Posted on2 May, 2016byMaiko Nakagaki|Comments Off on How Selling Online Helps Small Businesses in the Developing World Break into Export Markets
From the report on page 14. It shows that in 2014, eBay was the primarily an export platform for the eBay-enabled SMEs in Chile, Colombia, South Africa, Indonesia, and Thailand
Can e-commerce markets help create a more inclusive global economy where small and medium enterprises (SMEs) from developing countries can export their products overseas without facing major obstacles? According to a recent report published by eBay Public Policy Lab, Small Online Business Growth Report: Towards an Inclusive Global Economy, the answer is yes.
As the World Economic Forum notes, internet-based commerce sites have a positive impact for SMEs around the world because they open up new export opportunities, facilitate access to low-cost imported inputs, and e-commerce marketplaces make it easier to globally sell and source goods by reducing non-tariff barriers to trade, such as access to information.
The eBay report looked at its own data to examine if these arguments were true. The datasets of transactions from small online business (sellers with sales of more than USD $10,000 on eBay marketplace) from 2010 to 2014 in 18 countries, including emerging markets like Brazil, Mexico, Colombia, Chile, South Africa, India, Indonesia and Thailand.
Sayed Diab spent 26 years of his life working as a technician supplying organizations with sound systems and related digital services for their events and conferences. Six years ago he started his own business in this field and has since made his living providing his services to CIPE, other NGOs, business associations, and think tanks in Cairo, Egypt.
Diab recently sat down for an interview about his experiences running his own business in Egypt and what he has learned as a small business owner from the many CIPE events and discussions he has worked on.
“As a business owner, you either choose to survive or die. And surviving in this state of economic crisis in Nigeria requires creative thinking.”
On my recent trip to Lagos, Nigeria, I spoke with Patricia (Pat) Agbakwu -Ajegwu, the owner of Xklusive Patsie and the former president of the Fashion Designers Association of Nigeria. She shared with me some challenges that women entrepreneurs in Nigeria are facing in midst of economic turmoil.
Since the peak in 2014, the global price of oil has decreased by over 70 percent. As a result, petrostates like Nigeria, which relies on oil sales for 75 percent of government revenue and 95 percent of its export earnings, are hurting. This is especially felt by small business owners in Nigeria.
This past year has been filled with both positive and negative news regarding ongoing reforms in the Ukrainian economy. Ukraine entered into a historic free trade agreement with the European Union that went into effect on January 1, 2016, which was met with the predictable implementation of retaliatory tariffs on Ukrainian goods by Russia.
Additionally, and in spite of raucous parliamentary sessions and infighting among the parties, the Rada (Ukraine’s legislature) has adopted various pieces of pro-reform legislation, some of which were proposed by CIPE’s partners under a recently completed USAID-funded program Supporting Urgent Reforms to Better Ukraine’s Business Environment (SURE).
The support of USAID allowed CIPE and partners to build a sustainable institutional framework for business associations representing SMEs to have direct input into legislation that effects SME operations specifically, and to improve the environment for doing business in Ukraine more broadly.
One of the things Kenya’s new government succeeded in doing within its first year was to reduce the number of days it takes to move cargo from the Mombasa port to Malaba from 18 to 8 days — a 56 percent improvement in just 6 months. This is a major achievement which has boosted commercial relations with Uganda and other neighboring landlocked countries, forestalled competition from alternative transit routes, and ultimately reduced the cost of doing business, therefore improving economic growth in the region. How did the government accomplish this?
First of all, the president set up a cabinet subcommittee of Cabinet Secretaries dealing with the Northern Corridor — the transit links connecting Kenya’s landlocked neighbors to the sea — which reported to him during weekly cabinet meetings. Second, administrative changes were instituted; all agencies involved in the process including KRA, KEPHIS, KEBS and KMA were instructed to work under the authority of the Kenya Ports Authority and relocated to Mombasa port. Also all government agencies were to take orders from KPA and finalize operations in Mombasa without reference to any other authority. Finally, the process of clearing was digitized and weighing bridges were modernized.
What are the lessons learnt from this? There was very clear knowledge, analysis, and understanding of the problems and where the bottle necks lay, therefore solving the problem was undertaken with almost surgical precision. There was very little need for new financial resources or the construction of major physical infrastructure. This is one of the key reasons why most projects in Kenya are delayed, as they wait for budgetary allocations or get into procurement bureaucracy and controversy as we have come to see especially as a result expanded democratic space. Lastly and probably most important there was clear and dynamic leadership, the president led from the front on this one and delegated to decisive and action-oriented managers. The impact is there for all to see.
Creation of jobs was one of the rallying calls of the Jubilee campaign with 1 million jobs promised per year, but so far no major job creating initiative has borne fruit. The government seems to be waiting for big projects such as the Standard Gauge Railway and the Galana-Kulalu irrigation project to create jobs; one wonders if this will work, as time is clearly not on their side especially given the issues associated with some of these projects. My recommendation: why not replicate the cargo movement magic to prune low-hanging fruits and achieve quick wins in job creation by creating an enabling environment for micro and small enterprises (MSEs)?
Crowdfunding has taken the cyberspace by storm. Through platforms such as Kickstarter or Indiegogo, innovators can pitch their ideas and like-minded individuals around the world are able to come together to pool their resources toward a specific goal. Crowdfunding advocates say it is an entirely new model that goes beyond traditional types of investment — but regulators do not always agree.
From non-profit causes to art projects, crowdfunding has been a powerful force. But in the U.S., and in many other countries, it encountered a serious barrier when it comes to supporting small businesses and entrepreneurs: 80-year-old securities laws which made it illegal to publicly solicit money from unaccredited investors. As a result, Americans could use their money to help entrepreneurs in developing countries through platforms such as Kiva.org but were unable to invest in their local restaurant or gym.
Even though there are, in theory, many sources of funding available to such small businesses, in practice banks are often reluctant to lend to them and angel and venture capital options are also limited outside of fast growing sectors such as IT. This made changing the antiquated law an imperative. But how to do it? The story of how crowdfunding became legalized in the U.S. is the story of how 3 guys changed the rules of the game in 460 days.
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.