UN Trade Report Calls on Governments to Improve Environment for E-Commerce

The scope for developing countries to participate in and benefit from e-commerce is expanding, according to a new United Nations report released today, with improved connectivity, new e-commerce applications, platforms and payment solutions, and the emergence of local e-commerce companies that are tailoring their services to local demands.

The 2015 edition of the Information Economy Report (IER), published by the UN Conference on Trade and Development (UNCTAD), analyses trends and international policy issues related to information and communications technology and its links with trade and development.

“As the digital economy expands and more business activities are affected, it becomes more important for governments to consider policies that can help to harness e-commerce for sustainable development,” said UNCTAD Secretary-General Mukhisa Kituyi, specifying that governments need to improve areas including information and communications technology infrastructure, the legal and regulatory environment, and develop skills in their populations.

The report includes a B2C (Business-to-Consumer) E-commerce Index, which draws on data to assess e-commerce readiness and help States to formulate their national e-commerce strategies. Through the Index, governments can identify their relative strengths and weaknesses. In Africa, for example, internet penetration levels need to rise to promote e-commerce readiness.

“As the digital economy expands and more business activities are affected, it becomes more important for governments to consider policies that can help to harness e-commerce for sustainable development.”

– UNCTAD Secretary-General Mukhisa Kituyi

Making information and communications technology work for development requires more than expanding the infrastructure, the report says. In order to foster productive and inclusive use of information and communications technology, governments need to create legal, institutional and policy frameworks and generate the necessary skills in government, business and civil society and the Index measures progress in those areas.

Among developing countries, States at the top end of the Index are in East Asia, including the Republic of Korea and Singapore, with larger countries such as Brazil, China and Russia performing better than predicted, suggesting that large markets facilitate e-commerce.

Business-to-consumer e-commerce, valued at $1.2 trillion, is currently much smaller than business-to-business (B2B), which is worth $15 trillion, but is growing at a faster rate, especially in Asia and Africa, and is expected to double in size to $2.4 trillion by 2018.

To enable that, postal networks will be vital and the report measures data on home postal delivery as an indicator of countries’ readiness to engage in B2C e-commerce. In Latin America and the Caribbean and in Asia and Oceania, the extension of postal home delivery was found to be particularly important.

“Posts are seeing the mail makeup changing, with more merchandises making their way through their networks,” said Bishar A. Hussein, the Director General of the Universal Postal Union (UPU). “They must prepare for this growth by adapting their products and services, processes and infrastructure.”

The UNCTAD report also notes that growing concerns over cybercrime affect the willingness of both buyers and sellers to make transactions online, with research showing that the enactment of laws to facilitate security and trust in online transactions varies considerably globally, with significant gaps in many developing countries.

Although the United States is by far the most targeted country, accounting for almost half of known cases of cybercrime, information security is a rising concern for governments, enterprises and consumers around the world, especially given that $3.5 billion was lost in supplier revenue due to online fraud in 2012.

UNCTAD’s report calls for interoperability of legal measures between States, with 117 countries having enacted cybercrime legislation. Ensuring international compatibility of e-transaction laws remains a challenge and the report says the legal recognition of e-signatures, electronic contracts and evidence at a national level should ideally be extended to those originating in other jurisdictions.