December 31, 2020

While a Slow, Painful Recovery to the Global Economy Is Predicted in 2021, the EIU Says Digitalization Will Present Opportunities for Certain Sectors

While I am always mindful of risks that can impact a company's operations, a pandemic is not often a risk most corporate leaders prepare for. The coronavirus pandemic's grip on the global economy was certainly not in consideration when I published a post about The Economist Intelligence Unit's (The EIU) Industries in 2020 report. One year later, The EIU's report entitled Industries in 2021: A Slow, Painful Recovery, which gives its outlook for six global industries: automotive, consumer goods and retail, energy, financial services, healthcare and pharmaceuticals, and telecommunications, says "[m]uch of what we predicted in last year's report turned out to be wrong. As we all know, the coronavirus (Covid-19) pandemic overturned assumptions about the development of the global economy and destroyed any hope of steady growth for many industries. This year more uncertainties and risks lie ahead as the world stutters into a recovery."

The report explains: "With their finances already weakened by the pandemic and resulting lockdowns, many companies will not be able to take advantage of a recovery that is likely to be fitful. The consumer goods and retail sector in particular is likely to see a wave of bankruptcies and store closures as more business goes online. The financial sector will also have to cope with a sharp rise in non-performing loans that, in some cases, may overwhelm the provisions that banks have put in place. Restructuring will reshape even those industries, such as telecoms, which have emerged from the pandemic relatively unscathed. However, there will be some winners from this process as markets consolidate around surviving companies and opportunities open up for new business models."

What is more, "With many industries lobbying for support, governments whose tax revenues are already depleted will have to focus support and incentives on sectors with the strongest growth prospects, or those that feed into long-term policy goals. These are likely to include protecting jobs, promoting investment (particularly in innovation) and tackling climate change."

Regarding the energy sector, The EIU maintains "policy will focus on increasing the use of renewable energy. Even Poland, previously a staunch defender of its coal sector, will begin a phase-out, while markets in South-East Asia will see particularly strong growth in renewables. In the automotive sector, generous incentives will continue to encourage purchases of electric vehicles, particularly in Europe, although countries such as France will start to trim back funding as the sector develops. China, meanwhile, will shift its focus towards hydrogen fuel cell vehicles, previously an area where Japan led the way."

On the topic of trade spats and international disputes, the report suggests: "As countries and companies try to rebuild, their focus is likely to turn inwards, with domestic markets and operations becoming a priority. However, as pressure to reshore production and secure supply chains increases, this will have implications at an international level, too."

For example, "In the telecoms sector, this has particular implications for Huawei, a Chinese telecoms company that is now being targeted by US export controls. The technology war will also affect other sectors, including automotive and consumer electronics, while in the financial services sector concerns over China's intentions could undermine Hong Kong's role as an international hub. The UK, meanwhile, will face its own international challenges, as Brexit finally takes full effect on January 1st, drastically changing the business environment for financial firms, automakers and many others."

"Digitalization," according to The EIU, "will affect nearly every industry sector. In the consumer goods and retail sector (and even the automotive sector) the growth of online shopping will generate new companies and new jobs, making up for some of the cuts seen in real-world retailing. However, online retailers will not have it all their own way, with cash-strapped governments keen to raise digital taxes that are likely to exacerbate international tensions."

Moreover, "The rise in online shopping and other activity will also fuel the growth of new financial services, starting with digital payments and progressing into digital currencies, including national ones in China and elsewhere. Even healthcare providers, spurred by the pandemic and social distancing measures, are expanding their online services, with new regulations widening access to telehealth—while at the same time reining back its use where it could affect patient care."

The EIU's "key global forecasts for the six industries covered by this report are:
  • "Asia will be the first region to rebound to 2019 levels in most industries, given its relatively shallow slump in 2020;
  • "Latin America and Africa will see the slowest recovery, held back by low commodity prices and high debt levels;
  • "new-car sales will recover to grow by 15% globally, while commercial vehicle sales will rise by 16%, but only China, Ukraine and Turkey will see sales return to their 2019 levels;
  • "global retail sales volumes will grow by 3% but still fall 2% short of 2019 levels;
  • "energy consumption will rebound partially—by 2.6% worldwide—but demand for oil and coal will remain lower than in 2019 as the use of renewables surges ahead;
  • "financial firms will face weak demand for their services amid mounting debt defaults, while their income will be hurt by low interest rates;
  • "healthcare expenditure, which dipped in 2020 despite spending on the pandemic, will surpass 2019 levels, rising by 7% worldwide in US dollar terms; and
  • "global mobile subscriptions, which also dipped in 2020, will increase by 3%, again surpassing 2019 levels."

The EIU held a webinar, which is available through this link or the video embedded below, features industry analysts who comment on specific aspects of the report. While I recommend watching the session in its entirety, one point worth mentioning is the presentation of how the six industries covered by the report will be impacted by four key trends:

Job loses and bankruptcies will mount
  • Automotive
  • Consumer goods and retail
Some governments will aim to support a green recovery
  • Automotive
  • Energy
Trade spats and international disputes will remain disruptive
  • Financial services
  • Telecoms
Digitalization will offer the biggest opportunities
  • Consumer goods and retail
  • Financial services
  • Healthcare and pharmaceuticals
  • Telecoms

"As these decidedly mixed forecasts demonstrate," the report notes "there will be nothing straightforward about the global economic and business recovery in 2021. Even if the coronavirus is brought under control, many companies will face challenges that they will not be able to meet. Nevertheless, there will also be opportunities on offer for companies that are nimble enough to take advantage of rapid changes in the economic, business and political environment."

What are your predictions for 2021?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 30, 2020

UNCTAD's Productive Capacity Index Measures the Economic Vulnerabilities of Landlocked Developing Countries

Working in landlock developing countries like Afghanistan, Uganda, and Uzbekistan, which represent three of the 40 landlock states in the world (landlock meaning not having territory connected to an ocean or whose coastlines lie on endorheic basins), I learned the unique challenges these countries encounter. For example, as explained in a report published by the United Nations Conference on Trade Development (UNCTAD), "In landlocked developing countries, manufacturing and industrialization processes, as well as structural transformation efforts, are undermined by challenges related to energy supplies, breakdowns and outages. Landlocked developing countries that are rich in energy resources such as hydroelectricity, fossil fuel or renewable energy sources, do not perform well in the energy category. Moreover, energy supply restrictions, such as electricity rationing and water shortages, hamper productive capacity development, industrialization and manufacturing in several landlocked developing countries. It is critical that these countries enhance their capacities to use energy in production and transformation processes."

Writing the Forward for the Productive Capacities Index ("PCI" or the "Index"), Mukhisa Kituyi, Secretary-General of UNCTAD, says: "Weak productive capacities penalize structurally weak and vulnerable economies, including many landlocked developing countries. This penalty is aggravated by the coronavirus disease pandemic, and the global economic crisis that has accompanied it, wreaking havoc on the production structures, trading relationships and domestic livelihoods of these countries. The deep economic shock is compounding mounting damage from climate change, steep drops in international commodity prices and declining trust in global solidarity, threatening to erase the development gains of the last decades. New pathways for building economic resilience and addressing the root cause of vulnerabilities in these countries are desperately needed."

Whether creating a multinational strategic plan for a venture where I hold an equity stake or recommending to a client on which markets they should commercialize their product or service, I appreciate that "UNCTAD, through the development of the Productive Capacities Index, is among a handful of institutions that have taken on the challenge of measuring productive capacities. The Index is the first of its kind in its comprehensiveness, scale and scope. The overall level of productive capacities has been assessed for 193 economies by using 46 indicators in the eight categories of structural change, human capital, natural capital, energy, ICTs, transport, institutions and the private sector. The result is the creation of a composite multidimensional global index that summarizes the state of productive capacities in economies worldwide."

In discussing the results, the PCI adds:
The results of the Index are in many ways, as expected. Developed countries are primarily positioned towards the top of the ranking, followed by the best-performing developing economies in East Asia, and developing countries are lower down. Similarly, with regard to geographical comparisons, many economies in Asia and Latin America have higher Index scores than economies in Africa and the levels of productive capacities among landlocked developing countries are among the lowest of the groups analyzed, other than the least developed countries. The average scores of both landlocked developing countries and the least developed countries are below the global averages in seven of the eight categories, except that for the natural capital category, and also below the scores of other developing countries, developing economies in East Asia and transit countries. The only area in which the least developed countries and landlocked developing countries score better than the other comparable groups is in the natural capital category. This means that if landlocked developing countries rich in natural resources capture the rents from such resources in development, they may be in a particularly favorable position to build productive capacities and initiate the process of structural transformation.
Moreover, "One important use of the Index and country-specific scores is in the understanding of the sources of systemic vulnerabilities and the identification of the enablers of economic growth, including progress towards sustainable development. For instance, most developing countries, in particular the least developed countries, landlocked developing countries and small island developing States, perform low in the categories of human capital and information and communications technologies (ICTs). These are key capabilities in responding rapidly to health-related crises, as the availability of medical professionals is vital and ICTs are indispensable tools in providing commercial and other critical services, such as online learning, telemedicine and teleworking, in particular in situations where physical distancing and restrictions on movement are required."

The Index's methodological approach and results may be downloaded through this link.

While great challenges exist in developing countries, these markets also provide a multitude of opportunities for businesses in a variety of sectors including ICTs, natural resources, and logistics, just to name a few. But advances in socioeconomic development requires a coordinated effort by members of the private sector, nongovernmental organizations, and government officials. As Dr. Kituyi explains, "Developing countries, including the most vulnerable among them, with the support of development partners, need to strive to grow their productive capacities, transforming their economic structures and reversing their continued marginalization in the global economy. The Productive Capacities Index offers indispensable guidance for new policy pathways that can realign incentive structures to revive socioeconomic progress and address persistent vulnerabilities to external shocks, whether economic, health-related or other shocks."

What are you recommendations for how to revive socioeconomic progress in developing countries?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 28, 2020

14th Annual STAR-TIDES Capabilities Demonstration Focused on Converging Approaches to Sustainable Resilience

As noted in a posted entitled "Cheap and Effective Solutions for Humanitarian Emergencies," I had the opportunity to attend the second annual STAR-TIDES demonstration in 2008 at the Pentagon just outside of Washington DC. In outlining the program's background, the STAR-TIDES website says it "is a global knowledge-sharing network that focuses on building sustainable resilience, promoting human security (freedom from want and freedom from fear), and creating life-changing social and economic activities. These roles have evolved from original support by the U.S. Defense Department's TIDES (Transformative Innovation for Development and Emergency Support) program to four defense-related mission areas: (A) Building Partner Capacity, (B) Humanitarian Assistance and Foreign Disaster Relief, (C) Defense Support of Civil Authorities, and (D) Stability and Peace Keeping Operations."

In 2019 George Mason University in Fairfax, Va. established the Center for Resilient and Sustainable Communities (C-RASC), a transdisciplinary research center that addresses critical real-world problems through integrated approaches that build resilience. The C-RASC, which is led by Dr. Kathy Laskey, now oversees the global STAR-TIDES knowledge-sharing network. Dr. Linton Wells II, who founded the TIDES program, remains involved with STAR-TIDES as the C-RASC's Executive Advisor.

The knowledge in the STAR-TIDES network is organized into six platforms (technology areas): (1) Energy, Energy Storage; (2) Shelter, Heating/Cooling and Lighting; (3) Water, Sanitation and Hygiene (WASH); (4) Agriculture and Food Security; (5) Information and Communications Technology (ICT); and (6) Health, Nutrition and Integrated Cooking.


The six platforms are supported by the “keys to success” shown below:
  • Narrative (and Story Telling) are essential parts of the "Listening" and "Learning" phases of a project, both to understand community needs in their cultural context and to translate technical analyses into terms that support their engagement. Systems Thinking is needed to link the various platforms together in ways that support the community's needs, and then narrative comes back into play to convey the technical analysis back to the community in ways that are consistent with their needs, cultures, and resources.
  • Global Knowledge Sharing is facilitated by the STAR-TIDES network.
  • All projects need Resource-Raising Strategies.
  • Finance, Transport, and Logistics provide the glue to stand-up and execute real world efforts, and is a core part of "Lasting."
  • Education also is a key part of bi-directional learning, and developing modes that can be extended to other circumstances
  • Digital Enabling Technologies include geospatial information systems (GIS), identity management, distributed ledger technology (like blockchain) for accountability and transparency, climate science, big data analytics, etc.

I have enjoyed watching the STAR-TIDES program develop over the past several years and seeing its positive impact on distressed communities worldwide. As an e-newsletter produced by Dr. Wells dated Sept. 3rd, 2020 explains:
Over the years STAR-TIDES has made good use of focused teams on several occasions. For example, in late 2012/early 2013 team members helped a medical clinic that had been damaged by fire in Old Fangak, South Sudan. In 2015 nearly 80 members responded to a request to support refugee and IDP (internally displaced persons) camps in Iraq. In 2018 others supported George Mason graduate students in analyzing alternative shelters for use in Appalachia. Currently we have nearly 30 members who have signed up to support various aspects of rural broadband activities, from Native American communities, to dispersed towns in New England, to helping students return to classes in North Carolina. Going forward, I expect there will be many more opportunities, from geographic areas such as Puerto Rico, to STAR-TIDES core technology areas, to projects such as precision agriculture. As always, the teams will support those already working on the ground through our basic premise of Listening (to what they're trying to tell us), Learning (in both directions), and Lasting (to build local capacity).

As a result of the coronavirus pandemic, the 14th annual STAR-TIDES capabilities demonstration was held virtually from Oct. 20-22, 2020 under the title of "Converging Approaches to Sustainable Resilience." The STAR-TIDES e-newsletter dated Dec. 3rd, 2020 provided the following summary of the event:
22 separate events and 10 parallel breakout tracks focused on diverse areas including technology platforms (energy, shelter, water, etc.) plus key enablers such as narrative & storytelling, systems thinking, ethics, and Defense logistics. There were two sessions on "Puerto Rico Way Ahead." A career track offered students chances to interact with professionals for job search advice, as well as practitioners from areas such as geospatial information, emergency management, global health, development, and sustainable resilience. The conference featured 25 speakers and approximately 70 panelists, including several national and international figures. During his keynote address, Thomas L. Friedman, the distinguished author and New York Times Pulitzer-prize-winning columnist, discussed the fast, fused, deep, and open forces that increasingly affect our lives. Lt. Gen Michael Plehn, USAF, Military Deputy Commander of the U.S. Southern Command, and Claire Melamed, PhD, CEO of the Global Partnership for Sustainable Development Data, presented keynotes on October 21st.

Several participants showed how they applied their capabilities in real-world situations. These included perspectives on Navy operational energy, low-cost shelters, power grid cost reduction, and supply chain risk management for open source software, as well as a compelling example of how STAR-TIDES network members helped rebuild a medical clinic in South Sudan.

The sessions generated over 26 hours of content with more than 55 videos that may be viewed via the STAR-TIDES' YouTube page. Moderated by Dr. Wells, Mr. Friedman provided his insights on a variety of topics including U.S.-China relations, the emergence of black/green governments as the left/right binary approach of politics wane, education provided by the private sector including a company's role as an innovator and educator, and scaling community-based approaches.

Dave Warner, a medical neuroscientist with a MD/PhD researching new methods of physiologically based human-computer interaction to identify methods and techniques that optimize information flow between humans and computers, provided great remarks about information and communications technologies (ICTs).

And during the "Sustaining Cross-Cutting Solutions Across Silos" session, Bob Gourley, co-founder and chief technology officer of OODA LLC, moderated a discussion on sustainable resilience featuring the following panelists: Declan Kirrane, founder and managing director of ISC, Clare Lockhart, Director of the Institute for State Effectiveness, and Mike Tanji, Global Marketing Officer and Chief of Staff at the Global Cyber Alliance. For the purposes of this session, Mr. Gourley said resilience is defined "as an entity's capacity to prepare for disruptions, to recover from shocks and stresses, and to adapt and grow from a disruptive experience."

The STAR-TIDES team announced that the next demonstration is tentatively planned as a mixed physical and virtual event on Oct. 19th and 20th, 2021. The Pentagon Center Court event will immediately follow on Oct. 21st and 22nd.

The Dec. 3rd newsletter further notes: "A new initiative for 2021 will be a series of interactive online events throughout the year. For example, a session might be woven around a case study. STAR-TIDES always has been a community of doers, so this would give people with real-world expertise a chance to talk about what they'd have done differently, or how they might approach such a situation in the future with current or emerging capabilities, plus what persistent capacity gaps and blocks remain to be resolved, and why. We'll provide more info as the schedule solidifies and welcome your suggestions and inputs."

The newsletter concludes by saying "STAR-TIDES has always been about our world-wide network partners and the contributions they are making to uplift individuals and societies, not only to provide basic amenities but also to increase standards of living and build sustainable resilience. If you have anything you think might be of interest or use to the network, please share it via email"

The following words from my 2008 post remain relevant 12 years later: "For any sustainable social and economic development strategy to have a chance of succeeding, it must have the collaboration of the private sector, civil society, and government stakeholders. With adequate financial and logistical support, STAR-TIDES could make a difference to people worldwide facing the challenges of surviving a one-time natural disaster or the daily constraints of poverty." Impressively, the STAR-TIDES network has proven its success in making a positive impact on the lives of millions, if not billions, of people worldwide.

What effective solutions do you propose for addressing humanitarian emergencies or post-war reconstruction?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 25, 2020

'Hinrich Foundation Sustainable Trade Index 2020' Presents Four Recommendations on Building More Resilient Communities in the Post-Covid-19 World

According to the 2020 version of the Hinrich Foundation Sustainable Trade Index (STI), "Sustainability was gaining more traction in the years leading up to the Covid-19 pandemic. Firms stepped up commitments to corporate social responsibility (CSR) initiatives. Investors started incorporating environmental, social and governance (ESG) issues into their asset allocation decisions. And consumers voted with their wallets to support sustainable production, purchasing goods with certified claims regarding their environmental impact and use of labor."

Commissioned in 2016 by the Hinrich Foundation, an independent charitable foundation headquartered in Hong Kong, and devised by The Economist Intelligence Unit (The EIU) in 2016, the STI "was originally created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, executives and leaders from civil society must take into account when managing and advancing international trade. That purpose remains, but we hope that governments and businesses around the world start to also view it as a tool for building resilience into their international trade policy and their economies, more broadly."

What is more, the STI constructs "an index to measure the capacity of 20 economies—including 19 in Asia, and the US as an external benchmark—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection and strengthened social capital. The 2020 edition of the index is the 3rd, following the 2016 and 2018 versions."

The key results and findings from the 2020 STI include:
  • "For the first time, there is a tie atop the index. Japan and South Korea both receive scores of 75.1 (out of 100), placing them five points clear of Singapore in third place (70.0) and a group of three other economies—Hong Kong, Taiwan and the US—in the high 60s. These six together have been the mainstays at the top of the index throughout the three, slightly different iterations of the STI that have now been published since 2016. But this is also the first time for either Japan or South Korea to rank first in the index; Singapore was number one in 2016 and Hong Kong in 2018.
  • "The economic pillar is, in this edition, by far the most tightly packed, which was also the case in 2016. The difference in scores between the top-ranked economy, Hong Kong at 69.1, and the economy at the bottom, Laos at 44.6, is just barely over 25 points. The only consequential moves in the top half of The 2020 STI finds four key areas the pillar were by China and the Philippines. China continued its ascent up the ranks, although more because of consistency than progress. The Philippines rebounded to 9th, where it began in 2016 before slumping to 15th in 2018.
  • "To the praise Taiwan already garnered this year for its effective handling of the Covid-19 outbreak, we can add the accolade of being first in the social pillar of the STI, the second time it achieved the rank. It is further recognition that the economy is getting many things right.
  • "Japan registers the strongest performance in the environmental pillar (80.0), leading the same group of four—Singapore (78.7), Hong Kong (77.4) and South Korea (75.2), being the other three—that has excelled, with a few exceptions, across all three pillars of the STI from the start. Then there's a considerable drop. China and the US come next in the rankings, but are both 20 points below the top four in scores.
  • "Pretty much all we can be certain of is that there is going to be another crisis at some point. Preparedness matters. The original intention behind the STI was not necessarily to serve as a tool for crisis preparation. But it has taken on that dimension. We hope that governments and firms around the world, not just in Asia, will use it as such."

In presenting its key recommendations, The EIU says: "A good start towards avoiding having to ask what if when the next crisis hits would be for policymakers, business leaders, international institutions and NGOs to address the following four areas:

Reducing inequality

"The pandemic has just exacerbated an existing trend. Unless significant steps are taken now, the gap between the rich and the poor will only widen further when the next crisis comes, making sustainable trade all the more difficult."

Improving education

"Without progress in education, many economies in the STI may find themselves left behind."

(Re)lowering barriers to trade and investment

"None of the developing economies (in the STI) have the internal demand or the capital base to grow, let alone grow in a manner that will alleviate poverty and create a middle class. Trading, and trading sustainably, are really their only paths. That means keeping their economies open and welcoming the kind of foreign investment that supports those goals."

Building on the environmental benefits of the pandemic

"Governments have an opportunity to apply the environmental lessons learned from the crisis to their policy decisions and ask themselves questions about how to retain the gains already made, such as:
  • "With fewer cars on the road, and industrial demand for electricity down, how can we continue reducing air pollution when those two return to normal? Should they return to normal?
  • "Similarly, how do we build upon and accelerate the drop in emissions that the world will see in 2020?
  • "What can be done to ensure that the improvements in freshwater pollution levels are not lost?"

On Oct. 27th, 2020, Hinrich Foundation speakers presented the STI's key findings and discussed politics and economics in the wake of the pandemic at the Excelsia- Lumen Symposium Series. As explained by Pragya Bhatnagar, a Research Associate with the Hinrich Foundation where he focuses on International Trade Research, the virtual event entitled "Building Back Better with Sustainable Trade" "featured presentations from six experts in the fields of international trade, education, politics, technology, and culture. The speakers surveyed the post-pandemic landscape and identified key challenges – and opportunities – facing global society."

Do you find the STI a useful tool for building more resilient communities in the post-Covid-19 world? Do you agree with the report's recommendations?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 23, 2020

Overcoming Digital Illiteracy: A Toolkit for Training People in Basic Mobile Internet Skills

The previous post focuses on GSMA's annual report on the state of mobile internet connectivity with a particular focus on low- and middle-income countries (LMICs). Two of the report's key findings include an "awareness of mobile internet is increasing but is far from universal" and "a lack of literacy and digital skills persists as the main barrier to use among mobile users who are aware of mobile internet in LMICs surveyed." The latter point was reported "as the top barrier by a third of respondents, followed by affordability." While predictions of increased use of mobile phones in LMICs are encouraging, the benefits these devices bring to the user, like any tool, can be maximized only if they possess certain skills. Fortunately, with support by the Department for International Development (DFID), a government department of the United Kingdom that has since been replaced by the Foreign, Commonwealth & Development Office (FCDO), the GSMA created a toolkit for training people in basic mobile internet skills.

"Today there is still a 'usage gap' of 3.4 billion people who have access to mobile broadband coverage, but are either unable or unwilling to use it," the GSMA explains. What is more, "GSMA research has consistently shown that low levels of basic digital literacy are one of the main barriers to mobile internet adoption. To address this, in 2016 the GSMA Connected Society program – with financial support from DFID – developed the Mobile Internet Skills Training Toolkit (MISTT), a set of resources to promote digital literacy, help people use the internet more safely on their mobile and ensure they have the skills required for a digital future."

Designed for mobile network operators, non-governmental organizations, development organizations, and governments who want to provide training to improve people's basic knowledge and understanding of the mobile internet, the MISTT uses a 'train the trainer' approach and consists of short lessons in a PDF format that can be easily adapted to local needs and languages. Available in Bengali, English, FrenchHindiKinyarwanda, and Swahili, the guide serves as a tool for giving "trainers what they need to demonstrate the value and the functionality of the internet on mobile phones. As a result, trainees will be equipped with a deeper understanding of what they can use the internet for and the basic skills needed to access and use it. We believe that this will lead to increased awareness and use of the life enhancing services that the mobile internet has to offer."

Moreover, "The training presented in this toolkit, targets people with little or no mobile internet skills. It aims to teach those who want to learn what the mobile internet is and how to communicate and search online. This toolkit is not suitable for people with no experience of using mobile phones, and doesn't cover basic functions such as making calls or sending SMS. Similarly, it is not designed for those who are already familiar with the mobile internet."

Among the 12 individual video modules produced in English is one that provides an introduction to the internet.

I am very pleased to see a video module focusing on online safety.

And another video module focuses on mobile money, which is quickly becoming an essential service for individuals as well as micro, small and medium enterprises.

I concur with the guide's assertion that "[m]obile phones are much more than just a tool for making calls. Increasingly they are the primary way people across the world access the internet. Whilst the internet can provide a wide range of benefits to the user, it requires specific skills and knowledge to use a mobile phone effectively. This means that people who lack the skills and understanding are unable to access these life enhancing services."

What are your thoughts about GSMA's Mobile Internet Skills Training Toolkit?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 21, 2020

Mobile Internet Coverage and Adoption Has Increased Significantly in Recent Years, but Millions of People Could Remain Offline in 2025

Most readers of this post will agree the following assertion from a report published by the GSMA, a UK-based organization representing the interests of mobile operators worldwide: "Connectivity has never been more important, and the world's reliance on the internet has never been greater." Authored by GSMA Intelligence, GSMA's research and consulting arm, the report further says "[t]he COVID-19 pandemic has underscored the importance of the internet and the critical role of mobile, which is the primary way most people access the internet. Internet access and services have helped to ensure the functioning of emergency services, allowed separated friends and families to stay informed and keep in touch, and enabled large parts of the workforce to continue to be productive throughout the crisis."

What is more, "Bridging the persistent digital divide and providing mobile internet access to the 4 billion people still not connected is more important than ever in the current context. Meanwhile, it is becoming increasingly challenging as the unconnected tend to be poorer, have lower levels of education and live in rural areas. As this report shows, there has been strong progress over the last five years, with significant increases in mobile internet coverage and adoption. However, if current trends continue, more than 40% of the population in low- and middle-income countries will remain offline in 2025."

Titled The State of Mobile Internet Connectivity 2020, "the report accompanies the fifth annual update of the GSMA Mobile Connectivity Index and analyses trends from 2014 to 2019. The report provides answers to the following questions:
  • "What are the key trends in connectivity over the period and how do these compare across regions, gender and rural/urban populations?
  • "What are the barriers and drivers to the use of mobile internet and how have these changed over time?
  • "What are the achievements and challenges in extending broadband coverage?"

The report's findings "are based on two analytical tools – the GSMA Mobile Connectivity Index and the GSMA Intelligence Consumers in Focus Survey. The Mobile Connectivity Index is a tool that measures the performance of 170 countries (representing 99% of the global population) against the key enablers of mobile internet adoption": infrastructure (the availability of high-performance mobile internet network coverage); affordability (the availability of mobile services and devices at price points that reflect the level of income across a national population); consumer readiness (citizens with the awareness and skills needed to value and use the internet); and content and services (the availability of secure online content and services accessible and relevant to the local population).

With respect to the Consumers in Focus Survey, which is available to GSMA Intelligence subscribers only, the report says the survey "has been carried out every year since 2017 and in 2019 included 15 low- and middle-income countries. Together, these provide objective, quantitative metrics to track the key enablers of mobile internet adoption and usage, as well as insights from consumers on what prevents them from using mobile internet."

The authors of The State of Mobile Internet Connectivity 2020 importantly clarify that "[t]he analysis contained in this report relates to mobile internet use and its enablers up to the end of 2019, before the outbreak of the COVID-19 pandemic in early 2020. While it is not yet possible to identify the full implications of the pandemic, some of the potential impacts are discussed throughout."

Below are the report's key findings:
  1. "Almost half the world's population now use mobile internet. By the end of 2019, there were 3.8 billion people using mobile internet (an increase of 250 million users since the end of 2018), with three quarters of all mobile internet users living in low- and middle-income countries (LMICs).
  2. "The coverage gap – those living outside of areas covered by mobile broadband networks – continues to narrow. It is now 7% (down from 10% in 2018) and stands at just under 600 million people, compared to 750 million in 2018. This reduction was driven primarily by South Asia – particularly India, where almost 99% of the population is covered by 4G, and by upgrades of 2G sites to 3G and 4G across Sub-Saharan Africa.
  3. "4G coverage is catching up with 3G coverage. It now accounts for more than 50% of mobile connections globally. In 2019, 82% of the population in LMICs were covered by 4G (compared to 90% for 3G). It has taken LMICs around seven years to reach more than 80% coverage for 4G, compared to 10 years for 3G.
  4. "There is still a considerable usage gap, as coverage continues to grow faster than usage. Approximately 3.4 billion people who live in areas covered by a mobile broadband network do not use mobile internet. This usage gap is now six times larger than the coverage gap.
  5. "The rural-urban and gender gaps in mobile internet use remain substantial but are narrowing, driven primarily by improvements in South Asia. People living in rural areas across LMICs are 37% less likely to use mobile internet than those living in urban areas. Women in LMICs are 20% less likely than men to use mobile internet, meaning around 300 million fewer adult women than men use mobile internet.
  6. "Smartphones have become more affordable, but handset affordability remains the main barrier to mobile ownership in many LMICs. The average cost of an entry-level, internet-enabled device in LMICs fell from 44% of monthly income in 2018 to 34% in 2019, driven primarily by increased availability of lower cost devices in Sub-Saharan Africa and South Asia.
  7. "Mobile data is becoming increasingly affordable but is still a significant challenge for the poorest in society. In 2019, the cost of 1 GB of data as a share of monthly GDP per capita had decreased by more than 40% in LMICs since 2016. However, more than half of LMICs still fall short of the Broadband Commission's target to make entry-level broadband services less than 2% of monthly income per capita.
  8. "Awareness of mobile internet is increasing but is far from universal. Nearly a quarter of adults are not aware of mobile internet across the LMICs surveyed. Encouragingly, awareness is growing disproportionately for rural populations and for women.
  9. "A lack of literacy and digital skills persists as the main barrier to use among mobile users who are aware of mobile internet in LMICs surveyed. In 2019, it was reported as the top barrier by a third of respondents, followed by affordability.
  10. "In LMICs, mobile users increasingly see mobile internet as relevant to their lives and are using a wider range of services. While instant messaging and social networking remain the most popular online activities, there was also increased use of mobile internet across a range of services in 2019, including for education, paying utilities, government services, applying for a job, reading the news and healthcare.
Lastly, the GSMA held a webinar about its mobile internet connectivity report. The webinar helpfully includes a demo of the Mobile Connectivity Index (at the 32:23 mark).

A post published on this blog provides steps a business should take when choosing their export market. In addition to evaluating a country's security (how safe is the physical environment?), political stability (how stable are political institutions?), government effectiveness (does political culture foster strong business environment?), and financial risks (how healthy is the local financial system?), just to name a few, business executives should evaluate a country's local infrastructure (will infrastructure deficiencies negatively affect operations?). Local infrastructure includes access to the mobile internet as businesses worldwide are benefiting from the increasing availability of digital services. And improved access to the mobile internet will lead to a more educated and trained workforce, which will close both the digital divide and skills gap – the latter of which may be done by accessing educational or training services via a smartphone.

What do you think of the report's findings? Do you have any recommendations on how a country can close its digital divide?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 19, 2020

15 Years After Learning About Mexico's Banking Sector, Many Mexicans Continue to Distrust Banks

As people who follow me on LinkedIn or Twitter know, I am a regular reader of The Economist newspaper. An article occasionally appears that allows me to reflect on a project that I worked in years past.

In 2005 Washington Mutual Inc., a savings bank holding company and the former owner of what was then known as Washington Mutual Bank (WaMu) before its collapse in 2008, retained the consulting services of Global Tactics to evaluate the opportunity to expand to Mexico. During the preceding ten years, WaMu had grown through a series of acquisitions. These acquisitions broadened the bank's presence in California and Texas where a large number of Mexican-American customers or Mexicans working in the United States, the latter of which were remitting millions of dollars to their families in Mexico. While WaMu was generating revenue from remittance fees, the bank's executive managers speculated there may be an opportunity to offer a broader range of financial services in Mexico.

Mexico's gross domestic product (GDP) per capita grew from US$7,718 in 1995 to US$9,161 in 2004, according to the World Bank. Taking advantage of the country's growing wealth, WaMu's executives saw an opportunity to provide services it could offer to customers in Mexico such as personal checking and savings accounts, mortgage loans, and credit to small and medium-size enterprises (SMEs).

As part of our consulting assignment, my colleagues and I made a few trips to Mexico to better understand the country's banking sector. We quickly found that the sector was dominated by a few, but large financial institutions that catered mainly to wealthy Mexicans. And while the country's GDP was growing, a large proportion of personal wealth was held by the few.

What is more, many Mexicans possessed a high level of distrust of banks. This distrust led to a large number of Mexicans to conduct most transactions in cash. Even a large majority of home purchases were transacted in cash. These factors, coupled with the bloated bureaucracy of a seemingly endless number of rules imposed by the Mexican government, led WaMu's executive team not to proceed with its plan to expand into America's southern neighbor.

Fifteen years later, The Economist published an article saying: "For most Mexicans online shopping goes like this: people order their goods on Amazon or Mercado Libre, an Argentine ecommerce site that is Latin America's biggest, but pay in cash at a convenience store. That is no surprise given only 37% of Mexicans over 15 years old have a bank account, according to the World Bank. Some 86% of all payments in Mexico are in cash."

The article further explains that "Mexico is an anomaly both in Latin America and among emerging-economy peers such as Kenya and India. In those places 54%, 82% and 80% of people are banked respectively, despite Mexico being richer. Its GDP per person is close to $20,400, around three to four times higher than in Kenya and India.

"This shortfall is not just inconvenient. Counting cash adds to business costs, and those without accounts have little access to credit, slowing consumption and investment. The good news is that the country is improving financial inclusion, says Pablo Saavedra, who heads the World Bank's Mexico program. Only 27% of Mexicans had an account in 2011, but the pandemic has made the issue 'even more urgent,' he says."

Based on my experience providing strategic consulting services to WaMu, which presented me with the opportunity to learn about Mexico's banking sector, I appreciate the article's findings:
There are several reasons why so few Mexicans have access to financial services. Banks are generally conservative. Condusef, the financial watchdog, says bank fees in Mexico are high, with 30% of banks' income coming from commissions. In rural areas, branches can be hard to reach. Furthermore, banks tend not to be interested in the less well-off: only a fifth of the poorest 20% of Mexicans have accounts. Surveys show many Mexicans do not trust banks. Meanwhile, almost 60% work in the informal sector, where they may receive an inconsistent income, in cash. The lack of access affects some more than others—the poor, rural, women and indigenous people.
Successive Mexican governments have tried to improve access to financial institutions. In 2018, a law was introduced to regulate the fintech industry, which is now booming. Under Andrés Manuel López Obrador (known as AMLO) CoDi, a digital payment system using QR codes and contactless payments was introduced in 2019 while financial literacy was included in the school curriculum in September 2020 (currently schooling is via television during the pandemic). Much still needs to be done to hit the government's goal of 65% of Mexicans having an account by 2024.
The article concludes by noting: "The current low level of financial inclusion is likely to hamper Mexico's economic recovery from covid-19, which has been muted by a failure to control the pandemic. For example, small and medium businesses provide 95% of Mexico's private-sector employment but only 13% have access to formal credit. Under such circumstances 'it is very hard to see how you have a strong recovery,' says Mr Saavedra."

With a population of almost 130 million and the second largest economy in Latin America behind Brazil, I have long been an optimist about the investment and business opportunities in Mexico (a topic of which is the focus of my post, "Mexico's Growing Mobile Economy"). Political leadership, however, has not implemented necessary reforms to stimulate sustainable economic growth. Requiring financial institutions to promote transparency, which will help build public trust, is a start. And reducing red tape that prevents new entrants to challenge incumbents will lead to the deployment of innovative financial services benefiting individuals and SMEs alike.

What are your thoughts about doing business in Mexico? Do you have any recommendations on how Mexican authorities can strengthen its financial services sector?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 17, 2020

GSMA Report Explores the Value of Pay-as-You-Go Solar for Mobile Operators in Africa

On a trip to Africa just a few years ago, I was unable to recharge my mobile phone because the power was temporary unavailable in the city that I was visiting. This experience was a reminder that the value of a mobile phone to an individual is diminished if she is unable to keep device charged on a regular basis. Given the ubiquity of mobile phones in developing countries and their important value not just as a communication tool, but their use for utilizing value-added services such as education, business management, and mobile banking.

According to a study produced by the GSMA's Mobile for Development Utilities program, which aims to improve access to basic energy, water and sanitation services in underserved communities using mobile technology and infrastructure, the pay-as-you-go (PAYG) "solar model has spread rapidly across developing countries as a means of delivering energy services. Over one million PAYG devices were sold during the first six months of 2019. The growth of PAYG solar has only been possible with the rapid growth of mobile money and mobile connectivity that allows customers to pay by instalments, and companies to remotely control and monitor the solar home systems (SHS). And in turn, the PAYG solar industry has helped to drive the adoption and use of mobile money, by giving customers a regular and essential use case. Solar energy provides mobile subscribers with a convenient, safe and affordable way to keep their phones charged."

Available in English and Français, the report explains that it is "the first multi-country analysis to quantify the value of that synergy for the mobile industry. This was done by looking at mobile usage data from cohorts of PAYG customers starting six months before, and through the first six months of making SHS payments, and comparing this same analysis to a control group (not using PAYG solar). Five mobile operators from Uganda, Rwanda, Benin, Côte d’Ivoire, and Zambia worked with us to provide aggregated and anonymized mobile money and GSM data in order to measure the commercial value that the PAYG solar industry has for the mobile industry. The key findings from this analysis are as follows:"

PAYG solar customers show significantly increased mobile money usage, beyond just solar payments

"Across markets there is a clear trend showing that PAYG solar customers increase their mobile money usage from 27 percent up to 113 percent," the report says. "Customers made more mobile money transactions not only to pay for the solar home systems, but more transactions overall. This shows that PAYG solar can drive a range of mobile money transactions, and therefore makes a very important use case to develop mobile money ecosystems."

PAYG solar drives adoption of mobile money

"Across markets, 21 to 31 percent of PAYG solar customers were new to mobile money, or reactivated their accounts (after being inactive for 90 days or more)," notes the report. "This demonstrates that PAYG solar companies are laying the foundation of mobile money by introducing, or re-introducing customers to the service through their agents, and providing them with the essential training to keep making their payments for each PAYG solar instalment."

PAYG solar customers yield increased overall revenue for mobile operators

"It is striking that overall revenue did increase at higher rates than the control group in all markets. This shows that PAYG solar customers increase their usage of other mobile services, such as voice, SMS, and data more than other customers. Specifically, in two markets where we had data (Côte d’Ivoire and Uganda), PAYG solar customers significantly increased their usage of mobile data. This finding is particularly important because it shows that in an era where mobile operators are struggling with declining voice revenues, PAYG solar can lead to broader digital inclusion."

PAYG solar demonstrates the case for strengthening and broadening collaboration

The report asserts that "[t]hese findings provide robust evidence for the immense value that PAYG solar has for mobile operators to grow their business - helping them to reach more consumers and deepening their use of mobile services. Nonetheless, there are limitations to this kind of study, and we faced gaps in the data, for example we found it difficult to measure the impact of PAYG solar on reducing customer churn for mobile operators due to the limited timeframe of the study."

In addition to the aforementioned findings, the report presents three key actions for the mobile industry to stimulate PAYG partnerships:
  1. "For mobile operators already working with PAYG solar providers, there's a need to look at how deeper collaboration with these partners can further drive these mutual benefits.
  2. "For all mobile operators, investing in mobile money as a full business platform is essential to attract innovative service providers, and allow them to quickly and affordably put it to work.
  3. "Mobile operators can gain unique business intelligence on their partnerships from their data."

Lastly, I share in the "hope that this analysis provides the groundwork for deeper research on synergies between mobile operators and PAYG solar providers, as well as other PAYG services that are gaining traction in emerging markets, such as prepaid water and cooking gas."

What recommendations do you have for how mobile operators can support sustainable development initiatives?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 14, 2020

Monitoring Risks to Your International Business Beyond Covid

As evidenced by the multitude of posts on this forum regarding risks, I appreciate the following assertion by The Economist Intelligence Unit (The EIU): "Managing risk in an increasingly bifurcated world in the midst and aftermath of the Covid-19 pandemic will continue to dominate the thoughts of risk managers."

The report, which also includes a selection of risk scenarios, looking beyond those directly linked to the pandemic, that should be firmly on the radar of risk managers owing to the scale and intensity of the potential disruption that they could cause, adds that "[d]ivergent recovery speeds, differing policy responses, global supply-chain readjustments and ever-present political instability create an enormously challenging global business environment. Looking beyond that, there is a long tail of country risks, not directly related to—but many clearly exacerbated by—Covid-19 that businesses are going to have to understand to ensure that they can be managed."

Those who are engaged in conducting commercial or investment transactions in foreign markets will appreciate that The EIU's "core country growth forecasts are complemented by a comprehensive risk audit to provide a full understanding of both the opportunities and risks facing businesses."

As indicated in the chart above, The EIU is "forecasting global economic growth of 4.2% year on year in 2021, on the back of an anticipated 4.7% contraction in global output this year. The report notes that "this number masks enormous regional disparities."

What is more, The EIU is "forecasting huge divergence in the speed of recovery for individual economies, based on multiple factors: fiscal space and commitment; monetary policy flexibility; sectoral composition; severity and timing of lockdown measures; export market exposure; and labor market dynamics and demographics. This divergence, straddling as it does already inflamed global trade tensions, cements our expectation of an increasingly bifurcated world.

"We have produced a series of analyses that spotlight key issues to watch at a country level in 2021 (Things to watch in 2021). Our core scenario for these countries, in terms of their recovery, is informed by the above checklist. However, there are other recurring themes that will shape the growth outlook and the business environment for these markets in the coming years."
1. Global trade and supply chains are being reshaped; countries are striving to diversify their export markets and jostling to capture redirected manufacturing investment, while companies are concurrently seeking to diversify their supply chains.
• The reassessment of the risk versus reward equation—as companies weigh up labor costs, political stability, FDI policy and the benefits of localization versus specialism—will create new investment hotspots and strengthen some existing investment centers. There will be some limits on supply-chain rebalancing: the benefits of specialization will be hard for both companies and economies to give up, and companies will also have to accept higher production costs.

2. Political instability continues to be a threat; joblessness, poverty levels and rising inequality have only been worsened by Covid-19.

3. Many countries are newly prioritizing substantial investment in infrastructure. Financing models will vary amid widespread fiscal constraints, but with record-low interest rates in many places helping. Infrastructure investment will be pursued to facilitate job creation and, in some cases, to try to keep the potential for social unrest at bay.

It is important to note that risks to The EIU's "core country forecasts abound. Accelerated vaccine rollout and an unleashing of pent-up demand could cause several countries to surge ahead on this chart. Conversely, in other countries the labor market may be severely diminished for an extended period, weighing on post-pandemic demand and creating recovery laggards."

Lastly, the report contains maps that depict The EIU's "current global growth forecasts for 2021 and highlight the aforementioned divergence. They also highlight a handful of key country risks, looking beyond direct coronavirus-related risks.

"These are not part of our current growth scenario for the next year or two; rather they represent risk scenarios that could substantially change the business operating environment."

Which risks do you think could have the biggest impact on your business? Are there risks not mentioned in the report that you are monitoring?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 12, 2020

'The Digital Landscape in Latin America Is Evolving Rapidly,' Says GSMA Report

"The digital landscape in Latin America is evolving rapidly," according to a report published by the GSMA, a UK-based organization representing the interests of mobile operators worldwide. "Across the region, enterprises are increasingly using digital technologies to improve operational processes; for consumers, digital platforms are providing new ways to work, learn, shop and interact with society."

Authored by GSMA Intelligence, GSMA's research and consulting arm, The Mobile Economy Latin America 2020, which is available in English and español, forecasts 62 million 5G connections across the region by 2025, representing a near 10% adoption rate. By that same year, 4G will account for 67% of connections.

The report presents three key trends shaping the digital landscape:
  1. 5G: the enterprise networks opportunity. There is a growing trend towards the deployment of private networks by enterprises in sectors such as manufacturing, mining and, utilities. Operators are looking to address the needs of these enterprises with simple, out-of-the-box solutions, capturing early movers in Industry 4.0.
  2. IoT: a local focus. The IoT market in Latin America will reach 1.2 billion connections by 2025, driven by growth in the enterprise segment, mainly for smart manufacturing and smart building solutions. Operators are deploying IoT solutions in the auto, telematics and bioenergy industries and, cities such as Buenos Aires, Santiago, Medellín and São Paulo are implementing smart city initiatives.
  3. The rise of fintech. Smartphone adoption in Latin America will reach 72% in 2020 and 80% by 2025. This landscape, together with other factors such as low banking penetration rates, has led to the rise of numerous fintech firms in the region. Besides providing the connectivity that underpins many fintech solutions, operators are also exploring ways to leverage critical network and distribution assets to capture more value in the fintech space, and contemplating direct investment opportunities in fintech companies.
The report also highlights a series of policy recommendations for the digital transformation of Latin America, including:
  1. Removing legacy regulation and encouraging regulatory simplification.
  2. Fostering dialogue between Congress, regulatory authorities, sectoral policymakers, and the private sector to create consistent national digital agendas.
  3. Building a fiscal policy that encourages investments and the affordability of services and devices.
  4. Planning long-term spectrum policies, focusing on digital inclusion and innovation rather than revenue maximization.
I appreciate how the report provides a few examples of IoT startups across Latin America:
  • Babybe: Connects mothers with premature babies through a connected mattress that mimics the mother's breathing and heartbeat
  • ChoppUp: IoT solution for restaurants and bars to reduce beer waste by remotely monitoring data from dispensers
  • Citysense: IoT solutions for air quality and crime tracking, as well as helping firms understand potential markets through crowd counting
  • Firecity: Interconnects fire alarm systems in real time, notifying property owners and the fire department in emergencies
  • Jooycar: Telematics solution tracking driving patterns, and offering route optimization and maintenance reporting for connected cars
  • Lok: Last-mile logistics solutions based on a network of smart lockers
  • Neltume: IoT solutions to help farmers manage pesticides and moth infestations
  • Sensorbox: Reducing business losses from blackouts through a solution that predicts, monitors and reports problems with power sources
  • Tecrea: Multiple IoT solutions, including real-time alerts and GPS monitoring of livestock

Regarding the rise of fintech in Latin America, the report lists the following factors that are driving the sector's growth:
  • "Rapid adoption of smartphones, allowing more people to access digital financial services. Smartphone adoption in Latin America is set to reach 72% in 2020, from 46% five years earlier.
  • "Lack of access to traditional banking services for large swathes of the population, creating a sizeable opportunity for new entrants. According to the 2017 Global Findex, only 51% of households in Latin America and the Caribbean have an account at a formal financial institution – much lower than the average for Emerging Asia (78%) and the Advanced Economies group (96%).
  • "Enabling regulations that level the playing field between traditional financial institutions and new fintech players. In September 2020, the Colombian Ministry of Finance and Public Credit established a regulatory sandbox to support the growth of fintech firms. Brazil, Chile and Mexico are among other countries that have recently introduced regulatory initiatives for fintech.
  • "Sustained investment in fintech start-ups. In 2019, total funding for fintech startups tripled to £2.1 billion. In the first half of 2020, Latin American fintech firms raised a total of $525 million across 74 deals, with lending, payments and SME finance attracting the most interest from investors."

And with respect to mobile bringing more people online, the report notes:
The Covid-19 pandemic has cast a spotlight on connectivity and its role in sustaining social and economic activity in today's increasingly digital society. Lockdown measures at the peak of the crisis resulted in many everyday activities moving online – a situation likely to continue to varying degrees for as long as the threat of the disease persists. This underscores the need for universal access to reliable, high-speed connectivity to ensure everyone is able to stay connected. It also emphasizes the need for a range of relevant digital content and services that meet the socioeconomic, cultural and lifestyle needs of local users.
In Latin America, mobile technology continues to play a key role in bringing unconnected populations online and providing a platform to create, distribute and consume life-enhancing digital services.

What opportunities do you see in developing products and localized services for the Latin American market?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 8, 2020

eRegistrations Platform for Registering New Businesses Will Help Nations Build a Formal Private Sector

The previous post on this blog focused on how entrepreneurs in developing countries are able to use their mobile device to register their new business using eRegistrations. A document prepared by the UN Conference on Trade Development (UNCTAD) explains that "eRegistrations is an eGovernment system, designed to computerize simple or complex administrative procedures. It can be easily adapted and configured to any administrative process and may apply to procedures such as company registration, construction permits, foreign trade procedures or the transfer of a property title."

Developed by UNCTAD's Division on Investment and Enterprise in Geneva, Switzerland, the document notes that "eRegistrations is suited both to operations involving only one administration (such as registering at the business registry) and to simultaneous operations at multiple administrations (such as registering a company at the tax office, with the municipal council, with social security, at the labor department and at the business registry). It acts as a single electronic window." Importantly, the system "can be installed at the municipal, national or supra-national levels."

For government agencies utilizing eRegistrations, minimum technical infrastructure is required: "Administrations willing to offer their services through the system are not required to have computerized processes. The only requirement is to have computers and an internet connection."

Moreover, "A law on electronic signatures is not mandatory either. eRegistrations was conceived to make use of electronic signatures in countries where it is regulated. In others, the system proposes a secured technique to certify digital documents issued by the administrations."

With respect to database and application hosting, the document says that the "local counterpart has a choice between hosting the database and the application on a local server or on a distant cloud server. Cloud servers are latest generation and high-speed, with expandable storage space, automatic back-up, secured (https), large band-width internet connection and 24 hour service. Similar specifications are recommended for local servers."

And regarding maintenance of the platform, "eRegistrations comes with a 'bug-free' warranty, any bug in the original version is repaired within 48 working hours."

The document points out that "Source codes, in java script language, as well as the MongoDB database are made freely available to the municipal, national or supra-national entity that administers the project. A complete technical documentation is also provided, so that local computer experts can easily make changes to the system, e.g. modify the forms or the list of requirements, or incorporate new administrative procedures."

A separate publication entitled "How UNCTAD's e-government platform helps countries stay open for business during COVID-19," points out how "global pandemic countries are using UNCTAD's e-government platform to continue providing essential services and new COVID-19 fiscal rescue measures to businesses though online single windows while offices are closed."

UNCTAD's online platform is directly supporting goal number #8 (promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all) and #16 (promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels) of the United Nations' Sustainable Development Goals (SDGs). And eRegistrations indirectly supports SDG #1 (end poverty in all its forms everywhere) and #17 (strengthen the means of implementation and revitalize the global partnership for sustainable development).

Lastly, an article published on Dec. 7th, 2020 explains how "Over 25,000 small and medium enterprises (SMEs) in Cameroon have joined the formal sector by registering their operations through UNCTAD's eRegistrations online platform launched in the country in 2016.

"The platform has allowed residents of Douala, Yaoundé, Garoua and surrounding regions to conveniently register businesses and create jobs even amid the economic crisis caused by the COVID-19 pandemic.

"Funded by the European Union, the platform is marketed by the national SME promotion agency (APME) as, via its network of business creation centers (CFCEs)."

The article further says "Cameroonian SMEs mostly operate in the informal sector, limiting interactions with public authorities. By formalizing their operations, the SMEs and their employees may have access to loans, insurance and legal protection, and contribute taxes and social security."

Importantly, "The use of the platform has also led to the standardization of operations in the CFCEs. The automation of business registration online means the process can be finalized within 72 hours."

As I wrote in my post, "Role of the Private Sector in Stabilization: Providing Sustainable Employment in Afghanistan", a thriving private sector is crucial in nation stabilization and sustainable development. In my private sector development work in countries like Afghanistan, Peru or Uganda, I have witnessed the challenges local citizens encounter when registering a new business. Access to capital is often a barrier for citizens to launch their own business, but it is not the only one. Cumbersome processes to registering a new business such obtaining the necessary documents from the government office, which may be located a long distance away, prevent would-be entrepreneurs from starting the process to increase the standard of living for themselves, better provide for their family, and potentially create jobs those living in the surrounding community. Online platforms like UNCTAD's eRegistrations will play a crucial role for a country to build a thriving formal private sector.

What do you see are the benefits and challenges of a country deploying the eRegistrations platform? What other services should a country utilize to build its formal private sector?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.