Whether buying from giants like Amazon, Alibaba or smaller independent versions, whether booking flights, a hotel, or ordering an Uber, you are constantly engaged in e-commerce. For developing countries, including least developed countries (LDCs), e-commerce offers huge potential. It can allow small traders unprecedented access to global markets, promote economic diversification away from a reliance on commodities, and contribute to women’s economic empowerment.

E-commerce has the potential to level the playing field between companies and between countries, open up consumer choices and increase the opportunities for firms, big or small to enter global supply chains. It has the potential to allow consumers to seek the best deal in the global marketplace, which can mean lower prices and increased product variety and quality.

E-commerce offers a more efficient way to trade, by “eliminating barriers between marketplaces, creating opportunities for the re-organisation of business models and economic processes, and allowing customisation of products, distribution and consumption systems.”[1] In recognition of this potential, 71 members of the World Trade Organisation (WTO) signed the “Joint Statement on Electronic Commerce,” at the Eleventh WTO Ministerial Conference (MC11) in December 2017 in Buenos Aires, Argentina. According to Australian Trade Minister Steven Ciobo, “[E-commerce] is a great leveller. It provides opportunities, for businesses and individuals to engage in global trade in a structured and meaningful way.”[2]

However, e-commerce by its very nature relies upon technology. It requires access to ICT and communications infrastructure, as well as a reliable supply of electricity. It also necessitates a supportive policy, business and legal environment, particularly trade facilitation and logistics infrastructure. In this sense, Rwanda has been a model country, with the government showing ongoing commitment to developing the sector, as seen in their Vision 2020 strategy.[3] The country has developed a modern communications and ICT infrastructure, set out a legal and regulatory framework, numerous e-government services are now available and around 20% of the population are internet users according to the World Bank.[4]

However, whilst Rwanda shows great promise for e-commerce, it is encountering some challenges along the way, including inadequate international bandwidth, relatively high cost to access the internet, low energy access and high electricity costs, high transportation and logistics costs, and lack of awareness by business owners of related laws, regulations, and compliance measures, particularly amongst Micro, Small and Medium Enterprises, who make up 98.1% of all business in the country.[5]

It is within this context that International Economics Ltd. and Cardno were recently engaged in Rwanda to improve the competitiveness of Rwandan SMEs in international export markets through the harnessing of this new e-commerce environment.[6] In particular, the project aimed to respond to the key needs outlined in the government’s national ICT strategy. The strategy’s planned accumulated economic benefit is estimated at $1,7 billion, 21% contribution to GDP, and will lead to more than 50,000 jobs created.[7] Other expected benefits include increased innovation, capacity for ICT exports, boosted economic productivity, further poverty reduction and overall achievement of national economic objectives.[8]

Specifically, our engagement sought to review the necessary policy changes to create an effective policy, legal and regulatory framework and improve the business environment in Rwanda with the view to enabling the country’s business community to take full advantage of the potential that e-commerce offers. This necessitated an assessment of the e-trade readiness of SMEs in relation to market requirements and a benchmarking of the country’s policy and legal environment.

In general, it seems that whilst Rwandan companies are increasingly using the internet and related tools, it is still early days and many SMEs still lack access to the necessary information that would allow them to fully benefit from e-commerce, particularly due to concerns surrounding online trust and security. Of the various recommendations that resulted from our intervention, many of which are transferable to other contexts, the most urgent is the need for the government to operationalise its strategy, strengthen the regulatory environment in order to build trust and increase SME integration in online B2B and B2C platforms.

By Kerry O’Donoghue, Director of Consulting Services at International Economics Consulting Ltd.

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[1] Baker, P. (2017). E-commerce and Digital Trade: A Policy Guide for Least Developed Countries, Small States and Sub-Saharan Africa. Commonwealth Secretariat, July. Available at: https://books.thecommonwealth.org/e-commerce-and-digital-trade-paperback

[2] See: Bridges, WTO Ministerial: In Landmark Move, Country Coalitions Set Plans to Advance on New Issues, 14 December 2017. International Centre for Trade and Sustainable Development. Available at: https://www.ictsd.org/bridges-news/bridges/news/wto-ministerial-in-landmark-move-country-coalitions-set-plans-to-advance

[3] See Ministry of Finance and Economic Planning, Visions 2020, Government of Rwanda. Available at: http://www.minecofin.gov.rw/index.php?id=148

[4] World Bank (2016). Available at: https://data.worldbank.org/indicator/IT.NET.USER.ZS

[5] National Institute of Statistics of Rwanda, Integrated Business Enterprise Survey 2016, June 2018. Available for download at: http://www.statistics.gov.rw/publication/integrated-business-enterprise-survey-ibes-2016

[6] Cardno and International Economics Consulting Ltd. (2018). Targeted Support to Rwanda to Improve its E-Commerce Environment and Export Facilitation for SMEs, P020 – Final Technical Report. TradeCom II Facility. June

[7] Ministry of Youth and ICT, Government of Rwanda, SMART Rwanda Master Plan: 2015-2020. Available at: http://www.minecofin.gov.rw/fileadmin/templates/documents/sector_strategic_plan/ICT_SSP__SMART_Rwanda_Master_Plan_.pdf

[8] Ibid.