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VI. NEW CHALLENGES FOR SOCIETIES AND DEVELOPMENT ASSISTANCE

Guest post by: OECD Development Centre

Article Overview: The current ICT-centred technological revolution, of which the Internet is but one manifestation, is reshaping not only the sphere of economic organisation but also, and relatedly, the sphere of social relations. The impact is likely to be at least as great in developing countries as in OECD ones.

VI. NEW CHALLENGES FOR SOCIETIES AND DEVELOPMENT ASSISTANCE

The current ICT-centred technological revolution, of which the Internet is but one
manifestation, is reshaping not only the sphere of economic organisation but also, and
relatedly, the sphere of social relations. The impact is likely to be at least as great in
developing countries as in OECD ones. As the introduction of the Internet empowers
people who were previously discriminated against, beneficiaries of the status quo may
quite rationally react to defend their interests. In the Guyanan experience mentioned above,
the foray into electronic commerce created tension between the weavers and the traditional
regional leadership: threatened by the women’s success, regional leaders moved to take
control of the weavers’ organisation. The woman who created the Web site quit in protest,
and the group has been struggling since then to get by. More positively, the Grameen
Village Phone network in rural Bangladesh has apparently further added to the
empowerment of women beyond the acknowledged achievements of the GrameenBank
(Bayes, von Braun and Akhter, 1999). The operators of the village phones are all poor
women (selected for their strong credit record), whom members of the male-dominated
village elite now regularly visit to avail of mobile phone services. Also, these women
entrepreneurs appear to exercise greater discretion over the expenditure of profits from
their phone service than is the case with other household income.
Along with universities and research institutions, international development agencies
and NGOs have been among the early introducers of the Internet to low-income developing
countries. NGOs have played an especially important catalytic role, since they are often
working in remote areas with isolated communities. They have to some degree primed the
demand for wider Internet access. NGOs, for example, have been instrumental in
dissemination of the technology to link rural artisans to the Web. A well-known example is
that of Bangladesh’s GrameenBank, which has made available its branch infrastructure to
administer a village mobile phone network set up by its partially owned affiliate,
GrameenTelecom49. An interesting possibility raised by this experiment is that the phones
(and in time Internet connections) available to rural households would offer new incomegenerating
activities, for which GrameenBank financing could in turn provide seed capital.
In a best case, GrameenBank could become the incubator of a host of rural Bangladeshi
dot-coms.
For such dot-coms to flourish, whether in Bangladesh or other developing countries,
there is need to cultivate skills in the local population for certain e-commerce support
services like web design. One interesting experiment in Kenya is training youth from
Nairobi’s slums in web design skills, with some seed capital from the Netherlands
government50. The urgency of such training needs is recognised by rich countries’
governments, as exemplified by the Japanese initiative for comprehensive ICT assistance
to developing countries51.
As Panos (1998) observes, “(i)f the market is ensuring that access is spreading (in
terms of physical infrastructure), the donors and NGOs can shift their focus, ensuring that
the benefits are maximised and that marginalisation is minimised”. This seems to be the
approach adopted by many official development assistance (ODA) agencies. According
to the 1996 annual report of the World Bank-hosted InfoDev initiative to foster ICT diffusion in developing countries, less than a third of the projects then under consideration were
focused on infrastructure. Extending access to remote rural areas remains an issue, though
the emphasis is shifting from purely public investment financed by development assistance
to public-private partnerships. The ITU, for example, has established WorldTel, which is
seeking to raise private capital to finance telecommunications links to rural communities
and poorer communities in developing countries. Similar public-private endeavours may
be warranted for making bandwidth available at low cost to rural parts of developing
countries, with the multiple low earth orbiting satellite networks to be launched in coming
years by private sector consortia offering the prospect of sizeable slack transmission
capacity over low-income countries52.
As for micro-level initiatives, the establishment of telecentres seems to be a favoured
investment for the World Bank, various UN agencies, and regional development banks.
UNDP, for example, has begun pilot projects aimed at the creation of electronic community
centres as a platform for access and connectivity in rural areas, initially in Egypt and
South Africa. They will also serve as centres for capacity building, skills enhancement,
training, communications and content development. SMEs are encouraged to utilise these
facilities and they will be assisted in the creation of websites, digital web management and
the conduct of electronic commerce. A USAID project, Craftslink India, is building IT and
e-commerce capacity into the operations of low-income women handicraft-producer groups,
equipping and training them to use digital cameras and the Internet to market their wares
while showcasing their cultural richness.
Building reputational capital and fostering trust in consumers remain major challenges
for prospective developing country entrants into global e-commerce. The association of
artisanal exporters with a brand name like IFAT or with a globally recognised and respected
NGO has until now been an important means of building customer confidence. Eventually,
if market entry barriers are to be lowered for a much wider group of SMEs, generic solutions
are needed. It is of course too early to predict whether the open rating system mentioned
above will become an e-commerce standard. Assuming it (or some variation thereof) does,
then the question arises of whether the average SME in a developing country can
independently afford the software and service costs of participation in such a scheme. It
may be worth exploring options for negotiating favourable license terms and for cost sharing
— e.g., through industry associations, perhaps with partial financing from ODA.
To foster an e-commerce friendly environment, international organisations are seeking
to assist countries with the creation of suitable legal frameworks as well as support systems.
As mentioned above, while many of the norms and standards for transacting e-commerce
are being forged in OECD countries, developing countries have a stake in participating in
fora where key decisions are made. This includes the WTO, with its role in defining the
treatment of e-commerce in international trade. Given the limited capacity of many lowincome
countries to master the technicalities of even current trade issues, there is a clear
need to strengthen capacity for effective participation in multilateral negotiations and
standard-setting bodies. ODA can play a useful role here.
Finally, many traditional areas of development co-operation will increasingly incorporate
ICT elements — e.g. education and health care53. Maintaining the ICT infrastructure of
such projects may be facilitated by the technology’s multipurpose nature, notably through
leasing equipment and services to local e-ntrepreneurs.

OECD DEVELOPMENT CENTRE
Working Paper No. 164
E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES
by
Andrea Goldstein and David O’Connor

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Article Tags: akhter, artisans, catalytic role, economic organisation, electronic commerce, foray, grameenbank, household income, introducers, mobile phone services, ngos, oecd, poor women, regional leaders, regional leadership, research institutions, technological revolution, weavers, who created the web, women entrepreneurs



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