http://www.networkedintelligence.com/coc.htmlBriefing Kit on E-commerce for Micro and Small enterprises in Africa (1999)
Briefing I: Definitions, Perspectives and Contexts Briefing II: Global trends in electronic commerce Briefing III: Implications of e-commerce for MSEs in Africa Briefing IV: What are the E-business benefits for MSEs? Briefing V: What are the key constraints to MSE's adoption of e-commerce? Briefing VI: Is there a role for Chambers of Commerce? Briefing VII: Further research issues and activities Briefing VIII: Glossary of E-commerce terminology Briefing IX: Web Site References: source of support and recent researchBriefing I: Definitions, Perspectives and Contexts
Definitions: ICT: while ICT has emerged as a common acronym for Information and Communication Technologies, in fact the range of technologies covered by the term is very much open to interpretation. Technologies are often defined in terms of their properties or in terms of their applicability to specific contexts. For the purposes of this briefing, references to ICTs will focus primarily on the "new information and communication technologies" which include the developing technologies of telecommunications, computing and microelectronics. The two defining characteristics of these ICTs is their convergence and their speed which have created a radical range of possibilities for information collection, manipulation, transmission, storage and presentation and through these possibilities have created a whole new climate for conducting business.
Electronic business: is essentially the virtualization of business management. It includes using electronic means to improve all business transactions. This includes procurement and supply chain management; to make sales teams more effective; to outsource business functions such as accounting or market research; to link management teams in different locations; to efficiently locate the lowest cost supplier; to improve customer services; to collect and collate customer profile data; to effectively manage remote manufacturing sites.
Electronic commerce: this term is usually understood to describe all those value transactions involving the transfer of information, products, services, or payments via electronic networks. It is now touted as the most powerful new business tool which is fundamentally changing the way in which products are developed and marketed; communications are conducted; and commercial transactions take place. Today, open-ended definitions of e-commerce are evolving around an expanding universe of ICT applications to include electronic mail, document and workflow, EDI applications in procurement and logistics management, demand-driven manufacturing and retailing, virtual enterprises and groupware. E-commerce is the most visible aspect of electronic business, but it is just one segment of a larger whole.
Perspectives:
By implication, e-commerce is limited to those enterprises that have the technical and financial infrastructure to support encryption, on-line transaction processing, just-in-time production systems and order handling. Enterprises in developing countries that have less reliable access to infrastructure may be excluded from harnessing the power offered by these new tools.
On the other hand, a more abstract understanding of what electronic business entails, i.e. the increasing virtualization of the three components of a market (agents, products and processes) lends itself better to envisioning the future of ICT use by MSEs in developing countries. Internet access on its own is already of critical importance to a number of African businesses, small and large. From the perspective of these briefing papers, therefore, the term e-commerce will used in its broadest sense to include electronic business management and the commercial use of the web in all its different forms.
Contexts:
At the drawing board level, it is clearly expected that convergence - the pulling down of the technical and commercial barriers that hold telecoms and computing apart - will open up all kinds of opportunities for business development. It is also expected that the benefits of economies of scale in running all types of communications through the same "pipe" are especially realizable in developing countries where the bulk of population has still to be wired for television and telephones.
At the ground level, however, the rate of change in ICT development ranges from country to country - much depending on the supporting infrastructural base. Historically, technological developments have tended to have both positive effects on, say production, in terms of rate of growth and cost reduction, and negative effects through marginalising or excluding whole sections of the population from those benefits. In the case of ICTs, this is particularly true in African countries where most telecommunications infrastructure or connectivity is urban-biased. For instance, Kampala, the capital city of Uganda has 4% of the nation's population but 60% of the share of all telephone lines.
In a context of large disparities of wealth and access to services - the introduction of new technologies is likely to benefit those with access to electricity, phone lines, money and security and thus deepen the gaps between the haves and have-nots. Infostructure, defined as a permanent, real-time connection to the Internet, emerged in 1996 as the generally accepted platform for building the so-called "information superhighway" Such connections are already in place in the major urban centres of Africa. The bad news, however, is that this infostructure is initially, sometimes exclusively, targeted at big business and other high-income users. Furthermore, the level of formal economic activity is so low that the long-term viability of competing infrastructures chasing small markets is still in question. Rural areas, where 80% of Africans secure their livelihood, may be left out of this equation entirely.
It is within this context that we pursue our primary goal, which is to promote equitable access to and use of the Internet for small and micro businesses in Africa.
back to contentsBriefing II: Global Trends In Electronic Business
Thumbnail picture of the state of international trade
At the global level, we are witnessing a triple revolution in technology, information and capital flows. The international telecommunications business is increasingly dictating the rate of change in the development of information and communication technologies. The telecommunications business may be global in nature, but only insofar as its reach transcends national boundaries. The critical decisions around telecommunications trade policy are far from global - they rest in the hands and in the interests of the powerful few. The key players in this game are the US, the EC, Canada and Japan, who between them, account for over 77% of the market. The combination of the rate of change and the nature of telecommunications development has critical implications for all development sectors in Africa.
Traditionally, international telecommunications services were traded under a system of bilateral agreements between nations. Now virtually the whole sector is governed by the WTO Telecommunications Agreement, which opens the way to a multilateral framework for freer trade, market opening and competition. We are entering a new regime of global competition - considered together, the Information Technology Agreement and the Telecommunications Agreement cover international business worth over U.S.$1 trillion - roughly the equivalent of combined world trade in agriculture ($ 444 billion in 1995), automobiles ($456 billion) and textiles ($153 billion). Compared to the UNDP's annual budget of about $1billion and one gets a sense of the magnitude of the volume of telecommunications in international trade.
Information economies have the potential to realise huge profit margins when trading with other economies. Consider for instance, the trade environment between an agricultural, an industrial and an information economy producing respectively coffee, televisions and computer software. Assuming the products are worth $300.00 each and are tradable with each other. At 15 cents per kilo, an agricultural country requires 2000 kilos of coffee to earn $300.00. An industrial economy produces just one television to earn $300.00. An information economy, however, has only to sell one copy of a software program to earn the $300.00. In short, an information economy like the US can trade one copy of Microsoft 2000 for 2000 kilos of Uganda's coffee. By implication, African trading partners become captive markets of information economies.
At the same time the period that we are moving into is a very fluid and unpredictable one. With easier access to real-time information through the application of ICTs, fewer countries can isolate themselves from world economic events and trade. The distinction between a country's international and domestic economic policies is becoming increasingly blurred; macroeconomic policies are increasingly international ones. An increasing proportion of total value and wealth produced in the world will be produced and distributed through the intra-firm and inter-firm networks covering the entire globe. The physical infrastructure, the rules and regulations applied to individuals and businesses, the degree of transparency, the investment climate and the functioning of the legal system will be the most important elements that attract investment. This implies that countries will have to conform to international norms of economic behavior and the rules of the game if they are not to be marginalised. As well, new information technologies, bio-technologies and eco-technologies are opening up new areas of job creation in manufacturing as well as the services - one of the features of the information society is that the borderline between manufacturing and services is also becoming increasingly blurred.
E-commerce trends in developing countries
Electronic commerce began around 1965 when consumers were able to withdraw money from Automatic Teller Machines (ATMs), make purchases with a credit card where the vendor electronically verified payment, and big corporations managed procurement and controlled inventory. Since 1995, development has been overwhelming: it is growing at a rate of 10% per month, reaching over 40 million persons in 160 countries around the globe (USCIB 1998). An important shift in institutionalizing electronic commerce was made in 1998, at San Jose, California, when the World Trade Organization (WTO) general council made a declaration regarding global electronic commerce. This declaration represents the willingness of the 132 ministers to address vital trade issues such as custom duties related to electronic commerce.
Export values are usually a dependable indication of the state of the economic health of regions or countries. From the Revolutionary War until just after the Civil War, the USA balance of trade was negative because as a young and growing nation, it imported more than it exported in order to invest in its development. From about 1873 to 1914, its balance of trade became more favorable, it had been able to pay the debt contracted from abroad. In World War II, it expanded its exports tremendously and become a new creditor nation (Samuelson, 1964). Therefore, the value of goods and services exported over a period of time constitute a good indicator of economic growth.
The economic value of electronic commerce is expected to rise very rapidly in the next few years. Statements such as the World Trade Organization's estimate that "in the year 2001 there will be more than 300 million Internet users worldwide, and e-commerce transactions will amount to US$ 300 billion" are often quoted to substantiate this. What is the relevance of these statistics to MSEs in Africa? Are they a realistic measure of electronic business development in Africa? The answer is both Yes and No.
Yes because these values do indicate a general trend. The growing reliance on IT systems is being driven by a number of critical factors, including market liberalization, technology convergence and the globalization of business activity which Africa cannot be isolated from. Globalization, in particular, has forced organizations to compete across geographic divides to meet the requirements of their customers, wherever they are - a challenge that is effectively serviced by the Internet's global reach. In the South, the business sector, including banking, is rapidly catching up with the commercial sector in the highly industrialized states. In India for instance, most of the high street banks depend on the top 5% of customers for 70-80% of their margins. These are the customers who are most likely to be already wired. Therefore wiring up the entire country is not a prerequisite to e-banking in India. This reflects the reality of e-business trends in developing countries.
Business-to-business transactions account for 80% of e-commerce worldwide, this proportion is likely to continue for a good while in both developed and developing countries. In the short term, the domestic Internet subscriber base in African countries would be too thin to make e-commerce viable for local business-to-consumer transactions. The trend for increased e-commerce in Africa is an upward one.
On the other hand, these figures do not place a value on the kinds of transactions that may take place between MSEs and between MSEs and their clients. For the most part these forecasted figures are based on a narrow, policy-oriented definition of e-commerce. For example, the OECD, in order to measure the amplitude and estimate the structure of demand for electronic commerce, restricted its definition of electronic commerce to "commercial transaction occurring over open networks".
According to a 1997 study by Jupiter Communications, direct marketing revenue from on-line commerce is projected to grow from US $13 million in 1996 to US $1.3 billion in 2002. The vast majority of these exchanges are among the information rich. When on-line commerce crosses borders, it is predominantly North-North with a small fraction of this exchange flowing North-South or South-South. If on-line commerce typically involves the information rich, most microenterprise projects involve the information poor. These projects provide a critical source of employment opportunities for the world's poor, especially women in developing countries, by generating much needed revenue and low-cost jobs (sometimes referred to as the "hamburger-economy" in Europe). With far more pressing needs, it is not surprising that few microenterprise projects involve the use of the Internet, especially in a North-South exchange. Bringing any Southern product to a Northern market or vice versa involves a long and complicated chain of events, including production, pricing, transportation, customs clearance, and storage. Adding the use of technology with its own associated challenges - access, costs, maintenance, training and sustainability - to this exchange is beyond the capability and reach of most microenterprise initiatives.
back to contentsBriefing III: Implications for MSEs in Africa
MSEs, e-commerce and international trade: today, doing business with the world is not just following the trend, but a real necessity - economies must trade or perish. The abolition of boundaries, while facilitating access to the global market, has, on one hand introduced competition at home by removing privileges and protection. On the other hand, it has opened new opportunities for small, dynamic enterprises. Traditionally, those communities wanting to trade beyond their immediate markets relied upon a hierarchy of brokerage structures that obscured the final sale value of those products and commodities. This lack of transparency and ownership of the marketing process has been one of the contributing factors to the continued weaknesses in the bargaining position of small producers.
The new information technologies, transport mediums and communications have shortened geographic distances to such an extent that even small entrepreneurs from very remote areas in the world can become viable players. The advantages that multinational enterprises have traditionally monopolized regarding the movement of goods and services are being challenged. Furthermore, by their very nature, MSE's flexibility, innovation, personal working relations; originality in the products or services offered; enable them to cater to a niche market.
With regard to the interdependence, countries tend to focus on products or services on which they have a comparative advantage, or what they can produce more efficiently and cheaply. Many factors create business opportunities for the African MSEs in the area of export. They include:
trade liberalization at the global level;
macro-economic reform taking place in almost all the countries in the continent; consideration of ecological factors and interest for sustainable development;
increasing interest in biological products which are bringing consumers to modify their patterns of consumption;
agricultural world trade and its engagement in liberalization;
affirmation of cultural identity through products reflecting one's culture and heritage. African Americans for instance are showing more interest in purchasing products from Africa,
the increasing interest of the big retailing shops for non internationalized but standardized product;
the growing importance of SME’s as exporters. All these factors point to a potentially vibrant export sector in Africa.
To date the most pervasive instruments of electronic commerce for MSEs are the telephone and the fax machine. Even these instruments are often out of reach for poor rural micro-enterprises. While the telephones allow goods and services to be advertised, purchased and paid for, charges for long distance and international calls tend to put an upper limit on the use of the telephone by small businesses.
World-wide MSE demand for basic communication services such as local and long distance phone and fax services is rising. As new telecommunication services are becoming more available, MSEs of various types have emerged as some of the more avid customers. In some countries, such as South Africa and Senegal, efforts to upgrade phone shops to offer e-mail and internet-based information and training services have begun. While awareness and demand for the higher end of value-added services are still low, there are a growing number of initiatives in the developing world where ICTs are being incorporated into MSE business models.
Smaller enterprises and communities with lower access points to ICTs need intelligent and community intermediaries to represent their interests and service their needs. Building capacity within intermediary institutions is probably one of the most effective ways of ensuring that MSEs gain the benefits of ICTs. Unless this happens, it is unlikely that the larger portion of MSEs will have anything to do with e-commerce.
Needs of a changing labour force.
With electronic commerce, the domestic and regional market becomes an international one. Consequently, employees and entrepreneurs alike will be called upon to train themselves in order to get adapt to the changing environment. This suggests a need for the development of training materials and methodologies on new information technology that cater specifically to the needs of MSEs. The impact on employment equally concerns actions of sensitization and training of the population and society as a whole, notably through the media, case studies, dissemination of didactic material, etc. The population as a whole needs to be schooled on digital economy, so as to build up the critical mass and capacity to encourage use of ICTs to communicate and to place orders for its goods and services by internet. Those are the prerequisites needed to take part in the digital economy taking place.
At the same time, ICTs provide the most efficient medium for distance training. The development of new technical and economic skills is no longer the remit of technical colleges - the provision of skills and training is becoming more and more fragmented. In developing countries, where technical training colleges are affordable only to the relative few, ICTs provide an economic alternative to increasing access to training and skills-upgrading. Worldwide demand for education by working adults is growing exponentially, it is being driven by a number of factors including globalization, the need for continual re-training and the complexity of employment requirements in the age of information. In response to this need, academic and private sector initiatives are burgeoning everywhere to capitalize on the use of ICTs to link courses and trainers with the largest number of students.
Electronic commerce will gradually substitute traditional ways of doing commerce and providing services. We are witnessing a profound structural change that will have considerable repercussions on the labor market structure. On the one hand, new potential jobs will require the use of ICTs, specialization at a higher level with the capacity of advance reasoning and analysis. Job sites will welcome many competent people and basic education in mathematics and science will have to considerably improve; on the other hand, workers out of the information technology sector will have to use computer tools to carry out their work. In the face of such stiff competition, in a borderless digital environment, the biggest challenge will be to train these people and ascertain that the new jobs thus created are maintained on the continent.
The labor market is following the global trend. Internet does not have national borders, the physical presence of an employee is not the primary need or condition sine qua non for a position. It is now possible to both import workers and to export work around the globe in different ways. One can have one part of a business consignment done in a company in one geographic region, or share out the work among a virtual team whose members are scattered around the globe but connected through a telecommunication network, with each member staying at his home and country.
back to contentsBriefing IV: What are the E-business benefits for MSEs?
While we are still in the experimental stage of e-commerce, it is clear that ICTs offer today's enterprise a whole new dimension in reducing costs, marketing products and services and building and maintaining customer relationships. Their image rather than their location increasingly identify commercial organizations. Small niche businesses in particular, such as tailoring, travel services, hand-made crafts should be able to transcend the barriers of size, time and distance through the use of the Web. This presents a wonderful and timely opportunity for MSEs - who often are both the producer and retailer - to shift business interests to their favour, or to strike new business deals hitherto unreachable.
There are at least four dimensions to the positive impact that ICTs can have on enterprise development:
ICTs support current enterprises in new and improved ways of managing business, i.e. they change the way in which information is managed within the business;
ICTs generate entirely new kinds of economic activities and services;
ICTs represent a new factor of production which can lead to economic restructuring within existing enterprises;
ICTs represent a new means of organizing activities through its synergies with other technologies and through simplifying applications. In summary, the most profound changes brought about by ICTs will be within and between businesses. The main benefits of e-commerce to MSEs can be summarised as follows:
Reduced service costs: the e-commerce model is characterised by low variable transaction costs - for instance electronic mail is a far lower expenditure compared to other communications media (such as faxes or telegrammes) or to alternative transportation services. According to Mercer Management Consulting, internet-based faxing can drop a firm's fax expenses by as much as 35%. An Internet phone call can be up to 95% cheaper than a traditional international phone call.
Reduced administrative costs: the cost of processing purchase requisitions, orders and payments can also be dramatically reduced, as can invoice and bill presentation costs. The accuracy and transparency of business transactions is dramatically improved, increasing customer satisfaction, reducing transaction, auditing and administrative expenses.
Better service quality: the self-service model which underlies many forms of electronic commerce can improve the quality of marketing, sales, support and procurement process of MSEs by delivering more accurate, more timely and more complete information to the point of sale, point of decision or point of support. Service can also be delivered over a broader geographic and temporal base worldwide, or "any time anywhere".
Increased revenue: through increased market share, improved competition among products, lower business costs, more direct involvement with customers and less involvement of middle agents.
Faster business transactions: by communicating electronically, the time required to place and confirm an order can be compressed by hours, days or weeks. This shortens the lead-time for product delivery. As a result it may be possible to gain a competitive advantage over others.
Improves the visibility of the enterprise: through the building of business-to-business alliances and web communities which serve the interests of the MSEs in terms of providing access to market information, information about possible raw materials suppliers, information about interested clients and customers overseas. In today's liberalized trading environment, diffusion of ICTs can help MSEs to overcome:
barriers in terms of language and culture
large physical differences
difficulty in accessing business information
differences in business and administration practices that larger firms can easily cross.
back to contentsBriefing V: What are the key constraints to MSE's adoption of e-commerce?
There are two distinct kinds of constraints that MSEs face in adopting ICTs for marketing and trading activities. The first kind is particular to MSEs in terms of ICT diffusion, the second set of constraints applies to all enterprises and concerns the policy environment in which ICTs are accessed.
Diffusion constraints:
MSEs will embrace electronic commerce - just as they have the telephone and the fax machine - only when ICT use is widespread. In other words, MSE e-commerce depends on the distribution and diffusion of the technologies and the business processes - these constraints are primarily to do with the telecommunications and connectivity infrastructure. The main difficulties at the moment lie in:
Cost: of both basic information technology and transmission costs: according to ITU statistics, connection charges in Africa average at US$75.00 per month - compared to US$15.00 and US$10.00 in the UK and USA respectively.
Viability: so far there is not enough evidence to show that e-commerce is a sustainable profit-maker, the viable businesses that boast a good return on investment are few and far between. Most MSEs tend to be risk averse.
Installation: awareness about the processes involved in choosing an ISP, accessing appropriate hardware, establishing connectivity, getting software programmes etc. are a key obstacle to the MSE. Once up and running, support services and maintenance can often be difficulties in the day to day mangement of the ICTs.
Universality: the popularising of e-commerce is a long process, albeit a comparatively rapid one. The combination of obstacles and lack of support mechanisms is extremely challenging to the small, entrepreneurial culture. Mass virtual retailing will become possible only when online payment facilities become available to enough consumers in particular developing regions. At the moment, the main constraints to business-to-consumer e-commerce are:
the numbers of online consumers in the domestic African markets has not reached critical mass, due to the cost of equipment and the quality and cost of connectivity; online security and credit card payment facilities are not yet widely available; capital investment for this kind of venture is not easily raised; order fulfillment is expensive and for the most part, unreliable; local consumers have limited purchasing power lack of detailed commercial statistics and scarce information on custom duties; poor reliability of information because a lot of Web site data do not refer back to primary sources of information and this does not facilitate control of data; most key data banks are protected from the general public who are prevented from gaining access to them.Policy constraints
The constraints in this category are those related to the policy infrastructure that supports the process of electronic commerce - technical, economic and political - and apply to businesses in both developing and developed economies. They include:
encryption (necessary for processing of credit card information), the United States government - the biggest stakeholder in the Internet - has disagreed with other nations on the matter of encryption. The US has long banned export of encryption software out of fear that it will be used for criminal or terrorist purposes. In contrast, other large Internet nations such as France, Germany and the Netherlands are now lobbying to make encryption software, essential for secure transactions over the Internet, available worldwide;
taxation has been a major area of concern. In November 1998, the United States government announced a two-year moratorium on taxation of Internet activity. Yet at an international conference in Ottawa (Canada) that same month, ministers of the OECD agreed that, in the long-term, commercial transactions on the Internet should be taxed just like any other commercial activity;
copyright and intellectual property rights: legislation on copyright and intellectual property rights on the Internet is still in its infancy, and uncertainty about such legislation contributes to inhibiting business investment.
back to contentsBriefing VI: Is there a role for Chambers of Commerce?
Chambers of Commerce (CoC) have the potential to play an important role in facilitating the growth of ICT-based services for local enterprises and for the markets they serve. Positioning
In many ways, CoCs are ideally positioned to cater to the e-business needs of MSEs. They: can straddle between the private and the public sectors; can be demand driven, customer-led organizations; are already established in the provision of business development services; are an intermediary agent that MSEs have access to.
Straddling between the private and public sector: CoCs are well positioned to broker information between the policy-making machinery, MSEs and other national business associations. Governments do have a role to play through facilitating legislation that allows the private sector to develop self-regulatory solutions. Governments are being encouraged to implement the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce. Some international conventions also need to be adopted - the United Nations Economic Commission for Europe (UN-ECE) has published an analysis of international work to be done. Governments and private sector have to work together to agree on a predictable legal framework to ensure that the Internet presents a safe environment within which to conduct business. An appropriate national trade policy must be geared to the particular need of countries as well as to the regional and international policy elements to foster global trade. CoCs can ensure that MSEs are aware of these international issues and that the interests of MSEs are represented.
Demand-driven membership organizations: CoCs are well positioned to ensure that their membership is community based and that they deliver services and support for customer benefit from the customer point of view. CoCs can determine the spectrum of services that it can offer depending on the different needs of the business community - from transaction facilitation at one end to enterprise skill development at the other. The appropriate mix of services would be determined by the needs of the specific client group, this in turn would influence the internal structure, capacity and operations of the CoC.
Established business development services: CoCs are likely to apply business skills to finding appropriate ICT-based solutions to support local business and local economic development.
Potential roles for the CoC as an intermediary agent for MSEs
CoCs cannot expect to do everything. Rather they need to consider which areas they can specialize in where they have a competitive edge and in which areas they can build alliances with other kind of centres for other services. At the same time, CoCs need to be proactive in determining how, and to what extent, they can build upon their existing service structures to incorporate e-business support to MSEs.
For ease of discussion, let us categorise CoC support to MSEs into three groups: - Capacity building - Connectivity and ICT services - Content: information and data provision
The study found that the BPCO should continue to focus on services which save micro and small enterprises time and money by facilitating day to day business transactions. The Laguna Service Center should focus on services that help small and medium enterprises grow and develop their businesses. These two types of business service providers are very different requiring different strategies, internal capacity and staff skills.
Capacity building: through
assisting MSEs to adapt to new circumstances and providing tools and models to respond to the challenges posed by ICT; (eg. through awareness and training programmes)
consulting and fully involving MSEs and their membership associations in the development of strategies to advance electronic commerce; (eg. through localized workshops and virtual communications)
acting as a policy broker between e-business regulation and the needs of MSEs;
sensitizing the local MSE environment on the opportunities provided by electronic commerce . Connectivity and ICT services: through
providing some basic ICT facilities, services and management at a reasonable or subsidized cost; (e.g. through specific agreements with internet service providers)
providing support in Web site designs and in evaluating the impact of websites on MSE commercial activities;
catering to the different levels of awareness of the implications and consequences of e-commerce;
encouraging innovations in technology development, use of technology and general business management; (e.g. through keeping a tab on the kinds of software programmes being made available to other MSEs in developing countries)
identifying priority areas for ICT development (those areas that will have the greatest positive impact on MSEs).
promoting information sharing, transparency and accountability and reducing bureaucracy within and between organizations;
providing Internet-based information services that help MSEs grow their businesses;
monitoring policy and trade guidelines at the regional and international level that propose solutions required for traders to carry out international transactions in the most effective manner is required;
acting as brokers of information between MSEs and regional policy making machinery through the provision of information to different government agencies on behalf of MSEs;
managing databases such as linking enterprises by name, product or location to a business or investment opportunities through the use of personal computers and the Internet. Matching and transmitting such information for MSEs is invaluable;
establishing other value-added data dissemination services to users and members, e.g. local market research, local software sources,etc.
developing links with other similar business databases nationally and internationally;
making legal and best practice legal terms available to MSEs by developing an e-terms database with terms that parties can incorporate into electronic contracts;
providing information on self-regulatory products for e-commerce such as internet advertising guidelines and the general usage of international digitally ensured commerce (GUIDEC)
back to contentsBriefing VII: Further research issues and activities
Our understanding of the effects of ICTS on MSE operations is still very much open to interpretation. More systematic research is required to better understand how ICT developments might affect the prospects of MSEs and how intermediary agencies such as Chambers of Commerce might service those needs.
Two parallel research areas need further work: one to assess what CoCs themselves need in order to be able to service MSEs, and the other to assess how different kinds of MSEs are using ICTs to support their businesses.
How can CoC's build their own capacity to serve MSEs?
CoCs need to conduct the necessary local market research and establish the necessary consultative process to determine an appropriate mix of services and delivery mechanisms for the provision of ICT services to MSEs.
CoCs need to explore new thinking on policies towards MSEs, why small firms have a high mortality rate and what support mechanisms are required to help them to succeed and to adapt to the new information economy. CoCs need to be able to influence public policy initiatives in favour of increased access to the ICT infrastructure and services by lower income groups.
CoCs need to become part of information networks themselves that enable them to be constantly updated about new policies, appropriate software programmes for MSEs, available training programmes etc.
CoCs need to decide what delivery channels and service combinations are more likely to be financially sustainable.
CoCs need to assess what their own needs are in order to accomplish the above.
How can MSE's build their capacity to integrate ICTs into their trade and marketing activities?
MSEs need to organize training and awareness programs through CoCs or other similar membership programs.
MSEs need to build their business management capacities and understand how ICTs can strengthen processes and transactions.
Further research needs to be conducted to assess how increased ICT-based services impact upon the business operations of MSEs.
Ongoing research findings on the emerging business opportunities for MSEs as suppliers and or supporters in the rapidly expanding ICT sector of developing country economies needs to be disseminated and made available to MSEs.
MSEs need to be involved in designing a tool kit of solutions to the typical set of problems that they face in utilising e-commerce.
Clearly there is an important role for external agencies and non-governmental organisations to facilitate and coordinate meetings and research at the local level between trade associations, chambers of commerce and small and medium enterprises.
back to contentsBriefing VIII: Glossary of E-Commerce Terminology
ANS: Advance Notification of Payment is used in e-business by buyers to notify sellers of impending electronic cash transfers, improving treasury management and cash flow forecasting.
ASN: Advance Shipping notice is a detailed electronic document used to outline specifics of shipments, orders, packing and individual items purchased
Authentication: an electronic method to verify the source of transmitted data, like an electronic fingerprint. Not to be confused with encryption which disguises data but does not verify who sent it.
Cookies: small data files sent to your computer by some Web sites so that they are able to identify your preferences on subsequent visits. Useful for tracking frequent users but controversial as an invasion of privacy.
Digital certificate: an electronic "signature" often an alphanumeric code, verifying your identity and preventing others from posing as you.
Disintermediation: a term referring to the cutting out of middle agents in the traditional buying chain.
E-Cash: electronic currency that can be used as a substitute for money in online transactions. Also known as secured credit cards, electronic checks and digital coins.
EDI: Electronic Data Interchange is a private, proprietary system of computer-to-computer data transfer. EDI can exchange electronic versions of order forms, invoices and other structured documents between computers.
Encryption: a process of encoding or disguising data travelling over networks to ensure confidentiality, a password or electronic "key" unlocks the data.
Extranet: a community network of business partners, suppliers, distributors or customers using Internet tools to privately and securely exchange information
FEDI: Financial Electronic Data Interchange is the computer-to-computer transmission of payment and remittance instructions using international standards.
SET: the Secured Electronic Transaction protocol is a recognized standard for transmission and verification of payments electronically, such as credit-card transactions
24.7: means 24 hours, 7 days a week. (anytime anywhere!)
back to contentsBriefing IX: Web Site References: sources of support and recent research
CommerceNet: a non-profit organization, with chapters in Canada and other countries, dedicated to promoting the virtues and issues of electronic commerce. www.commercenet.com
International Chamber of Commerce (ICC): This site has updated information on e-commerce, roles and responsibilities. You will also find on their site the complete reference document " An action plan for business with governments toward electronic commerce".
Exporting services of ICC: International commerce information and data site http://www.intracen.org/servicexport/
International Institute for Communication and Development (IICD) assists developing countries in keeping up with the latest developments in ITCs, with a special emphasis on electronic information and communication applications that support health care, education, environmental protection and commerce. IICD have conducted one research study on E-commerce: a medium for promotion and sales by SMEs.
ITC has provided developing countries with a Web site where the products of artisans are displayed in an electronic catalogue. The Virtual Exhibition Center was established in close collaboration with national trade promotion organizations, Chambers of Commerce and other business organizations, and non-profit organizations promoting trade for developing countries. The Virtual Exhibition Centre is a free, on-line exhibition center and contact point for sale and promotion of artisanal products from developing countries. It covers over 400 product images and more than 100 artisan enterprises in 10 categories: (e.g. leather, pottery, carpet). The site contains contact details, company profiles of suppliers, information on how to participate, a list of qualifying products, technical information on how to build a virtual exhibition stand and links to related Internet sites. The VEC is available free of charge on the Internet. The ITC's Virtual Exhibition Centre receives over 3000 visits monthly and can also be viewed at
Artisanet Web or at the International Telecommunications Union server http://www3.itu.int/virtexh/artisan.htm
International Telecommunication Union (ITU) EC-DC Pilot Project: the objective of the ITU Pilot Project is to help developing countries use existing telecommunication infrastructures to participate in electronic commerce. In doing so, the ITU hopes to help developing countries participate in the electronic commerce market, boost trade with industrialized countries and attract foreign capital and investment. ITU is active in the development of standards widely used in electronic commerce and now has considerable experience in developing electronic commerce applications. The ITU is therefore in a position to share this expertise with developing countries. Its pilot project focus is on small and medium enterprises (SMEs) in Africa. ITU's participation is limited to providing technical advice and to demonstrating the feasibility of the model.
Mercer Management consulting http://mercermc.com/news/briefs1q98/faxtraff.html
Microenterprise Innovation Project: is the U.S. Agency for International Development's (USAID) initiative to support technical and financial assistance, research and training on best practices in microenterprise development and finance. MIP's goal is to provide microentrepreneurs with greater and more reliable access to financial and business development services to improve enterprise performance and household income. www.mip.org
OECD: the documentation for two conferences: "Dismantling the barriers to global electronic commerce" and "The borderless world: realising the potential of global electronic commerce" can be found on the OECD web site. http://www.oecd.org/subject/e-commerce
PEOPLink: a non-profit initiative that is successfully marketing artisanal products from developing countries over a commercial website.
Small Enterprise Education and Promotion (SEEP) Network - is an association of more than 40 North American private and voluntary organizations which support micro and small enterprise program in the developing world.
Tele options for community business: an opportunity for economic development in Africa. Paper presented to BITWorld 99, Cape Town, South Africa, July 1999 by Len Holmes and Margaret Grieco.
The Business School, University of North London.
UNCTAD's Global Trade Point Network: promotes greater participation in international trade by small and medium enterprises by offering assistance in banking, freight forwarding, customs and insurance. The Global Trade Point Network now also facilitates transactions via a secure webserver hosted by UNCTAD.
UNESCAP's Economic and Social Survey of Asia and the Pacific, 1999 has excellent content from an Asian and Pacific perspective: Information Technology, Globalization, Economic Security and Development. One entire section is devoted to electronic commerce.
UNDP - has a web site dedicated to e-commerce issues and offer a one-stop shop site for exchange of information, basic documents and modules, (best) practices and experiences.
World Standard Network: has the International standard organization (ISO) and International electronic commission (IEC) and International telecommunication Union (ITU) norms
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