Electronic Commerce and International Transport Services: Competitiveness of African Economies

Electronic Commerce and International Transport Services: Competitiveness of African Economies • C. T. Mwalwanda • Economic and Social Policy Division • Economic Commission for Africa (ECA) • Presentation at the Experts Meeting on Commerce and International Transport Services • Geneva, Switzerland 26 September 2001

Electronic Commerce and International Transport Services: Best Practices for Enhancing Competitiveness of Developing Countries • Key aspects of this topic are: • Participation of developing countries in electronic commerce • Electronic transfer of messages and efficiency in provision of transport services • Infrastructure and international competitiveness of economies

Participation of Developing Countries in Electronic Commerce • Developing countries have been making concerted efforts to participate in e-commerce • Successful ,participation in e-commerce is heavily depended on the availability of adequate infrastructure and skills • The “Digital Divide” is no greater in any region than in Africa • In Africa concerted efforts are being made by both African countries and regional organizations to raise the level of usage of ICT

Electronic Transfer of Messages and Efficiency of Transport Services • It is acknowledged that the use of the Internet and other forms of transferring information electronically facilitates flow of information and improves efficiency of transport services • The extent to which the electronic transfer of information can take place depends on the existing infrastructure • In Africa such infrastructure either does not exist or is rudimentary (except in a few countries)

Electronic Transfer of Messages and Efficiency of Transport Services • ECA has been making concerted efforts to promote the development of ICT in Africa • This has been undertaken in the context of the “African Information Society Initiative (AISI)

The African Information Society Initiative (AISI) • In May 1995 the twenty-first meeting of ECA Conference of Ministers adopted Resolution 795 (XXX) entitled "Building Africa's Information Highway". • In response to this resolution ECA appointed a High-Level Working Group on Information and Communications Technologies in Africa to draft an action framework

The African Information Society Initiative (AISI) • The High-Level Working Group consisted of eleven experts on Information Technology in Africa. And produced a document entitled "Africa's Information Society Initiative (AISI): An Action Framework to Build Africa's Information and Communication Infrastructure". • The document was submitted to the twenty-second meeting of ECA Conference of Ministers in May 1996 and adopted by Resolution 812 (XXXI) entitled "Implementation of the African Information Society Initiative".

The African Information Society Initiative (AISI) • The action framework calls for the elaboration and implementation of national information and communication infrastructure plans involving development of institutional frameworks, human, information and technological resources in all African countries • It calls for the pursuit of priority strategies, programmes and projects which can assist in the sustainable build up of an information society in African countries.

The African Information Society Initiative (AISI) • The AISI intiative was put into place through the collaborative actions of a network of partners, sharing the aim of promoting connectivity and information technology development in Africa. • Beginning with the organisation of the Regional Symposium on Access to Telematics in Africa (Addis Ababa, April 1995), ECA, and in collaboration with its have worked towards these aims through the African Networking Initiative (ANI) partnership.

The African Information Society Initiative (AISI) • Following the passage of resolution 795 (XXX) of the 1995 ECA Conference of Ministers, the World Bank and supported by the Global Information Infrastructure Commission (GIIC, on behalf of the private sector) joined the Initiative. • March 1996 marked the launching of the Special Initiative on Africa, including the priority programme Harnessing Information Technology for Development (HITD/SIA) led by ECA and UNESCO.

The African Information Society Initiative (AISI) • The United Nations Industrial Development Organisation (UNIDO) and the United Nations Conference on Trade and Development (UNCTAD) alsojoined the group of collaborating agencies • The United Nations Institute for Training and Research (UNITAR) has also associated itself.

The African Information Society Initiative (AISI) • More and more the AISI initiative is regarded as a guiding framework on which to base information and communication activities in Africa. • The AISI action framework is also the basis for one of ECA's programmes of work. • ECA is among others responsible for the overall coordination of the implementation of the AISI action framework.

Programmes of AISI • Policy Awareness • Democratizing Access to the Information Society • Infrastructure Development and Internet Connectivity • National Information and Communication Infrastructure (NICI) plans • Development Information • Sector Applications • Training and Capacity Building

Policy Awareness • This area concerns raising awareness for the issues related to information and communication for Africa's development through workshops, case-studies, "best practices" and dissemination of the AISI action framework, in information society during major regional political events. • The purpose of workshops for planners, policy makers and sectoral users at the national level is to build awareness of the possibilities that information and communication technologies can bring to development.

Policy Awareness • A symposium was organized by the Global Information Infrastructure Commission (GIIC) and ECA on Building the African Information Society with Public and Private Sector Cooperation, as a special event for 32nd session of the ECA and the 23rd meeting of the Conference of Ministers responsible for Economic and Social Development and Planning, which was held from 6-8 May 1997 in Addis Ababa, Ethiopia.

Democratising Access to the Information Society • This area concerns provision of access to information and communication services in rural and remote areas by the establishment of multipurpose rural community telecentres, among other means, as well as broadening access to all social groups. • ECA and IDRC working together to organize a theme area on women and information and communication technologies in Africa for the 1998 ECA 40th anniversary Conference.

Democratising Access to the Information Society • Provision of relevant content and services on the information and communication services in rural and remote areas to facilitate use by those with limited language and literacy skills by the establishment of multipurpose rural community telecentres. • This contributes to the development of replicable models.

Infrastructure Development and Internet Connectivity • This area concerns connection of all African countries and areas within those countries to the Internet with sufficient bandwidth, using different technologies and by tackling policy constraints. • ECA has undertaken a number of studies on use, benefits and constraints of electronic communication in Africa.

Infrastructure Development and Internet Connectivity • In order to address the challenges of global connectivity and identify priorities for action, a group of international organizations cooperated to organize a high-level conference on "Global Connectivity for Africa: Issues and options", from 2-4 June 1998 in Addis Ababa, Ethiopia. • Some of background documents to the onference: Briefing Report on Cable and Satellite Projects. ,Case Study: Toolkit for evaluating cable and satellite projects and Key issues for decision makers

National Information and Communication Infrastructure (NICI) plans • This area concerns development of demand-driven country originated policy programmes which reflect the national priorities for action in utilizing information and communication technologies to accelerate the national socio-economic development. • Information and communication infrastructure plans ahould be a part of national development plans.

National Information and Communication Infrastructure (NICI) plans • ECA and its partners are working with a number of African countries to develop these plans. Some 18 African countries presented work programmes deriving from these plans to ADF'99.

Development Information • This area concerns development of an "infostructure", a shorthand for information infrastructure, for information relevant to social and economic aspects of African development. • This comprises, collecting and organizing African information sources by African countries, the development and use of software that addresses the variety of African languages and levels of literacy, and the establishment and operation of an electronic clearinghouse on meta-information

Development Information • For connectivity to be relevant, Africa must be able to find information from Africa. • Africans must be involved in content creation or the development of "infostructure". African countries need to organize information for electronic access and dissemination.

Sector Applications • Software applications which may help countries to overcome stubborn development constraints in various sectors of society. • Relevance of information and communication technologies is the use to which they are put - from distance education to decision support systems to telemedicine and public information databases accessible to every citizen. • Partners will assist member States in developing and and applying information and communication technologies applications that fit national priorities.

Training and Capacity Building • This section will carries materials related to training and capacity building which are obvious remedies to enhance the technical know-how and the spread of information and communication technologies. • Training and capacity building will among others include the establishment of regional institutions and the development of demonstration courses.

Training and Capacity Building • Attention is given to the introduction of information and communication technologies into public schools, training of information workers (including librarians) in electronic information management, and training in Internet systems operation, administration and maintenance.

Africa Development Forum’99 • The United Nations Economic Commission for Africa convened the first African Development Forum from 24-28 October 1999 under the theme "The Challenge to Africa of Globalisation and the Information Age". • It marked the beginning of a process led by ECA to position an African-driven development agenda reflecting a consensus among major partners and leading to specific programmes for implementation at national, sub-regional and regional levels.

Africa Development Forum’99 • ADF was born out of the conviction that Africa cannot achieve sustainable development unless Africans themselves design and own their development policies, strategies and actions. • The issue of Globalisation and the Information Age was chosen for the inaugural ADF because of the importance of defining African-owned and African-led strategies to join the global information economy.

Africa Development Forum’99 • The major goal of ADF '99 was to develop and support African initiatives that are fundamental to the shaping of the African Information Age. • ADF '99 provided the first occasion for a broad range of African policy-makers and practitioners to come together as a group to assess the opportunities, confront the challenges and develop a plan of action for Africa in the Information Age.

Africa Development Forum’99 • It was the culmination of more than three years of activities to build an African Information Society and the occasion to set future directions for the African Information Society Initiative. • The Forum was unique because for the first time, it demonstrated how much was being done in Africa by Africans, in harnessing Information and Communication Technologies (ICTs) towards development.

Africa Development Forum’99 • Much was already underway, and yet it was not well known, even within Africa itself. Some of the most vibrant and innovative applications of Information and Communication Technologies (ICTs) for development occupied centre stage during the Forum.

Initiatives from ADF’99 • Applications to support the education process and meet the the needs of Africa's youth • SchoolNet Africa Initiative • VarsityNet - Connectivity for universities and institutes of higher learning • Out-Of-School Youth Networking (Oosynet) • Applications in support of the Delivery of health care

Initiatives from ADF’99 • Regional Tele-health Initiative • ICTs and HIV/AIDS • Opportunities for business and trade • The Pan African Electronic Commerce Initiative • Creating the enabling policy environment • Community of African Regulators

Infrastructure and International Competitiveness of African Economies • There is broad agreement that the term “competitiveness” is often used in different senses. A narrow focus on factor prices as determinants of competitiveness can be misleading as a variety of intangible factors are also important, such as product quality, the capacity for timely delivery and transportation costs.

Definition of Competitiveness (cont’d) • Transaction and transportation costs within countries and across borders, have a decisive impact on both competition and the competitiveness of individual suppliers. Appropriate policies with regard to the real exchange rate constitute an important element in managing the link between investment and exports.

Definition of Competitiveness (cont’d) • As defined by the American Commission on Industrial Competitiveness, “a country’s competitiveness is the ability to produce goods and services that meet the test of international markets and simultaneously to maintain and expand the real income of its citizens” (Tyson, 1992; and Ostry, 1991). • In this respect, a country’s competitiveness must be judged not only against its performance in the world market, but also in terms of its capacity to sustain economic growth over a period of time.

Definition of Competitiveness (cont’d) • Although to a large extent firm performance in the market place is what determines a country’s overall economic strength, nonetheless, it appears that certain national characteristics, such as how human capital is used, the technical skills of labour force, managerial practices and government policies, do influence firms’ ability to compete.

Definition of Competitiveness (cont’d) • The African Competitiveness Report measures the competitiveness of African countries based on the estimates of their medium-term economic growth, controlling for levels of initial income. Overall competitiveness is calculated based on an average of six indices: openness, government, finance, labour, infrastructure and institutions, which are in turn sub-divided into criteria which include both survey and hard data.

Definition of Competitiveness (cont’d) • According to the Africa Competitiveness Report 1998, a number of African countries have made significant progress towards improving their international competitiveness and yet many others are failing in their efforts to penetrate the international markets

Empirical Research on Competitiveness • Sachs (1997) contends that Africa’s trade has not only been hampered by bad policies, but also by the physical geography of the continent. He posits that the fact that the majority of Africa’s populations live in the interior, rather than in the coastal areas, is not conducive for trade development, especially in the context of poor infrastructure and poor technology which characterises the continent.

Empirical Research on Competitiveness (cont’d) • Adrian Wood and Mayer have tried to show that the poor overall economic performance of African countries as well as in world trade could be attributed to factors more than inappropriate trade policies, although they may have partly contributed. • Adrian Wood and Mayer, in particular, argue that the concentration of Africa’s exports on unprocessed primary products is caused largely by the region’s combination of low levels of education and abundant natural resources.

Empirical Research on Competitiveness (cont’d) • According to them, the relative position of Africa in the world constellation of human and natural resources, which is what determines Africa's comparative advantage as an exporter, and which has not changed much for the past thirty years, will probably not change radically over the next thirty years, either.

Empirical Research on Competitiveness (cont’d) • Bloom and Sachs argue that the structure of a country’s exports tends to mirror to a certain extent its production structure and the production structure in turn is depended on a number of factors. • cording to these authors, six factors have often been cited as underlying reasons for the poor economic performance of the continent and include: external conditions; heavy dependence on a small number of primary exports, with declines and volatility in terms of trade; internal politics; economic policies, including protectionism, statism and fiscal profligacy; demography change; and social conditions.

Empirical Research on Competitiveness (cont’d) • However, in their view, although these factors are important, at the root of Africa's poverty lies its extraordinary disadvantageous geography, which has helped to shape its societies and its interactions with the rest of the world.

Infrastructure and Africa’s International Competitiveness • Weak infrastructure remains a major obstacle for Africa integration in the global trading system • Infrastructural weaknesses evident in both physical infrastructure and institutional infrastructure • Weaknesses in physical infrastructure evident in poor transport linkages, derapidated facilitates, and inefficient modes on transportation • Lack of efficient telecommunication facilities • Poor electricity connection and erratic supplies

Infrastructure and Africa’s International Competitiveness • Transport costs in many African countries contribute to making their exports not competitive in international markets • For landlocked African countries, freight and insurance can be as much as 60% of the export price of commodities (I.e 60 cents for every one dollar earned) • It is believed that if Africa were to reduce its transport costs it could become a net food exporter

Infrastructure and Africa’s International Competitiveness • Africa remains at the margins of electronic commerce as few countries have the necessary infrastructure • Concerted efforts are being made to become part of the rapid expansion of electronic commerce • ECA is expended significant efforts to help African countries take advantage of the information age • ECA has a Division on Development of Information Services

Thank You for Listening

Electronic Commerce and International Transport Services: Competitiveness of African Economies