>> JAMES HOWE: Good morning! I am sorry to disturb your post coffee chats but thank you for coming along to this hidden room in the corner. You are special. You have found it. So hopefully we will have a compact and interesting session of around 90 minutes. We are running three minutes late. I don't want to be too obsessive about timing. But let's make sure that we have a good amount of time to change on the issues.
So let me just make an introduction in case you're in the wrong room, first of all of the topic here is: Trust and Trade across Borders ‑‑ and I am even reading: Shaping the Future of International Ecommerce from Developing Countries. So my name is James Howe. I am a senior advisor to ITC. I run a small team that does a few things. And one of them that's getting more and more of our attention and other people's attention is some very pragmatic support that we're working on a program to support developing and least developed countries, small and micro‑sized firms in those developing countries, overcome barriers to using e‑commerce. So we play in a different space and so I think the way we speak about it may be a bit different than you hear about it in other fora. Because we are trying to represent the voice and the needs of the SMEs and how to get them in international trade. That's ITC's core mandate.
In various seminars we have seen that there is a focus, when we talk about trust on some of the technical aspects and indeed a lot of the public debate at a high level can be on topics which seem very esoteric when you are a micro enterprise in a developing country. Very, very important issues as they are, such as data delocalization or even cybersecurity or even some of the international debates seem very far removed from the kind of problems that you are faced with immediately to create a viable business, to get your goods online and get paid and get he deliveries happen. Because there are lots of problems that you will go through but a core underlying problem is the issue of trust, which is an animal that has different faces. So, there is the technological aspects.
There are the legal aspects and what we said we would have a little bit of focus also ‑‑ and that's not to neglect those very important aspects, but also the behavioral, societal aspects and how these play upon one another. Somebody did the click for me. That's brilliant. Thank you.
So, let me introduce those speakers. I have Adam Schlosser here on my right‑hand side, probably on your left‑hand side who is from the World Economic Forum. Adam will focus on the view how technology's change and how he thinks it think impacts what we are talking about, trust and trade.
In the middle our session, we will have testimony from Africa in two parts. Firstly, from Maria, who worked with us earlier this year in her thesis on this area. And she is ‑‑ I misunderstood. She is still in Zentih Bank, so we can drop the word former. She's based in Nigeria and has come over to give us this view about what those issues are and about trust seen from an African point of view. Then we will pass to Korotoum, who's on my right here, who will present us what the African Poste is doing about this, a very pragmatic area of helping small firms. How the Poste can support that.
And finally and only available online is Hanne, from eBay, who will give us some lessons from the past of how micro enterprises built their presence but also currently with eBay, how the small, medium enterprises are being helped in building that cross‑border business. Right. So this forms a background.
Earlier this year we did some research interviewing around 2,000 SME's through our network around the world in developing least developed countries and also developed countries to find out what the reality is like, what it feels like in the voice of small enterprises. Why exactly it is so difficult when we can sit here in Geneva and have debate about what the WTO should be doing and what the member states should be doing, while is it still a problem, pragmatically for a micro business to get on and do e‑commerce. We had a number of findings in that, some of which will become apparent. But there are a series of papers which you can find and download or you can find me and I can give you the references over the last few years.
ITC is not firstly a research house. We are very much involved with projects and project support. But we do occasionally put pen to paper and produce something. Over the last few years we looked at e‑commerce in China, which we're supporting an ongoing project that we're doing about helping out market access into China for some of these developing countries.
A report from our ongoing SME competitiveness research where we pulled out lessons on e‑commerce in particular. Last year and a couple of years ago, we did something specific about Africa.
So, I will just point out something that's a few years old and it really anticipates Hanne's intervention at end, because eBay did a lot of work with some analytical background to this but supporting the notion that it's possible today to launch yourself and be a micro multinational out of your garage and indeed there is a lot of case history that shows this is possible.
The big, formerly developing countries, such as India, there is a massive movement of companies starting small but very rapidly developing substantial domestic and international business through e‑commerce channels. But our observation is that this is not as easy as it seems. And I will come to it in a moment. We'll move on.
We see in the background, elements of trust is a big issue and there is a great irony here and we see this at the senior executive level ‑‑ this is a another view. This is A KPMG survey earlier on this year of saying that building trust is among the biggest challenges here as well as growing the business, which is the normal preoccupation of chief executives. A third of them nearly see an issue in general ‑‑ and we are being very high level here ‑‑ with trust. So there is something funny that's going on in the world. While we have all this access to information and all this accessibility, you would think that trust would be driven by social networks and the kind of information that we've got. But trust seems to be a general kind of problem.
So, we will move on. And indeed, looking more in the area of e‑commerce, a survey last year by Ipsos, which is confirmed by the general public, 80% of people across the world are finding it hard to know who to trust and we are in an age which it does point to some kind of crisis.
And here is a survey I commend to you. It is a very detailed survey commissioned by ‑‑ worked on by Ipsos as well but also several parties including the global ‑‑ including the Center for Internet Governance and Innovation and The Internet Society and UNCTAD. It was a very extensive report. 24,000 Internet users in 24 countries including some developing and least developed countries and there is a mass of information there about what the issues are, viewed from the consumer ‑‑ I mean, this is not the translation into what SME sees but you see this: I do not trust shopping online. 49%. A huge number. So this remains a huge issue. And, of course, the second on here: I have heard bad things about shopping on line, of course is linked. About testimonials and the power of voice. You know a culture of people who hear bad things about this. So we would point out that there are a number of simple things and we have been through this. This is at the core of some of our work: To identify this journey again ‑‑ I should say this is from the SME's point of view, small companies, of moving from understanding, so understanding what is e‑commerce, which is very transparent. Anybody can go on Amazon and very quickly understand what is e‑commerce but what is more difficult to understand is the steps and the barriers to actually make this ‑‑ so, understanding what are the right products, understanding how to get the right quality of information as simply as photos and descriptions. Actually achieving access to some of these markets, this is a thorny problem. We don't go into detail about this. We discuss it in other fora about some of these markets are simply closed as is the availability of many common payment solutions.
Transport remains difficult. Anticipating duties and tax. There is the issue of not having visibility on these international markets is of course going to be a problem. It both damages margins and can lead to disputes and damage to reputation. That is a journey simply from understanding to trust, in our way of viewing things, which you will see we are not talking about very complicate the issues here in many cases but another learning that comes about is that in a way this is all link today formalization and this is one of my learnings over the years work with the small companies.
If you think about it, digital involves no room for ambiguity. It requires a major step into formalization of information and I can explain a lot more about that and that underpins a lot of problems. All of this involves being able to have an identity online and issues we'll talk about like having a security certificate and so on. That involves some changes business attitudes and behaviors about a series of capabilities to do with formalization, formalizing what the product is called and its variations and so on.
I'm speaking too long. I've started late but anyway there are these different areas we can talk about. We can come back to in our discussion. So: Trustworthy online presence, payment solutions, customer support, terms and conditions and security technology.
So we'll just move on. And we can click ‑‑ so that we mean by that ‑‑ so this is about professionalism, as I've mentioned, transparency of what's available; testimonials. And we do work to help understand that with small firms so they can start to benefit from being professional, being transparent, getting testimonials.
Payment solutions is a technical area but if you can't have your business registered, if you want can't be a part of a certified authority which recognizes your business, you're going to find it very difficult to get payment solutions in many of these countries.
>> ADAM SCHLOSSER: Thanks for including me on this great panel today. My presentation, as James alluded to, will be looking at the impact on trade of new emerging technologies. In some ways that technology can be used to improve trust and also development. I will also touch briefly on data protection and then cover some of the uses of this new technology and I promise to do all that in seven minutes or less or you can yell at me.
So, technology is really moving faster than ever before. The new speed of technologies is combining different uses, different applications to create an exponential amount of benefit in ways that weren't even thought possible a few years ago. So, for example, the iPhone is only about ten years old. When it first came out it was a novelty. Oh, our friends are online. Checking their email. They couldn't even check their email. Checking the sports scores. It's great. But now we can't even imagine traveling without it.
The idea of prninting out maps before you go somewhere is crazy. You pull out your phone, you are able to connect online. Years ago, buying something online was something people are are afraid of. People wouldn't do that. Now we just do it on our phone. I needed to get a present for someone for Christmas. I did it on my phone and had it sent two days later later back home. And I was here, in Switzerland and my home is in San man. So it is really incredible the amount of commerce being unleashed just from the application of mobile devices. And the possibilities from there are endless when you can buy new types of technology. I want to touch upon emerging technologies such as blockchain that is really facilitating trade and blockchain is a bit of a magic cure‑all for everything from saving the environment to stopping illegal fishing to anything that you can think of. Improving healthcare. And the one area that really is doing good work is the training system; and the exciting thing about speaking at the IGF versus a training conference, is that I hope I don't have to explain the difference between blockchain and Bitcoin to this audience because it is pretty advanced. There is a difference between a cryptocurrency and a distributed ledger technology.
And the blockchain is being used in the world of trade finance so that when goods arrive at port, the trade finance can automatically be updated and work smoothly. The Smart contract can self‑execute to show that, all right, the goods ‑‑ and you can put an IoT tracker onto the goods ‑‑ the moment they cross into port, into that jurisdiction, the attached paperwork, financing, automatically uploads and the process proceeds smoothly. Then, if you can incorporate AI into that process, you can show that, all right, based on the information provided in this good or the size of the shipment, we can say, all right, this is less likely to have fraud or you can say in the last 20 instances when the category is left open in the trade document, there is a good chance something fraudulent is going on here.
So it can better direct resources to try to determine, try to improve trust, say when packages, goods and services might be fraudulent or something might be awry, make the process more efficient and streamlined. You can in theory create a fast lane for e‑commerce from developing economies, to say, okay, it is less than $200, trusted source in this government, we know it can go through customs. You avoid a situation where goods have to wait days or weeks to clear a customs process, another area where technology ‑‑ I should say there is not a distinction between goods and services. In the trade system we talking about trading goods and services. It is all one. All trade is digitalized.
In older times, you think of ‑‑ warehousing, just getting your goods into port. So, warehouses in the past were so big and so analog that if you moved a package literally three feet from its original location, you would lose it, because you had no way to track where it was. If there were hundreds or thousands of packages, how do you identify it. Applying trackers, industrial Internet is an easy way to smooth the process. In the past, truckers would have to wait ten to twelve hours to see whether their containers from ships came into port because they had no way to predict what terminal they were arriving at. Even in major ports, such as the city of Los Angeles, they have five different data systems, internally. So you can imagine the inefficiency that causes in a fairly advanced industry.
All that being said, that creates an advantage for developing economies, where they have not incorporated the data systems yet. So they can really leap‑frog the developing countries and really move quicker. So that's a big advantage there.
A lot of these developments are really fueled by data. So, I just was on a previous panel with your colleagues talking about data issues. I won't go too deep there. But, just to raise a question about when data crosses borders, there are not easy solutions out there ‑‑ for example self‑driving cars. Imagine a situation you have a US citizen driving a German car on a Japanese road. Well, obviously there was some trade happening that got the car there. And the data is valuable. But what happens when the regulators, the safety regulators in all three governments say you need to store the data locally; you need to report that data and keep it here. What happens when there is an accident? Where does the data go: Who are you conflicting with, two, three laws? That is an open question out there. Some of the rules that are in place now are not entirely fit for keeping up with the rapidly evolving technology that is out there.
Moving on to the concept of trust ‑‑ and this is something that came up in the last panel. One of the biggest barriers to trust is a lack of financial and transaction data ‑‑ in Indonesia, only 36% of the population is banked and only 23% has access to e‑payments. So SMEs can have a really hard time getting financing because they lack credit history. So traditional credit reporting is only negative situations; when you didn't pay a bill. But what happens if you paid cash to utilities for three years? You're potentially a great client; I'd want to lend you money. I don't want to finance you because you are showing you're trustworthy. But how do you track that? How do you develop that? So it's really important to increase the level of banking, increase the level of e‑payments, whether it's through their systems like PayPal or MPesa. But getting people online is a great way to prevent and deter fraud and it's a way to do it through new technology. It's not as exciting or emerging as blockchain but it's still emerging technology that's very important to use.
In developing economies, instances of fraud are definitely higher. In Indonesia, again, fraud is about 12 times higher than average. So people are deterred or slightly worried about making purchases online. In developing economies, we are used to going ‑‑ we have credit cards or bank accounts. So I am not worried about fraud. So I know I can go to my credit card company, go to my bank, say, "Stop the payment."
What about when payments are done in cash; how do you track these situations? A lot of these problems will get better as more people come online. We are facing a bit of a chicken and egg situation. How do you get people online conducting more transactions to increase the transparency when they're worried about fraud?
So, how can we jumpstart this and create some improvements so we can improve the process? One, governments can play a really key role; in particular, increase cross‑border cooperation to prevent fraud; provide Easy Pass for dispute resolution. They can create sandboxes to safely test and evaluate emerging technologies, so this is the example of block chain for trade finance. Ensuring that there are guard rails in place to be innovative, incorporating new technology while still ensuring public safety. And a lot of developing economies, now they're in a place where their paperwork isn't even digital. So to digitalize paperwork, let’s put it into PDF form. Millions of dollars. And that's not even being able to scrub data sets our or just manually or electronically and efficiently add data. It's just literally scanning documents into PDFs.
So, why do that; why even take that step? Just go right to the idea of being all digital, all electronic. It's a great opportunity. You are operating from a green space. You really leapfrog and avoid a stage that is not as helpful. So I think it's a big opportunity there as well.
When governments are creating frameworks, it's important that they are technology‑neutral and function‑based. So indifferent to whether it's on a phone, a computer, the type of technology, open source, closed source; that focusses on the functions and services that are being offered. It can also make it easy to comply with consumer protection rules such as Know Your Customer and any money laundering policies. However it's not just a government solution that's out there. The private sector also needs to get involved. So platforms that are enabling e‑commerce, or enabling other platforms, B2B or B2C. Can make resolution easier obtained; make consent rules visible, improve accessibility by having multiple language options and vetting the people that are buying and selling on the site. Maybe even taking escrow as well there.
It is not a government or private solution. It's important that everyone cooperates. Combined with the advice and effort from the civil society there is a clear path towards maximizing benefits of technology and trade, really answering the challenges that are out there. And both building trust both domestically and across borders. Thanks. I don't know if I was over seven minutes a little bit, but okay.
>> JAMES HOWE: I think the time is required, a lot to enter into a short amount of time. So there were a lot of things there. And I think we should come back in some of the discussions and focus on some of the key ideas.
We will move on first of all, present the basis of the discussion. Thanks, Adam, if I didn't say that.
And pass to Maria, if I may.
>> MARIA UMOREN: All right. Good day, everybody. Like James has said, I am Maria Umoren from Nigeria. I recently worked with the ITC on some issues concerning trust and digital commerce in Africa. And I would like to share some of our insights to us this morning.
With the internet comes the call ‑‑ with the ease with which business can showcase their goods and services globally and have consumers have access to them online and it has become very fundamental to e‑commerce transactions.
E‑commerce, I mean. And right now BTC e‑commerce is expected to hit $1.8 trillion by the end of 2017. However, most of this is occurring in developed countries and retail ‑‑ global e‑commerce should increase four times the rate of retail sales jumping to $2.2 trillion. This represents about 23.2%; and by the end of this year, retail sales should represent about 10% of global retail sales, e‑commerce retail sales, I mean. And this figure will get up to 4.4 trillion by 2021.
However, with all of these developments, in Africa, it is still very low. E‑commerce estimates recorded in Africa is still very low and it will be surprising to note that the total international B2C trade from Africa and the Middle East was estimated at 2.2% in 2014.
Despite the overwhelming merits of doing business online with the Internet, we have several issues, several challenges in Africa and some of them could be seen in terms of poor technology, high access costs of connectivity. We have limitation in terms of identification and authentication of businesses.
We have lack of government support and we also have issues with our educational systems. Our payment systems are very poor and we have, most of all, the issue of trust, which is what we are going to be talking about this morning in more detail.
With the Internet rapidly penetrating Africa, we actually think that Africa has a lot of potential for e‑commerce. Our population as of now is estimated at 1.2 billion and this represents about 15% of the world population. Our population is supposed to hit 2.4 2020. It is hoped that, with the ease access to the Internet our huge population will give rise to exponential e‑commerce growth. And businesses in Africa, small businesses in Africa will be able to seize the opportunity to sell their goods and services online. With increased access to electronic trust tools, we have the e‑SSO certificates, SSO certificates, some other forms of digital certificates. African businesses will be able to do business on the Internet and we will be able to harness the potentials of e‑commerce for going across borders to do trade and business.
In Nigeria we also have major issues that affect e‑commerce. Right now, people are skeptical about doing business online. For instance, I would not want to pay for goods and services online until I have received the goods I have ordered. Because we have the problem of financial fraud; we have situations where people's personal information is misused online. Of course, for us to complete transactions online, we have to use your cards and your cards have your personal information, your house addresses, your phone numbers, your bank details.
And putting all of this information online causes a problem of internet crime. Hackers have accessed this information and then we have issues where people send you phishing messages and some spurious messages that hack into your account.
We also have the issue of insufficient legal environment. We have absolutely no government policies that protect consumers. So, it is a problem to carry out e‑commerce in Africa and in Nigeria in particular. We have limited technologies to support the confidentiality of consumer information online. We lack transparency and we have the problems of customer service, like I said earlier, if I purchase a good online and it doesn't meet my specification, to return and get my goods replaced is a problem. So the issue of customer service also impdeds doing business online in Nigeria.
There is also the issue in particular, the limited use of technology. We do not have access to technologies that support confidentiality and online transparency. Thus, digital certificates required for you to be able to trade with businesses abroad, we have the extended validation SSL certificates, which is the highest form of certificate. When a business has an e‑SSL certificate it means that the certificate authority has conducted KYC and authenticated the identification of this business. In Nigeria, this is not available. We don't even have the basic SSL certificates, which is the basic one for businesses.
And then we do not have the qualified electronic signatures for individuals, which is like the e‑SSL for businesses. So, it is pretty difficult and challenging to be able to do business with the outside world.
Now the implication of doing business digitally in Nigeria comes with several issues. Because for businesses abroad to trust you, you need to have access to digital certificates. It is impossible in Nigeria, because of some issues that we have, these digital certificate authorities are mainly from the Western World and they have very strict compliance procedures, which we could not adhere to in Nigeria, could not be met, because there are several implications, such as cost. You have to pay for broadband, which is very expensive, pay the certificate authorities, which is expensive, subscription costs, which is quite expensive.
And we also do not even have good payment options or ‑‑ for foreign payments. For instance, until recently, Nigerian cards could not be used to make purchases online. Right now, you can, but you are limited to a thousand dollars in a quarter and you need to pay for these things online. It is difficult for you to be able to use your Nigerian card to make payment online. We have credit cards too, but it is the high‑end, people who are high net worth individuals who have access to credit cards and most of them are not businesspeople. So this is a very serious problem for us.
And then the certificate authorities need to rely on somebody in Nigeria to be able to identify businesses. For instance we have the Corporate Affairs Commission who is the registrar of all businesses in Nigeria and the website of the Corporate Affairs Commission is not seen as a trusted website. So, how do the certificate authorities authenticate the identity of businesses in Nigeria? These are the issues that we have.
The other issues that we have that concern, that inhibit us from doing e‑business or e‑commerce has to do with payment or delivery systems. Now I am afraid to use my card online because I don't want my details to be hacked. Because I don't want you to bring the wrong good for me, the wrong product for me. I might order size 12 of shoes and the delivery guy shows up with a size 10. I decide to pay you only when you have delivered and I am sure the goods you delivered to me are what I ordered. Then you bring it to me and I give you cash.
The deliveryperson is saddled with the responsibility of carrying the cash from one delivery point to another. Because, mind you, he is not delivering one product at a time. He probably has one, two, three, four, five people to deliver to. So he goes around with the cash. There is a problem that he might be robbed on the way. If he is able to take the cash back to the office, he needs to take the cash to the bank to pay him. There is a high cost to processing cash. Now, who bears the cost of processing the cash? Is it the person who bought the good? Is it the delivery company or is it the online company? These issues need to be looked into.
So I feel that a few solutions can help us increase trust in doing business online. For instance, the government should be able to provide better and trusted online payment systems for people who are afraid to use their cards online. And then, the compliance authorities, the compliance procedures for the certificate authorities should be adapted to the peculiarities of the environment.
What I mean by this is a certificate authority knows the Corporate Affairs Commission in Nigeria does not have an e‑VSSL certificate. How do we make sure they can rely on what we have on the ground to be able to identify business in Nigeria? There should be some kind of synergy at this point. So that, even though we have not been able to get access to the highest level of trust technology, we can meet them halfway and be able to use the technologies that we have on the ground. And then there should also be some awareness, education of the general public on the need to go digital, as this is the way to go in the world. And finally, governments in Africa must be able to facilitate cross‑border e‑commerce by creating laws and regulations in line available globally like the model law on electronic signature. Thank you.
>> JAMES HOWE: All right, thanks. Thank you very much, Maria. We will now move on to Korotoum Diabate, who is Director General of La Poste from Côte d'Ivoire ‑‑ Madame Diabate if Francophone, so she has made the great effort to translate her speech into English. But I encourage her, if she has any problems, to use some French words. But I will hand over the . . . if there is any difficulty, I' sure we can understand some French, okay?
>> KOROTOUM DIABATE: Thank you. So, historical background, it is important to remember the role that Poste has played for some centuries (?) in developing countries. In many countries the Poste has played a foundational role in terms of economic development and in terms of infrastructure. For the most advanced country, the post remained a portal for innovation and enabler 4K technology sans 200 years. In the context of e‑commerce, posts are playing a similar role today. So, instead of inviting the potential negative effect of Internet, posts demonstrated a new willingness to take advantage of the new opportunities. If you prefer, how can postal operators disrupt rather than be disrupted. We can identify La Poste as a trusted provider of messaging. In the e‑commerce value chain, La Poste serves in the role from the initiation of the purchase to the delivery.
La Poste is a unique Internet space managed by the UPU for its members and the postal community. The dot‑Poste group is collaborating on a project managed by the UPU which will unify regional initiatives at the international level. Synergy between the mode of governance of the Internet and postal regulations. La Poste is operating in a regulated environment leading to a high level of reliability in terms of quality of product, delivery, information and service, leading to a high level of trust and high level of expectation from the customer.
Regulating e‑commerce in La Poste we can raise the importance of electronic data and exchange of data important to reinforce the level of trust. La Poste has a critical role to play. Indeed, the importance of a global network with the capability to offer reliability of data exchange globally. This is a way La Poste can play in the context of security and exchange of data and information management. These aspects are crucial for e‑commerce. For my colleagues in the most industrialized countries, the major impact of current regulation of La Poste is related to data prediction. There is a real impact at the government level, not yet at the customers level.
Example of digital services set up by La Poste Côte d'Ivoire. Côte d'Ivoire boutique. How does our shop work? La Poste has its products and services online. La Poste proposes as well products that might be relevant and interesting for Internet users such as books and school materials.
Once a customer makes an online purchase via the website, La Poste Côte d'Ivoire is in charge of the shipment until the point of delivery specified to the customer at his home address. The location to the customer is done via geolocalization to his virtual address composed by true dictionary words.
Cross‑border e‑commerce strategy and initiative, Sanlishop in Africa region. Sanlishop, from the world in Malenque, the act of buying and shopping. Sanlishop is another oriented marketplace dedicated to local products with the theme of promoting the crafts sector. Small entrepreneurs including e‑seller offer their products online. Once they sell a piece, La Poste Côte d'Ivoire is in charge of picking the product up at the seller's location and deliver it to the buyer. Once again, visualization of a customer is facilitated by the solution of door‑to‑door.
Next project, we are investigating the virtual postal address. We will provide a postal address at a very attractive price and associated with additional services. M poste. Beyond mobile banking, postal mobile money. We have set up the M Poste project Mobile Money solution, an application allowing all citizens to send and receive money via mobile phone without the need for a bank account. The citizen M Poste account becomes an account for financial transaction, a real electronic wallet, facilitating a range of domestic activities. This service allows us to make up for the delay in extending the network of contact points, postal outlets, franchisee offices, establishing the ecosystem of our national digital economic network of merchant, retailer, distributor, M payment and e‑commerce.
One of the important most important aspects of this vast program is to enable financial inclusion. The fight against poverty through access to banking services and financial education, et cetera.
Role of the post in trade across borders in developing countries. For the postal community dot post is the obvious extension for all of transnational electronic services. The security and trust associated with pointe poste daily drives adoption and increases usage.
In regard to the numerous ambitious UPU member countries, it seems very clear that the post remains a model and strategy player in achieving the objectives of swift sustainable development.
The post and the social link between the citizen and the state. It is precisely this reason that has motivated in Côte d'Ivoire to design a new industrial postal project based on the concept of the post as provider of service to citizen. In conclusion, some of stocks (?) we need to withdraw setting and promoting websites, digital divide. Literacy. Trust and confidence in the online payment system. In Africa, in general and in Côte d'Ivoire in particular, the online buyer is more willing to pay for goods once they receive them. This is an issue of trust.
It will be highly beneficial to set up a payment system at the point of delivery such as cash on delivery or better are by electronic means. More specifically for Africa, one of the most interesting trends is the high rate of penetration of mobile technology and devices for the post. For post in the region, covering mobile payment and delivery with proof of identity is definitely a concept that African posts are investigating. Technology is everywhere now in the environment of a postman. For instance, with new mobile device to capture information at the source from the collection points to the delivery points. Mobile service devices and the Internet of Things are a centerpiece of flagged management. And a daily (?) to understand the most effective route to follow for mail and postal distribution. Thank you for your attention.
>> GUS ROSSI: Thank you, Korotoum. We had an African interlude in two parts and we'll come back to some of these very practical points that were mentioned and I will pull out a couple of things there that we can discuss a little, perhaps to understand a little bit better. But first, now passing over to Hanne from EBay who should be online. Hanne, hi.
>> HANNE MELIN OLBE: Can you hear me?
>> JAMES HOWE: For the audience, you will you have to listen in the headphones apparently. Hanne, we are just putting on our headphones. Can you hear me.
>> Try again.
>> HANNE MELIN OLBE: Can you hear me?
>> JAMES HOWE: Yes, we can hear you.
>> HANNE MELIN OLBE: I will take a step back because we are talking about trust.
(Captioner not receiving audio)
>> HANNE MELIN OLBE: (?) Buyers and sellers are less concerned with national borders, culture, legislation. Simply put, distance between the buyer and the seller matters less our (?), we have been working with economists, in Geneva (gave names) and our estimates show that distance matters six times less for international transactions over an online commerce platform compared to traditional trade. And this online effect on distance is actually larger where it is most needed. So, when a seller is located in a developing country, in a country with high corruption, when a buyer is located in a country with high risk aversion.
That's when placing trust in the seller performance and in the platform's credibility, that is when that has the greatest effect on trade. So, my team's research, base the on the transaction data over EBay shows that across emerging and advanced economies, micro and small firms, they use the e‑commerce commerce to sell internationally. The (?) assess countries reached in a year by them is around 30. The majority of them serve four or more continents.
So, if I come back to where I started, with the larger firms using the strategy for trust, sales and growth, I would say that the online commerce platform should be understood as a cost‑effective way for small, remote enterprises to, as independent companies, build a broader customer base. And that's ‑‑ that helps me frame the context that I think should be the one when we discuss trust to drive online commerce from developing countries. Namely: How do you enable firms that are small yet independent, remote yet global to compete with locally established merchants? That's ‑‑ that, for me, is the crux question. And I believe we need to progress in three ways and I will wrap up with that, James. First we need competition to continue drive platforms to innovate. So, for instance, using artificial intelligence to detect fraud in the platform, to better predict and estimate delivery times, using virtual reality, to bring buyers and sellers closer to each other by helping to tell the stories, bring the sellers' stories to life. Second and emphasizing what what Madame Diabate and Maria said, the postal, the customs logistics is a key element of trust in the transaction.
And then, the third: Online trust is second‑best to face‑to‑face trust. This means that even in the best of worlds, remote firms will start with higher costs. Lower convenience, higher risks. Compared to local firms. When they market to the same customers. So, if you then agree that it's a good thing to support small, remote global independent firms and if you agree that we want to drive online commerce from developing countries to consumers in the advanced economies, I would offer that it is a no‑brainer to reduce for those firms the other costs they face such as sales and consumption taxes in the destination markets. So, those three things: Competition, marketplaces to innovate.
The infrastructure postal customs, then the other costs remote firms face in the destination markets. So I will leave it at that James, summing up that trust is a cost, which, compared to local commerce is higher for online commerce. Thank you.
>> JAMES HOWE: Thank you very much, Hanne. If I can make the passage now into a period of ‑‑ we have about half an hour left of the session. We are open for questions and hopefully discussion. Let me give you an overview of where we have been. I made introduction about problems, and I mentioned the fact that one of the underlying ‑‑ the linkage . . . informally, in different ways. We heard about this from Maria, who mentioned the idea of ordering a size 12 and getting a size ten pair. It seems a trivial example but is about the second aspect that Hanne mentioned about reliability. My comment that digital requires something obvious, but actually, quite difficult in many cultures: Is a precision of moving towards moving to very advanced. Size 12 pair, in the warehouse somewhere, precisely tagged, precisely known with all of the accuracy of digital commerce. The problem with informality you mentioned, with having access to secure certificates, firms that don't have access to this (?) in a secure way with themselves. So we move to a requirement that the different parts in the chain of commerce needs to have some organization. Without going on fur, I would like to ‑‑ do we have the questions and comments from the floor. Can I start ‑‑ I saw a hand up there. Thank you very much.
>> AUDIENCE MEMBER: I am (?) from Nigeria. One of the issues we talk about during our 2017, I concur with most of the things said by Maria. But the truth is that people still are doing business online. It is happening. The scale is increasing every year and we have e‑commerce businesses springing up in Nigeria. In spite of the difficulties. We didn't mention that we have these things growing.
One of the things that I would like to say if there are (?) in Nigeria that want to ‑‑ that are e‑commerce offerings or businesses, that would trade with those in Europe. Do you trust us enough that you can order our goods from you in Nigeria or from Africa? We have literacy issues. We have infrastructure issues, quite right. We have lack of capacity. But in spite of that, it is growing, e‑commerce is growing. Even in West Africa, we talked about e‑commerce in the region. If we can go to Europe or America, can't we trade amongst ourselves. So, is there anything technology can do to help us scale our e‑commerce and enable us to overcome all of the issues that are dragging us down or creating a barrier for cross‑border trading in e‑commerce or data flow across the border? So, those are things. And, again we as much as possible want to create jobs for people in our country. So see want to look forward to doing e‑commerce across the borders. Thank you.
I have another event, another session. That is why I tried to make this comment and ask those questions. Thank you.
>> JAMES HOWE: You will probably see the report of the session. It is a shame that have you to leave. Coming back to Michael.
>> AUDIENCE MEMBER: Michael al Kende [phonetic]. I was thinking about the roles of business in generating the trust. I live here in Switzerland. I bought something online recently. It was online tickets, I didn't get the tickets I wanted. I realized I had no idea who I would go to in the government to get better tickets or if there was a problem. Eventually, the company gave me the right tickets. I don't know if they were worried about what I would do or they just wanted to generate trust. There is no doubt that the companies like eBay ‑‑ it wasn't EBay. There is no doubt that companies like EBay have done a lot to generate trust. I wonder, in a country fly like my year ya, does the government to to take steps to generate strong laws so the consumers have recourse. Or is it more for the online sellers to build a reputation. You don't have to go to the government because they will take care of the issues. I wonder about the role of government and businesses in generating trust.
>> JAMES HOWE: Thanks. A good question.
>> AUDIENCE MEMBER: What we do, we digitalize and commoditise . (?) My background is 24 years of selling soft commodity, trading mainly to and from Africa and Central and South America. At the beginning of my career, I concluded I was going to the former and exporting, following the presentation of the papers and so on. In the last year, I have seen certification, loss via block chains of (?). For example if there is a mistake at origin, the mistake is replicated. Then it comes to the fact that the buyer is waiting for his goods and they are totally different, even with fake warehouse receipts.
So, the problem of trading is now the question of liable. 20 years ago, when you had (?) from LGS for example it was certifying that the goods are in the warehouse. Now, they are changed into a monitoring system. Without any liability. And the problems become bigger and bigger.
I have been working with top firms that I will not name, dealing with US‑sanctioned clients (?) and all of the process goes through without any problem. It goes through the big banks s in the US for US‑sanctioned clients. There is no problem.
So, can we secure the system of block chains, embedding all of the laws and stopping sometimes it can be a vessel of something worth $14 million of goods and nobody wants to stop the operation, not the banks, because their money is a float. Not the client because he needs his goods. Not the supplier because he needs to be paid. So, how can we invent the rules?
Today, as you know, the trading is in the hands of the big players. They are above the laws. It is a reality. So, is the blockchain ‑‑ I know that it's very efficient, for example, for all you, because all the actors are quite big and difficult to do wrong things. But think about cargos of cotton, cocoa, sugar. Those are quite difficult to ‑‑ we can track them by block chain; but we can also make a lot of mistakes because of the blockchains.
>> JAMES HOWE: Thank you. Maybe a couple of more and then respond. I will come back over here.
>> AUDIENCE MEMBER: My name is Adora, from Nigeria. An Internet Society ISOC ambassador. I want to share an experience we have in Nigeria and wonder how, possibly for developing economies how we can perhaps bridge that gap or look for other models to help. In Nigeria, we have this system Nigeria we have pay on delivery system. Basically because a lot of consumers don't trust the system. As was mentioned, some of the issues: Payment issues. Sometimes you don't have return guarantees. If there is any problem with the product. They came up with the system of pay on delivery. Where even though you buy something online, you don't make payment until the goods are delivered at the point of delivery. But recently, a lot of the major online retailers have stopped that system because they have had issues with it. There have been security issues and some other issues. They stopped the pay on delivery system. In the meantime a lot of Nigerians don't necessarily trust the online systems. We are still trying to build that trust. It might take us a while to do that.
In the meantime, could there be any innovative way or models like the pay on delivery that might work until we get to the place where a lot of people would not mind putting their cards online or purchasing things from out of the country without having any issues? Is there anyway we can bridge that gap until we get to that point?
>> JAMES HOWE: Thank you. We will move along. Sir, would you like to say your name.
>> AUDIENCE MEMBER: Michael from the (?) postal union. (?) How did they manage with the (?) because this is one of the areas that you have programs exchanging goods. Thank you.
>> JAMES HOWE: Thank you, Michael. We can move along.
>> AUDIENCE MEMBER: Hello .(?) from Brazil representing the youth program. So, here are we are talking about SSL certificates and security protocols. So I have been wondering if we can produce or have a discussion about quality assurance. How can we ensure quality on trades and distrust if that sense. Thank you.
>> JAMES HOWE: Thank you.
>> AUDIENCE MEMBER: (?) From India. So we know there are some private public sector (?) certification service provider or payments ‑‑ also some organization from a consumer protection (?) so how can this contribute for better confidence between the merchant and the consumer. Thank you.
>> JAMES HOWE: Thank you very much. Those are nice questions. We are going to look at some of the past comments, coming back to the past comments.
Role of governments. Maria, do you want to say something about that?
>> MARIA UMOREN: Okay. Michael, the problem now is in two phases, as was said, the first person who commented, in Nigeria, we are actually upscaling in e‑commerce so to say online buying and selling. But now the issue is just sitting amongst ourselves so we are trying to find out how businesses in Nigeria relate to businesses abroad. How do we upscale so we do not just sell to ourselves but sell abroad. We have goods and services that other people might be interested in. But the issue is they wouldn't trust us to the point of doing business with us online because we haven't seen the products you are offering. They are just waiting and trusting that (?) is what they want it to be. So, now, we need the government in this situation where you have to do business with people abroad. Like I say in my presentation, one of the solutions that I think will help doing online business in Nigeria is that businesses of great understanding of how trust (?) through communication (?) quality of design of website. If you help doing these with Nigerians ‑‑ I have a Nigerian business; I want to sell in Nigeria, if you trust that the customers are (?) if I trust that if I pay online, you will you deliver to me. That the billing information I sent you is confidential, I will buy from your website; but if somebody abroad needs to buy from Nigeria, there are the intricate issues of trust that have to be met. For instance, I go on a company website and I see that he doesn't have the e‑VSSL certificate. It is very unlikely that I as a business operator want to do business with this person in Nigeria, considering the perception that people abroad have about countries in Africa. Underdeveloped countries. The perception . . . because you are not there, you are not in person. You need some technology that will allow you trust that these processes are working according to international standards. That is where we need to go.
>> (?) point earlier, what if you can't (?) issues of trust. Between the government and the private sector, I think it is important that the government sets the frameworks to help build trust. If you want to move quickly sit going to be up to the private sector. The great thing about online transactions there can be transparency in their review system. The moment the platform is enabling the sales or even in individual marketplace, individual seller has a fraudulent transaction, people can make a big deal, rate them online, tell friends. The customers will quickly and most efficiently enforce the level of trust.
>> JAMES HOWE: Thank you. I can make a comment with respect to governments being involved. Pointing out these issues, for instance, the certifying authorities and whether they are internationally accredited is something to be worked on, what standards there are, the way the certification can be accepted; the way information can be accessed securely and reliably is an issue. I think there should be a greater effort to try to drill down where the problems come from. We have a lot of debate and get more information on the problems. I think there has to be a willingness to go to the small firms and understand from their point of view how the problems were expressed. The ease of being able to fill in a form online, access to that. Being able to respond to some of these questions. There are issues of literacy issues of understanding. Without the ability to understand this, the governments have to make an effort to understand from the point of view of the enterprises.
It will make it a whole lot easier for them. So perhaps we make a link to another question, which was posed in two ways. Mary, in the beginning said is there anything technology can do. At the end we had a question about are there any solutions that could help to do cross‑border trades. Perhaps we will lead with Adam ‑‑ looking at the problem of payments. Perhaps ‑‑ we know that payment on delivery is used in most of the developing countries. In Pakistan, statistics show there are 95% payment on delivery. E‑commerce. That is one of the things . . . is there a solution perhaps. Other interesting technology that would help in terms of building trust.
>> ADAM SCHLOSSER: While the issue of payment/delivery is not going to solved or change quickly, combining that with the technology of mobile payment is an easy way forward whereby when the package comes in, look at it, easily check on your phone, say that is okay. That is verified on the phone. You have a little bit of safeguard in place, go to the provider of that payment system and say, "By the way, I put the size ten shoe on; it fit but fell apart the next day." That payment system has the ability to go back to the seller and withhold that payment. It is an easier way to improve the process, provide the safeguards. Also alleviates the problem where you have a deliveryperson carrying around a whole lot of cash.
>> JAMES HOWE: We will come to the experience in Africa in a moment and I will let Korotoum respond to that. But I wanted to make a link with another technology question because there was the thing with blockchain there ‑‑ the way I heard it, translated this perhaps a simple way of saying it: Garbage in garbage out, the way we have this fantastic distributed ledger system with amazing accuracy in it. But of course, we are interfacing with a real‑world system, a system of physical movements of cargo that may or may not be contaminated. The blockchain itself doesn't say if it is contaminated a lot. Adam, can you comment?
>> ADAM SCHLOSSER: Again, I am in the lightning round phase. I know the time is short. I will be quick on that. That's a very good example of why blockchain is not ready for wide use yet. It is in testing phase. That's why I mentioned that governments should be creating sandboxes by which that can be tested safely. But you also need the backup situation, the real world, processing that's happening, the paperwork that's needed as well. It's important in the sandboxes it is being monitored and you can improve on the system.
I comment I have heard from companies implementing the technology, is that 2017 was the Year of Design, 2018 would be the Year of Implementation and Greater Testing; 2019 is the Year of Iteration and by 2020, three years from now, it will be ready for PrimeTime. That's still three years away. Very quickly, very quick coming in terms of trade and trade technology but a long way away when it comes to Internet technology. So, that is some of the time frame I have heard but that's the human element that can't be taken out.
Garbage in garbage out, yes. I guess you summarized it the best.
>> JAMES HOWE: Well there could be a point we come back to. There was a question about quality assurance here at the end of trusted (?). But I believe there is at least one question that has come online.
>> JAMES HOWE: So Judith can read it.
>> JUDITH UEBERSCHAER: So let me just read the question from a remote participant, JC Finiduri (phonetic) from UPU. He asks: I have heard from the floor a very good statement about blockchain referring to cargo cocoa, sugar. It reflects more on Smart contracts stored on blockchains and I am interested to hear your panelists say more about blockchain, Smart contracts and how it is linked to building confidence and trust online.
>> JAMES HOWE: Thanks. I think I will pause that one and see if we can come back to it. Maybe it links to the certification at the end. But I wanted to let respond to let Madame Diabate answer the question about the African union and what could stimulate cross‑border trade.
>> KOROTOUM DIABATE: (No English translation )
>> JAMES HOWE: Well, I will let it lie in French for the moment. We will come back. I believe that Hanne wanted to make an intervention here online.
>> HANNE MELIN OLBE: At the moment I pass but I wanted to come back to what Adam said and the question on governments and companies. Just to emphasize that they ‑‑ well, companies for platforms like eBay we don't operate in a vacuum. National legislation, of course, interacts with and dictates for example our policies, our user agreements. But then there is I think sort of a feedback loop the other way as well. Based on the legislation, the transparent circumstances then on our marketplace helps to raise standards I have seen on the platform. For example, standards in terms of returns, consumer returns and withdrawals. So I think there is ‑‑ in the best of worlds, again, there is a feedback and interaction between companies, platforms and governments.
And another aspect of that interaction is in enforcement. So, when you enforce laws on buyers and sellers using platforms that is also an area where we work very closely with governments and agencies and authorities. So, I think you need the whole sort of system of transparency on the platforms and then legislation to sort of underpin this to create trust. Very quickly, on the first question on the e‑commerce in Nigeria. As James, from ITC, you know that we are working together to bring African women it present yours on entrepreneurs on to eBay and sell in Europe. One element in answering the question: How do we scale because there are e‑commerce business this is Nigeria, I think is awareness raising and effective training. Thank you.
>> JAMES HOWE: Thanks, Hanne, for that referencing to the work we are doing and making the emphasis on training, which would be one of my messages in a very broad sense: To train companies both on what it takes to produce a reliable service, accede to the right level of quality and keep their promises. I just mentioned, in resuming Madame Diabate's intervention on the post, the work going on there is really the bottom of the pyramid, training on what are good e‑commerce products, how to get them online and providing logistics, which is a very interesting that the post offices Africa, in Côte d'Ivoire and other countries can be doing. There you go. We're almost at time. Was there perhaps any other comments from the panelists?
Sorry, I have a question here on the left.
>> AUDIENCE MEMBER: Maybe not a question, just to add something. That you talk about mainly Africa, but even in Europe we are working on the report to remove online barriers to make easier ‑‑ sorry, I am a member of the European Parliament.
We are working to harmonize the systems, to be able to order online from another country and not have the credit card rejected or to have the seller to avoid to sell to you. So these are things we have not even addressed in Europe.
I think it is important ‑‑ that's why IGF is important as a body, because we identify each issue that we have to coordinate and harmonize across the world. So I think it's important to understand we are all at the same level and the Internet is maybe the field where we should work faster together because we can have great possibilities.
Now in Europe I think next year we will be able to export more easily in the European market as a single market than we used to. For example, we used to export easier in China because there we have one system, one taxation, one legislation. In Europe, we had 20 different languages to deal with. So it was not very easy. So I think we should be maybe even try to move towards a body that would coordinate the way we move forward with commerce. Even if you succeeded with Africa, you would have to have each member state of Europe dealing separately with Africa. So I think it's important to find the ways to work together. Thank you.
>> JAMES HOWE: Thank you very much. Is there a comment here from the floor?
>> AUDIENCE MEMBER: Yes. My name is Radhita (phonetic). I am from Indonesia. And I am her with the Internet Society; I am a Fellow. I would like to make the comment that the fact is in supporting ‑‑ in promoting the digital trade in Indonesia itself, we have small‑medium enterprises. However, those who may have the need to import stuff or even myself I want to order stuff online, we have problems with the import restrictions. It has many regulations, the customs regulations and many things. It is a problem on the awareness of the regulations and import restrictions. That's one point. And the other is: For the SMEs who want to do exporting, I think there is a need of platforms, a group where they can understand the risks, the provisions, the requirements of the country where they want to export these goods abroad because after all if their goods are rejected or seized at Customs . . . not delivered to the customer, there will be no more trust and reputation built up for the SME itself. Thank you.
>> JAMES HOWE: Okay.
>> AUDIENCE MEMBER: So just to say, the geoblocking report because I was the rapporteur for the industry committee. We managed to deal with the situation. We exclude the imports that are on a personal level and private level than what we import for a business situation. So there you have to have some restrictions. It depends on the law that we have in each country.
For example, if you want to import pharmaceuticals then you understand it is not very easy to achieve this e‑commerce. But at the same time we are at least gaining access to the contents, so, for example, you used to not be able to access another site from your country. And somebody could make it impossible for you to access the site if you are from Germany. Also ‑‑ so you were redirected to a different site. This is changing. I'm trying to say a few things that are not even common sense yet.
>> JAMES HOWE: Thank you. We are at time there. Actually a few minutes late. Make we can indulge you and have is a couple of minutes. I think here my fellow panelists are okay?
>> PANELIST: Yes. Doing great.
>> JAMES HOWE: I don't know if Hanne wants to make a comment. I would ‑‑ am sorry, I think I can't really take any more from the floor, closing comments. I would like to thank my panelists, some of whom traveled quite a way, Nigeria and Côte d'Ivoire. Adam and I less so. Hanne, who's already started her break in Sweden and interrupted it for us. Some did not travel quite as far. I would put positive messages on this. You heard about exciting technologies from Adam; the exciting growth potential in Africa of a continent that's going to double in size, the penetration of mobile. The future is rosy; as they say in French (speaking in French).
One of the questions is blockchain. The question about blockchain ‑‑ we can't come back to JC's question about blockchain; it is not a block chain session but it is interesting to ask for the future how quality certification and real world data can go into that. These are interesting questions. We have lots of potential with technology. There is a lot of hard work to be done, spreading the information about it, getting physical systems in order that people understand and correctly inform those systems, correctly comply to a quality standard. And then, when we collect the data, which is a big problem about getting it together, we can actually have reliable data for these increasingly reliable systems. So thank you very much. Thank you for coming and have a good rest of the day. Thank you.
(Session ended at 11:43 a.m.)