the same country and offer similar assistance. This is hardly an efficient use of taxpayers’ money and is a burden on the beneficiary country government that must manage relations with so many partners. The eTrade for all initiative, with its focus on information sharing to leverage the strengths of different actors, has enhanced mutual understanding of what each partner is doing and where there are opportunities for synergies. For example, the Pacific Digital Economy Programme is unlikely to have emerged without eTrade for all. Nevertheless, the process is still at an early stage. Among the key priorities for the future are to further enhance transparency and explore possibilities for implementing projects involving multiple partners. The new United Nations resident coordinator offices could also help facilitate better co-ordination in countries. Achieving effective collaboration requires trust, resources and an openness to do things differently. When done well, it is likely to deliver better impacts.


[2] Globe Newswire (2018), “Cisco predicts more IP traffic in the next five years than in the history of the Internet”, Globe Newswire, https://www.bloomberg.com/press-releases/2018-11-27/cisco-cisco-predicts-more-ip-traffic-in-the-next-five-years-than-in-the-history-of-the-internet.

[3] TeleGeography (2021), The State of the Network: 2021 Edition, TeleGeography, https://www2.telegeography.com/hubfs/assets/Ebooks/state-of-the-network-2021.pdf.

[8] UNCTAD (2021), COVID-19 and E-Commerce: A Global Review, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/dtlstict2020d13_en.pdf.

[4] UNCTAD (2021), Digital Economy Report 2021 – Cross-border Data Flows and Development: For Whom the Data Flow, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/der2021_en.pdf.

[6] UNCTAD (2021), E-Commerce and Digital Economy Programme Year in Review 2020: Facilitating Inclusive Digital Economies in Challenging Times, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/dtlstictinf2021d2_en.pdf.

[1] UNCTAD (2021), “Estimates of global e-commerce 2019 and preliminary assessment of COVID-19 impact on online retail 2020”, UNCTAD Technical Notes on ICT for Development, No. 18, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/tn_unctad_ict4d18_en.pdf.

[5] UNCTAD (2021), “The UNCTAD B2C E-commerce Index 2020: Spotlight on Latin America and the Caribbean”, UNCTAD Technical Notes on ICT for Development, No. 17, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/tn_unctad_ict4d17_en.pdf.

[10] UNCTAD (2020), Fast-tracking Implementation of eTrade Readiness Assessments, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/dtlstict2020d9_en.pdf.

[7] UNCTAD (2019), Digital Economy Report 2019 – Value Creation and Capture: Implications for Developing Countries, United Nations Conference on Trade and Development, Geneva, https://unctad.org/system/files/official-document/der2019_en.pdf.

[9] UNCTAD (n.d.), The UNCTAD Cyberlaw Tracker, https://unctad.org/topic/ecommerce-and-digital-economy/ecommerce-law-reform/summary-adoption-e-commerce-legislation-worldwide.

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