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The Role of Information and Communications Technology _ICT_ for

VIEWS: 4 PAGES: 59

									The Role of ICTs in Facilitating Trade and
          Economic Growth in
                Ethiopia



               Assefa Admassie
                     and
               Woubalem Taye
    Presentation Outline
   Introduction
   Trade and ICT Landscape
   Policy Assessments
   Legal and Regulatory Framework
   Private Sector Readiness for E-Business.
   Conclusions and Recommendations.
1.      Introduction….Cont’d
   Advances in ICTs have dramatically changed the
    World economy over the last few decades:
           Advances in the Information Technology
        (Computers usage for Storage, Processing & Retrieval)
           Advances in the Communication
            Technologies
        (Telecom & Computer Networks, Broadcasting, & the
          Internet)
   Access to information and knowledge via ICT:
      Makes business more competitive and Productive
      Empower people with knowledge
      Speed up and reduce the costs of production and
       transactions
      Open new opportunities, perspective, but also new
       challenges.
    1. Introduction….Cont’d
   ICT use could also facilitate:
      effective decentralization,
      more transparent and accountable governance,
        delivery of public services, and
      Improved quality and reach of health,
        education and other basic services.
   ICTS enables other sectors to develop new
    functions and services.
   It is now taking a central stage with e-
    government, e-commerce, e-learning and other
    internet-enabled activities.
    1. Introduction…cont’d
   Knowledge has replaced traditional inputs for
    growth
   Demand for ICT products and services generate
    new job opportunities (tele centers)

   In general, Significant spillover effects on
    economic growth:
      1% ↑ stock of infrastructure→1% ↑ GDP (WB
       1994)
      Poverty also ↓ (the case of Grameen Bank
       village phone system)

   Those who can best receive, process, adopt
    and innovate information are the winners!
1. Introduction…cont’d
   ICT offers many promises and opportunities in
    trade transactions:
       Trade transaction is a complex process
       Involves Many documents and Many players
          A trade transaction involves different actors.
              Raw material and component supplier
              Manufacturer/assembler
              Customs agents/brokers
              Customs authorities
              Government authorities- export
               promotion/approval
              Local transport and warehousing companies
              Container handlers
              Port and harbor authorities
              Shippers (sea, air, road, rail, …)
              Bank and insurance companies
1. Introduction…cont’d
   Each has own set of paper forms and interactions
    with other organizations.
   Trade occurs in physical space and moving goods
    requires time.
   Time is, thus, an important Trade Barrier
      Trade logistics costs are as important as tariffs

         Each   day saved is equivalent to 0.5%
          tariff
         7% of the value of world trade is cost of
          administration of trade logistics
          (UNCTAD)
1. Introduction…cont’d
   ICT is an important tool for facilitating trade
    transactions:
   Trade facilitation imply:
      Facilitating market access
         By lowering technical barriers
      Lowering transaction costs through
         Improved trade logistics
         Enhanced information flows.
         Reduced transport costs
         Transparent and harmonized regulations
         Improved ports facilities and procedures
         Efficient and transparent customs
          procedures
         Simplified trade document processing and
          clearance processes
1. Introduction…cont’d
   ICT should be viewed as a cost-effective tool to
    enable all sectors to realize their objectives
    better than through traditional means.

   Given the profound promises and impacts of ICT
    on national economies countries need to embed
    ICT into their overall development strategies.

   Hence, the awareness of policy makers is critical
    for ICT to enable development.
   However, very little is known about the extent of
    ICT applications in trade and other sectors in
    Ethiopia.
1.1. Motivation and Objective
   Objectives of the study
     The main aim of this study has been to assess
      the use of ICTs in facilitating trade and the
      private sector’s readiness to use ICTs.

   Methodology (several methods):
     Systematic analysis and review of policy
      documents
     Review ICT and trade statistics

     Primary survey data

       Case studies.
     2.1. General Overview of the Ethiopian
                   Economy
   Ethiopia:
      Is Among the poorest countries on Earth (PCI of
       $160)
      Is Land-locked
      Is primarily rain-fed low productive Agrarian
       economy
      >15% children cannot celebrate their 5th birth day
      47% of children are malnourished
      871 per 100,000 MMR
      48 million people do not have access to clean
       water
      Only 17% have access to electricity
      Average Ethiopian lives only 43 (F) yrs or 42 (M)
       yrs
      Etc…
      2.1. General Overview of the Ethiopian
                    Economy
                Population (millions)

 80
 60
                                        Population
 40
                                        (millions)
 20
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  2.1. General Overview of the Ethiopian
                Economy
                      GNI per capita (US$)


600
500
400
                                             GNI per capita,
300
200                                          Atlas method (US$)
100
  0
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2.2. Trade Landscape:
    Several reforms and promotions in the trade
     sector
    Contribution of export trade has been growing
     at about 7.4% - 1995/96 to 2005/06.
    2009 is the target accession date to WTO
    Ethiopia is also a member of COMESA
       23   African countries (300 million pop.)
    Member of NEPAD
    Beneficiary of:
       AGOA

       Economic    Partnership Arrangement
        (EPA)
       EBA, etc.
2.3. The Structure of Export (in million of
                 USD)
                                    Coffee
350
300
                                    Leather and leather products
250
200
                                    Pulses
150
100
 50                                 Oilseeds
  0
      2002/03   2003/04   2004/05   Fruits and vegetables
                 Year
                                    Meat and meat products
2.4. The Structure of Imports (%)
 Year      Raw material       Semi finished   Fuel    Capital    Consumer     Misc.
                                    goods               goods       goods
 1995/96             2.5               17.5    12.9       35.9         27.1       4.1
 1996/97                  2            19.2    18.4       38.8         20.6       0.9

 1997/98                  2            16.4    24.4       29.8         19.7       7.7

 1998/99             1.7               16.8    11.4       33.7         28.1       8.3

 1999/00             1.2               12.7    15.5       29.2         26.8      14.5

 2000/01             1.5               18.3    18.8       28.2         30.1       2.8

 2001/01             1.8                17     15.8       28.3         34.6       2.5

 2002/03             1.2               14.8    15.5       29.6         35.2       3.7

 2003/04             1.3               18.1    12.2       31.6         35.1       1.5

 2004/05             1.4               18.3    18.4       33.0         27.1       1.8
2.5. Main Sources of Imports

             14000
             12000                         Africa
             10000
Mills, USD




                                           Europe
              8000
                                           Asia
              6000
                                           North America
              4000
                                           Other
              2000
                 0
                     2001 2002 2003 2004
                            Year
2.6. Overview of the ICT Landscape
                Telephone mainlines per 1000 people


120
100
 80                                                Telephone
 60                                                mainlines per
 40                                                1000 people
 20
  0


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2.6. Overview of the ICT Landscape

            Personal computers per 1000 people


10
 8                                          Personal
 6                                          computers per
                                            1000 people
 4
 2
 0
     Ethiopia   Kenya   Sudan Tanzania
2.6. Overview of the ICT Landscape

                        Internet users (thousands)

100
 80
 60                                                  Internet users
 40                                                  (thousands)
 20
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2.6. Overview of the ICT Landscape
                     Tele-Density


     50

     40

     30
 %                                     Series1
     20

     10

      0
          Ethiopia     World Average
             -3-
Assessment of the Policy Domain
3.1. Policy Assessment
   Gov’t plays a vital role in the creation of
    enabling environment in the use of ICT for
    trade

   Policy can enable or enhance adoption of ICT or
    act as a barrier and suppress the e-Economy.

   Hence, the contribution of e-Commerce and e-
    Biz to growth ultimately depends on policy
    environment
3.1. Policy Assessment …. Cont
    Main Strategies and Policies reviewed:
      ADLI
      SDPRP
      PASDEP
      Rural and Agricultural Dev’t Policy
      Trade
      Industrial Policy
      Customs Procedures & Regulations
      Foreign Exchange Directives
      Standardization & Quality Control
      Draft ICT Policy.
3.1. Policy Assessment …. Cont
   Development Strategies:
      ADLI Has not made any concrete reference
       to the use of ICTs either in the production or
       distribution of goods and services.

       SDPRP recognizes ICT as one of the
        capacity building programs.

       PASDEP acknowledges that ICT is central to
        growth and poverty reduction.
3.1. Policy Assessment …. Cont
   Sectoral Policies:
      The Agric. and Rural Dev’t policy:
            Recognizes the need for expanding telecom
             services up to kebele level.
            The policy, however, makes no systematic
             reference as to how the development and
             application of ICT in the sector could be achieved.
       The Trade Policy:
          The Ethiopian Trade Point was established
           with objectives of:
             Receiving, collecting, compiling and
              disseminating trade information,
             Sending, receiving and distributing
              electronic trading opportunities,
             Promoting domestic products at int’l
              market, Etc.
3.1. Policy Assessment …. Cont
       Nevertheless, an up-to-date and interactive
        web-based database and information
        dissemination system does not still exist.

   The Industrial Dev’t Policy:
      articulates the importance of rigorous effort on
       the dev’t of ICT
      It underscores the role of ICT for:

          Properincome , expenditure and
          property registration for the tax system,
          etc.
3.1. Policy Assessment …. Cont
   The Investment policy
      Ethiopia has poor record in attracting FDI
             Many licensed projects have not been
              implemented
      One reason could be the underdeveloped ICT
       infrastructure
        Requirements   for an investment permit:
           Signed application
           In person or photocopy of his power of
            attorney
           Photocopy of memorandum and Article of
            Association
           Photocopy of identity cards


        All   are paper-based
3.1. Policy Assessment …. Cont
   No provision of ICT in processing investment
    licensing using
      Electronic forms
      Interactive websites
      Advanced e-processing.
   The Foreign Exchange Regime:
      A number of financial liberalization measures
        have been undertaken since 1991.
      payments for imports and export, can be made
        by:
          Letter of Credit (LC)
          Cash Against Documents (CAD)
          Advance Payment (AP)
   All are paper based documents!
3.1. Policy Assessment …. Cont
   The Forex directives have no room for:
      Electronic payment system for cross-border
       transactions
      Electronic processing of imports and exports
      Electronic application forms and
      Electronic signatures.
   Banking is still done in the conventional way;
    “explicit consent”
   Transaction security (e-transactions and e-
    payment) Privacy and safety are not yet in
    place.
3.1. Policy Assessment …. Cont
   The Customs Procedures:
      ECuA has made significant progress!

         Customs automation (Automated System
          for Customs Data – ASYCUDA++)
             Several branch offices have been
              networked.
         Simplified declaration process using Direct
          Trade Input (DTI)
             About 32 agents are remotely
              connected.
3.1. Policy Assessment …. Cont
   The National ICT Development Policy:
      A national ICT Policy was drafted.
      EICTDA was established in 2003;
      ICT Capacity Building program was launched
       in 2003.
o   The policy Acknowledges:
      That ICT is an important tool for Ethiopia to
       enhance its development.
      The need to develop of ICT as a sector or
       industry
      physical and telecommunications
       infrastructure is underdeveloped.
3.1. Policy Assessment …. Cont
 The Strategic Focus of the ICT policy:
    Physical and ICT infrastructure;

    Human resource development;

    ICT industry and private sector development
     and e-commerce
    The legal and regulatory environment;
3.1. Policy Assessment …. Cont
Policy strength:
 The ICT policy has excellent intentions;
    The intention to develop globally competitive
     private sector;
    The introduction of tax incentives to create
     an attractive environment for ICT enterprise
     development;
    Recognizing ICT infrastructure development
     as a critical factor for social and economic
     development;
    Outlining the Goals and the strategic focus
     areas. Etc.
3.1. Policy Assessment …. Cont
 Policy Gaps:
  Fails to initially recognize the existence of a
   very weak private sector (including ICTs),
  Too Many strategic focus areas:
     Emphasis should be given to the most
      important issues.
  Piecemeal approach in initiating infrastructure &
   public service projects (SCHOOL NET, WEREDA
   NET & TELECOM SERVICES EXPANSION);
  Prolonged time taken to officially approve the
   ICT policy
               -4.
   THE LEGAL AND REGULATORY
           FRAMEWORK
4.1. THE LEGAL AND REGULATORY FRAMEWORK

 Introduction:
   The rapid development in the ICTs sector has
   brought about new challenges.
  Regulators and policy makers are looking at
   creating responsive and dynamic legal and
   regulatory framework.

 Generally there is a need for:
   a Legal & regulatory framework which is aimed at
   facilitating instead of Strictly regulating e-
   commerce activities.
4.1.THE LEGAL AND REGULATORY FRAMEWORK

o   Some relevant Regulatory institutions have
    been established.
o   These include:
      Ethiopian ICTs Development Agency
       (EICTDA);
      Ethiopian Broadcasting Agency (EBA);

      Ethiopian Telecommunication Agency;

      Ethiopian Science & Technology Commission;

      The National Bank of Ethiopia, etc.
4.1. THE LEGAL AND REGULATORY FRAMEWORK

Common challenges:
   Limited institutional, managerial and technical
    capacity;
   Fragmented effort to regulate ICT sector;
   Low protection capacity of consumers in a
    digital environment such as the Internet.

o   There should be an institutional arrangement that
    ensures the development & maintenance of
    various legislation & institutions that could serve
    well in an electronic environment.
              -5-
Private Sector Readiness in Using
     ICTs in Trade (SMMEs)
    5.1. Introduction
   SMMEs:
      Foster competition

      Ensure efficient utilization of resources

      Instant to respond to new opportunities

      Create employment opportunities

      Reduce poverty

      Breeding ground for entrepreneurs in LDCs

      Market driven

      Expand the tax base.

      Etc.
    5.1. Introduction
   ICTs can benefit SMMEs in many ways:
      Increase productivity
      Increase efficiency of internal biz operation –
       inventory management, accounting and budget
      Cheap communications
      Expand client base – e-Marketing
      Facilitate capacity building – e-Learning/Training
      Facilitate government services – business
       registration and filing of taxes.

   BUT SMMEs need to have affordable access to:
      Physical Infrastructure, and
      Information & Communication facilities
5.2. Background to the SMMEs Study
    With the aim of understanding the level and usage
     of ICTs by SMMEs in Ethiopia a small survey was
     organized.
    Coverage of the survey: Addis Ababa
    Sampling frame: list of registered and currently
     operational SMMEs
    A two-stage stratified sampling - according to their
     area of operation and level of paid-up capital
    Four areas of operation:
       Customs and clearance
       Export
       Export and import
       Foreign trade auxiliary (import only is excluded)
5.2.Background to the SMMEs Study
                                                                       With
                                         Level of registered           telepho
        Export category by type             Paid-up capital    Total      ne        Sample
Customs and Clearance Cat 0              less than 20,000      173     158            2
Customs and Clearance Cat 1              20,001 - 100,000       47      46            1
Customs and Clearance Cat 2              100,001 - 500,000      62      60            1
Export Cat 0                             less than 20,000      342     295            4
Export Cat 1                             20,001 - 100,000      130     117            2
Export Cat 2                             100,001 - 500,000     268     205            3
Import Export Cat 0                      less than 20,000      475     444            6
Import Export Cat 1                      20,001 - 100,000      415     388            6
Import Export Cat 2                      100,001 - 500,000     480     450            7
Foreign trade Auxiliary Cat 0            less than 20,000      207     180            3
Foreign trade Auxiliary Cat 1            20,001 - 100,000      187     161            2
Foreign trade Auxiliary Cat2             100,001 - 500,000     286     229            3
Total                                                          3,072   2,733          40
Sample size                                                                    40
Percentage of sample in the Population                                   1.46%
5.2.Background to the SMMEs Study
   40 SMMEs were selected for the study.
   Problems:
      Missing contact address

      Mismatch between registered and
       actual address
      Non-response
5.3.Year of establishment and Location
  Year of establishment of sampled firms       Location of sampled firms
                     Num.        Per.      Sub District    Num.      Per.
Before 1991          4           10.0      Addis Ketema       1        2.6
1992- 2000           7           17.5      Arada              3        7.7
2001 – 2004          11          27.5      Bole               14      35.9
2005 – 2006          18          45.00     Gulele             2        5.1
Total                40          100.0     Kirkos             11      28.2
                                           Kolfe              1        2.6
                                           Lideta             1        2.6
                                           Nefas-silk         2        5.1
                                           Yeka               4       10.3
                                           Total             39*      100.0
5.4.Enterprise and Owners profile
    Majority of the firm managers are male(93%)
    80% have either college diploma or degree
    48% are sole proprietorship, 43% partnership
    The majority (65%) are engaged in retail and
     whole sale trade
    More than 50% employ on the average less
     than five workers.
5.5.ICT Penetration and Utilization
    What type of ICTs do they use?
          Fixed line, mobile, fax, PBX, PCs, LANs, Website,
           internet.
  Number of Tel. Lines          Frequency    Percentage

  1-3                           29           72.5
  4–6                           3            7.5
  7 – 10                        4            10.0
  16                            1            2.5
  TOTAL With Fixed lines        37           92.5
  W/O Fixed Line                3            7.5
  Total                         40           100
5.5.ICT Penetration …cont’d
 Number of       Frequenc   Percentag                                 Purpose to connect to the Internet
   Mobile Tel.      y          e
   Lines                                           80
                                                   70
 1               14         35.9
                                                   60
 2               7          17.5




                                        Firms(%)
                                                   50

 3               7          17.5                   40                                                                         Series1
                                                   30
 4               7          17.5                   20
 6               2          5.0                    10
                                                   0
 20              1          2.5




                                                                          Information




                                                                                             product/service
                                                    Electronic mail




                                                                                                               goods and/or
                                                                                                               To purchase
                                                                                              information to
                                                                             search




                                                                                                                 services
                                                                                                customers
                                                                                                  To give
                                                       (e-mail)
 41              1          2.5
 TOT. W. Mob.    39         97.5
   lines
                                                                                        Purpose
 Do not use      1          2.5
    mobile
 Total           40         100
5.5.ICT Penetration …cont’d
   E-mail services are the most important use of internet.
   About 45% stated that they have received sales orders via
    the internet.
   About 45% of the firms have made orders via the
    internet to purchase goods and services.

   Main reasons for using the internet for trade
    transactions:
Main Motivations               Number   Percent   Rank

reduce production/service      16       40.0      25(2)
   procurement cost
speed up product/service       16       40.0      49(1)
   procurement process
outreach to new suppliers      14       35.0      15(3)
5.6. Availability of Online Gov’t Information and
Electronic Forms

 o Less than 40 percent indicated the availability
   of some Government Information online.
  More than one-third indicated that some gov’t
   information and some electronic forms are
   available on the internet.
  BUT, Most firms indicated that there is no legal
   and regulatory provision that authorizes the
   establishment of online cross border business!
5.7. Constraints on the Use of ICTs by SMMEs
   Some of the factors constraining SMMEs’
    participation in E-trade:
      Absence of legal framework for electronic commerce
      Inefficient utilization of ICTs within SMMEs;
      Paper based export and exchange regulations;
      Absence of a critical mass of robust ICT private
       sector to develop & Support ICTs in SMMEs
      Inadequate ICT skilled workforce;
      Insufficient information network & security
       safeguards;
      Lack of sufficient support for trade facilitation &
       information provision;
      Customers not ready to use Internet purchases.
                   6.
   Conclusions and Recommendations
6.1. Conclusions
   Evidence shows that developing a national ICT
    strategy is vital to a country’s economic
    development.

   The main goal of this project has been to
    assess the use of ICTs in facilitating trade and
    thereby identify the gaps in policy and
    regulatory frameworks to promote e-trade.

   The result shows that:
      Like many other countries, Ethiopia has not
       been able to fully benefit from developing
       the ICTs industry as a sector and using ICTs
       as an enabler.
6.1.Conclusions
   Some positive Developments:
      ICT is considered as a cross-cutting edge in the
       strategy documents (SDPRP, PASDEP).
      Concrete efforts are observed on the expansion
       of ICTs infrastructure
      Although, still more efforts are needed,
       Custom’s reform and modernization are
       encouraging.
      The draft ICT policy has clear guiding principles
       for the implementation process.
   The result of the SMMEs survey shows that:
      some firms have started to be engaged in online
       trading
      great interest to use ICTs in trade practices
6.1. Conclusions
   Policy Gaps:
      Sectoral policies did not clearly articulate the role
       gov’t can play to facilitate the use of ICTs.
      Very little attention has been given to the role of the
       private sector’s participation in ICTs development
      The current Foreign exchange directives have
       serious bottlenecks for the development of e-
       commerce
      The absence of an appropriate legal and regulatory
       framework is one of the main constraints for the
       expansion of online trade.
   Major Problems facing SMMEs:
      absence of legal and regulatory framework
      poor ICT related infrastructure
      high cost of the technology
6.2. Recommendations
   Efforts to create enabling policies, institutions,
    infrastructures, and skills, and to devise national
    strategies that promote adoption of ICTs must be
    scaled up.
   Mainstream ICTs in all sectors of the economy.
   Ensure ICT friendly legal and regulatory
    environment:
      The use of electronic document
      Legal recognition of electronic signature
      Electronic document transaction recognition;
       (signature, payment)
      E-trade compatible Export and Exchange
       regulations;
   Liberalization of the telecom sector is long
    overdue.
6.2. Recommendations
   Providing incentives for ICT development :
      tax,
      private sector capacity building programs,
      trade facilitation centers
   substantial investment in human capital
    development
   Encouraging SMMEs to use ICTs by:
      Improving the business processes
      Simplifying registration and other legal
       processes
      Providing business & ICT skills education at all
       levels
      Improving the costs to access ICT
       infrastructure, the internet, Personal
       computers, etc.
 Thank   you

								
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