E-Commerce Can Create Opportunities for Young People, Women, and Entrepreneurs in Iraq, Says UN Report

Even before the coronavirus pandemic, e-commerce was disrupting the brick-and-mortar retail industry. Not only did digital retail explode in industrialized markets, but developing countries are seeing signs of the industry's growth. The potential for a thriving e-commerce industry in developing countries has long existed provided that the necessary mechanisms (i.e., smartphones, mobile broadband, physical infrastructure and trade logistics) are in place. For example, while performing due diligence on Iraqi businesses that applied for business development funds provided by the United States government in the late 2000s, I had the opportunity to see role e-commerce can play in the development of the country's private sector. I witnessed how a thriving private sector powered by micro, small and medium-sized enterprises (MSMEs) is necessary for stabilization and sustainable development. Therefore, it was with great interest that I read a report by the United Nations Conference on Trade and Development (UNCTAD) assessing Iraq's e-commerce and digital trade readiness.

Highlights from the report include:

The e-commerce ecosystem in Iraq, while emerging, is still facing major challenges.

• The country lacks a unified vision on e-commerce and the coordination required among stakeholders to accelerate the Iraqi digital development agenda.
• Years of conflict in Iraq have caused major damage to physical infrastructure. Rebuilding ICT infrastructure and improving trade logistics – especially in terms of customs' clearance processes – are key to building the foundations for e-commerce and the digital economy in Iraq.
• The customs' operational model in Iraq also needs an update, as time and costs to export and import goods in Iraq are among the highest globally. Some improvements have been made, by introducing new regulations on electronic processing of moving goods, but further reforms are needed.
• Other challenges are the limited role of Iraqi Post in the digital economy and the low integration of postal services with other e-commerce stakeholders, for both national and cross-border transactions.

Despite these challenges, there are important opportunities for Iraq to tap into the potential of e-commerce for development:

• The assessment shows that e-commerce would help stimulate domestic demand, boost trade and diversify Iraq's largely oil-based economy. Increased productivity and competition would push local industries to create new jobs, especially for the youth, who represent nearly 60% of the population.
• With the improved security environment, Iraq has a chance today to leverage digital technologies for economic diversification and for supporting more sustainable and inclusive development.
• The assessment can help the Government of Iraq mobilize the resources needed for the implementation of the key policy actions, thus moving the country towards its digital economic and social transformation.

On the topic of e-commerce skills development, the report asserts that Iraq's "entrepreneurial ecosystem is still nascent and shallow. Private sector institutions, companies and employees - especially MSMEs - lack the knowledge and expertise to effectively engage in e-commerce. Among MSMEs there is a general lack of awareness about the benefits of e-commerce; this is reflected in their priorities and plans that do not consider the potential benefits of online commerce, including access to new markets. Among the general population, trust in online transactions remains low."

Moreover, "The Iraqi public sector also lacks the skills and knowledge to develop an enabling environment for e-commerce and digital economy, which has been identified as a major challenge. This reality prevents public sector institutions from developing the necessary policies and programs to support the private sector, which relies on an enabling environment to drive innovation and introduce new products and services. Without an enabling environment supported and enhanced by the public sector, the potential of the private sector is constrained."

Once an enabling environment by the public sector to support private sector development is established, "the lack of access to financing for e-commerce startups and MSMEs, from the formal banking system and the non-banking financial system, is another barrier to the development of e-commerce in Iraq," the report explains. "The main reasons include the limited use of formal financial institutions by citizens and MSMEs, and the inability of financial institutions and financing initiatives to address the needs of customers such as startups, small businesses and women-run enterprises. Typically, the products and services offered by these financial institutions are geared towards large established firms in traditional sectors."

While "the Iraqi entrepreneurial system remains nascent," the report notes that "promising developments are emerging. Five innovation hubs have been established across the country and there is growing interest in digital innovations from local incubators and accelerators, the telecommunications company Zain, the donor community and other stakeholders."

The report optimistically concludes that the "emergence of e-commerce in Iraq is very promising and has the potential to create jobs, diversify the economy, stimulate domestic demand and increase exports. As the country continues to rebuild after years of conflict, e-commerce can provide a boost to many existing industries and create new opportunities for young people, women and aspiring entrepreneurs." Although it is unknown how covid-19 has impacted these innovation hubs, the drive to build a thriving e-commerce sector and digital economy in Iraq and throughout the Middle East region remains strong based on discussions with my colleagues in the region.

What are your recommendations for how Iraq can develop a thriving digital economy?

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.

Utilizing Digital Health as a Health System Strengthening Tool for Developing Countries

"The coronavirus (COVID-19) pandemic has magnified existing weaknesses and gaps in health systems. Developing countries have been severely affected," according to a report published by the GSMA, a UK-based organization representing the interests of mobile operators worldwide. "From under resourced health facilities to poor data and information coordination, weak health systems pose serious challenges for developing country leaders and development partners working to mitigate the impact of COVID-19 and other health issues."

Titled Digital Health: A health system strengthening tool for developing countries, the report further says that "there is a pressing need to strengthen health systems in developing countries. Reducing and mitigating the impact of these challenges will require a holistic approach that recognizes health systems as complex and adaptive, functioning at multiple, interconnected levels with a range of stakeholders."

In outlining its objectives and scope, the report explains: "Our research aimed to reveal the transformative impact digital health can have in developing countries. This report unpacks the challenges facing health systems in developing countries and how they have been exacerbated by the COVID-19 pandemic. It examines digital health as a strengthening tool for health systems, featuring different private sector business models, and highlights the role of digital health in managing COVID-19. Finally, we share strategies for reaching those at the bottom of the pyramid (BOP) and conclude with strategic recommendations for digital health stakeholders during and beyond the COVID-19 pandemic."

Shaped by interviews with health and digital experts across seven developing countries (Benin, Nigeria, Rwanda, Somalia, Bangladesh, Myanmar, and Pakistan), below are the report's strategic recommendations for key digital health stakeholders including development partners and nongovernmental organizations (NGOs), start-ups, mobile operators, investors, and governments and health ministries.

Development partners and NGOs

Align efforts and support the government to build capacity to deliver policy and strategy

• Consider committing and adhering to collaborative donor actions like the Principles of Donor Alignment for Digital Health.
• Commit to having a digital agenda as part of any development partner-backed intervention, giving digital health the same status as gender/social inclusion.
• Provide a platform for all health and digital health stakeholders to discuss and share requirements, best practices and solutions.
• Work with governments to enable them to track progress on their initiatives.
• Create a strategic plan with the government based on health systems rather than a programmatic approach, and design the digital health architecture, blueprint or roadmap needed to deliver it.
• Support the government to build the technical capacity it needs to develop and deliver the digital health agenda.
• Support governments to slow the spread of COVID-19 and provide social protection for vulnerable populations, promoting a whole-of-government and whole-of-society response to complement efforts in the health sector.
• Share timely and accurate data with data privacy in mind.
• Collaborate with government and other health stakeholders to assess the unique social and economic impacts of COVID-19 in a country, take urgent recovery measures to minimize the long-term impacts and help societies to recover.

Work collaboratively to enable sustainable solutions

• Be clear about what is to be delivered and show how it can become sustainable and scalable.
• Be more agile with decision making and willing to try new solutions.
• Improve coordination and share strategic documents and information to avoid siloed solutions.
• Work collaboratively with start-ups and mobile operators to solve problems together, rather than innovating separately.
• Cooperate with innovators who are working on sustainable solutions.
• Be open to matched funding models in which development partners provide a grant if the start-up also has an equity investment.

Help to extend the reach of digital health

• Work with all stakeholders to help extend the reach of digital health services to the BOP.
• Take the first financing and planning steps to extend the reach of service provision.
• Provide the skills and introductions for start-ups to make contracts with the government.
• Help map out the benefits of investing in digital health.
• Support in the provision of tools and resources for strengthen their health systems. This includes helping to procure much-needed medical supplies, leveraging digital technologies and ensuring health workers are paid.
• Leverage existing and established digital health platforms and digital technologies to avoid reinventing the wheel and link these to the national system. A proliferation of new tools, such as information collection systems, can complicate efforts to align information infrastructure and threaten sustainability.

Start-ups

Focus on problems that people care about

• Create a proof of concept based on local ideas, but build for broader (potentially global) ecosystems.
• Be innovative in developing solutions that are good for patients/staff and the bottom line.

Understand the processes involved in supporting innovations in digital health

• Polish the proof of concept and use incubation centers to test ideas and potentially attract funds.
• Combine digital with analogue models for health solutions. This is more likely to work than converting entirely to digital.
• Build trust and engage with the government to influence policy. Soft skills, perseverance and dedication is also needed.

Leverage partnerships

• Identify mutual benefits for start-ups and mobile operators, as collaboration can deliver customized digital health services.
• Understand mobile operators' cost structures.
• Align services with the corporate social responsibility (CSR) activities of development partners.
• Have demonstrable products and a roadmap to attract attention from the government.
• Approach mobile operators with a proven product. Acting as a consortium (e.g. development partners) can be more powerful.

Develop realistic business cases

• Be focused and do not attempt to run several businesses simultaneously.
• Understand that investors and banks are averse to risks in digital health, and be prepared to deal with an unsupportive policy environment.
• Investigate the market and how to grow – who is going to buy the service and how is it aligned to the country's needs. Be aware of national and international regulatory barriers.
• Understand the implementation landscape and realize that investors are more likely to focus on companies that use brick-and-mortar as part of their solutions.

Mobile operators

Pursue partnerships

• Be open to partnering and collaborating with start-ups. Working with them to extend the reach of digital health can be beneficial and profitable for both mobile operators and start-ups.
• Partner with digital health platforms to leverage existing ecosystems, infrastructure and personnel.
• Continue to open APIs and customer bases to innovators.
• Gather feedback on user growth and offer these insights to the start-ups.

Make a long-term, large-scale business case for digital health

• Adopt best practices from mobile operator-led/supported digital health solutions (examples include Tonic in Bangladesh and M-Tiba in Kenya)
• Explore providing preferential rates and decreasing costs per call as volume increases.
• Adopt a three- to five-year view. There is huge potential to grow and reach millions as everyone needs healthcare.
• Leverage relationships with the government on behalf of other stakeholders.

Make digital health services more user friendly

• Simplify payment processes and ensure dependable connectivity
• Nurture local ecosystems, for example, by providing basic health education to customers when they come to distribution centers to recharge their phones.

Extend the reach of digital health services

• Understand that digital health is a channel for attracting new customers. Like identity, civil registration and rural connectivity, digital health is also a way to build a customer base.
• Use CSR to extend reach, for example, by providing more toll-free hotlines, and by showing the government how it will benefit from the CSR resources being committed.
• Share non-confidential data so that all stakeholders can find ways to partner and extend digital health to the BOP.
• Recognize emerging opportunities for collaboration with the government and development partners/NGOs in the areas of disease prevention and health promotion, provided coordination mechanisms with the government are in place.
• Foster well-performing, widespread network coverage to aid long-term recovery, disseminate information and support technology in healthcare infrastructure.

Investors

Understand the investment climate

• Adopt a long-term view and be willing to take more risks. The digital health sector takes at least three to five years to see returns, in terms of both finance and impact.
• Understand the dynamics and regulations of the digital health market.
• Recognize that digital health provides ample opportunity for social impact investors to support millions of people.
• Coordinate investments to avoid a proliferation of similar digital health tools.

Understand the local context

• Understand the implications of local startups having to take unconventional, innovative approaches to improve service delivery.
• Refrain from investing in digital health companies without understanding the local context. What works well in one country may not in another.
• Remember that what works well in an incubator environment may not scale if local conditions have not been fully considered.

Nurture the investment climate

• Be clear with all stakeholders about the conditions for investment, for example, that government must be clear about its policy priorities.
• Capitalize on positive feedback. When end users spread the word that an innovation is working well, find ways to accelerate the spread of that information to open up other monetization channels and encourage return on investment.
• Recognize that certain countries are positioning themselves to be leaders in digital health.

Governments and Ministries of Health

Develop digital health policies and strategies

• Develop health and digital health policy and obtain approval from stakeholders, including the Ministry of ICT.
• Create an enabling environment for digital technologies through new workflows, new policies, and institutional changes and capacity.
• Map out where technology is likely to have the greatest benefit, and ensure there is a policy ecosystem in place to support it, such as legislation that requires patient records to be stored electronically.
• Secure agreement from all stakeholders, including mobile operators, on the digital health architecture, blueprint or roadmap needed to deliver the strategy.
• Help development partners identify where they are in the value chain. This will help start-ups and investors understand what to focus on, and how to contribute (such as opening up their APIs).
• Appoint a high-level digital health officer(s) who may have interim external funding to build capacity for digital health policy and strategy, to support the government and to ensure development partners and NGOs understand what they need to achieve.
• Take a strong technical leadership position and act as a central point for collecting, analyzing and disseminating information for COVID-19 and future disease outbreak.

Laws and regulation

• Draft laws and regulations that address sector-wide information and data governance issues, and address specific sub-sectors of digital health, such as telehealth, online prescriptions and microinsurance (so that small, affordable premiums can be collected electronically). Data platforms, training and innovation are also areas where laws and regulations are needed.
• Establish enforcement mechanisms provided by digitally enabled services, such as inspection and regulation of the quality of care and information management.

Behavior change

• Identify stakeholders' challenges and make arrangements to work with all stakeholders to devise solutions.
• Collaborate and adhere to governmental roles and responsibilities.
• Be more open to collaborating with the private sector and actively promoting digital health innovations and partnerships. Be willing to work with innovators directly and avoid creating bureaucratic processes that delay decisions.

Encouraging investment

• Advise development partners on how they can support and strengthen the government's management capacity.
• Recognize the value of existing data and improve assessment of the impact of digital health, including success stories, which will help to attract investors.
• Encourage more investment in the public health sector to bring them up to private sector levels (which only serve those at the top of the pyramid). Keep in mind that improvements to private sector quality can take 10 to 15 years.

The report also discusses the role of frontier technologies and healthcare: "Frontier technologies are powerful tools with transformative potential to deliver healthcare in developing countries. These technologies, when combined with mobile, have the potential to bridge gaps in health systems and enhance health outcomes."

Moreover, "Artificial intelligence and big data enable complex healthcare data and information to be analyzed and used to predict future care plans, as well as expedite and increase the accuracy of triage, diagnosis, screening and interventions. They can also aid the management of disease spread patterns and optimize the time of health workers."

The report encouragingly adds: "Blockchain has the potential to secure healthcare data systems and enhance the management of EMRs. The nature of healthcare, which has distributed stakeholders, calls for a decentralized management system. Blockchain technology can help make data and patient records more secure, private and transparent, and enable traceability and authentication of medical and pharmaceutical products."

Regarding connected devices, "Internet of Things (IoT) and drones have the potential to increase the number of patients that can be treated. IoT-enabled remote diagnostic capabilities can maximize existing capacity and extend care to isolated areas where hospitals and doctors are scarce. One advanced IoT solution is the use of drones for transporting medical supplies. Drones have the capacity to transport vital medical necessities to underserved and rural areas, resolving access issues or easing the challenges associated with a lack of hospitals and pharmacies. Drones are expected to have a critical impact on the health systems of developing economies."

I concur with the report's assertion that "[d]igital solutions have proven to be excellent tools to address systemic challenges, particularly by enabling communication within and between various parts of the healthcare value chain." Do you agree with the report's recommendations on how to utilize digital health as a health system strengthening tool for 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.

The Makings of a Responsible Business

During a recent trip to Washington, DC, I had the pleasure of serving as a panelist at the Global Social Entrepreneurship Forum hosted by the Carey International Business Career Club at Johns Hopkins University. Moderated by James Calvin, Ph.D., Associate Professor at the Johns Hopkins Carey Business School, my fellow panelists included Drew Durban, Co-Founder of Anza Technologies, Neelima Grover, Founder and Chairman of The QED Group, and Barbara Moller, President and Founder of Paper to Pearls. I enjoyed the conversation with the attendees and my fellow panelists and while several good points were made during the course of the forum, there are a few worth mentioning in this blog.

As a result of the difficult economic climate, many business students are considering starting their own business ventures upon graduation. While it may be obvious to most people, it is important to focus a business on an area where the entrepreneur is passionate and finds motivating. Many people have the misconception that business is not personal. They are grossly incorrect. When you immerse yourself in your venture by working 16 hours a day, seven days a week and sacrifice your time with your friends and family, business IS personal. An entrepreneur will fail if they cannot find the passion and motivation to sustain their energy, efforts, and carry themselves through the tough times (and there will be a lot of rough spots where you question the reasons for starting your venture, finding value in your efforts or managing the stress caused by unforeseen viability and success of the venture).

Since the focus of the forum was on social entrepreneurship (I prefer the term “responsible business”), the panelists were asked about the challenges of doing business in developing nations, some of which have serious corruption problems and lack of governance or physical infrastructure. The panel uniformly replied the importance of a vast knowledge of the local culture and unique nuances. I have conducted business worldwide and I learned early in my career that every country possesses an uniqueness about it. As an entrepreneur, my operational strategy, product or service and value proposition must take the unique cultural nuances into consideration.

The financial bottom line is not always the primary focus of doing business in developing markets; social return on investment (SROI) often takes an essential role in defining the value of a business venture. The Wikipedia definition of SROI “is a principles-based method for measuring extra-financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) relative to resources invested. It can be used by any entity to evaluate impact on stakeholders, identify ways to improve performance, and enhance the performance of investments.” While businesses adhering to responsible practices are mindful of the SROI, they tend to neglect the financial ROI. In other words, businesses, for-profit and nonprofits alike, must establish a revenue model that will produce a steady stream of cash flow to sustain operations and promote business growth.

A key mistake many businesses make is their failure to differentiate themselves from the competition or invest in a comprehensive branding and marketing strategy. I am in the early stages of launching a business venture where there currently exists little competition. However, I have to assume the marketplace will see an influx of competitors and I will need to convince my customer that my service is superior. This cannot be done through innovation alone. It is essential to create brand value and effectively market this brand to current and potential customers alike.

Lastly, it takes a highly motivated and well-organized team for any venture to succeed. From my experiences with for-profit and nonprofit ventures, I learned the importance of having the right people involved who believes in the business mission, supports the objectives, assists in the creation of the product or service, and understands the value proposition. In addition to leading the right team, it is essential to have good mentors and advisors whom an entrepreneur can receive feedback to their ideas or provide objective advice that will help the entrepreneur succeed. Furthermore, in my ventures, not only have I learned to utilize my strengths, it is equally important to realize my weaknesses and find people (mentors, managers or support staff) that will provide a unique value to the business team.

I invite you to contribute your own ideas or share your experiences in the comment section below.

Number of Internet Users to Surpass Two Billion by End of 2010

On October 19, 2010, the eve of World Statistics Day, the Geneva, Switzerland-based International Telecommunication Union (ITU) released a report, The World in 2010: ICT facts and figures, explaining the number of Internet users worldwide doubled in the past five years and will surpass the two billion mark in 2010. There will be an estimated 226 million new Internet users in 2010, with a majority, 126 million, coming from developing countries. China is the largest Internet market in the world with more than 420 million Internet users. 

Where people are accessing the Internet is different when comparing industrialized and developing countries. For example, the number of people with Internet access at their residence increased from to 1.6 billion this year from 1.4 billion in 2009, with 65 percent of these in developed countries and only 13.5 percent in developing countries where access to the Internet in schools, at work and public locations is crucial. By the end of 2010, 71 percent of the population in industrialized nations will be online, compared to 21 percent in developing countries. Regional differences are significant: 65 percent of Europeans are on the Internet compared to only 9.6 percent of Africans.

There is a growing demand for higher-speed broadband connections to access rapidly increasing high-bandwidth content and applications on the Internet. The press release explains that the ITU, the leading United Nations agency for information and communication technology issues, “considers broadband as a catalyst for growth. Recently, ITU and UNESCO launched the Broadband Commission for Digital Development that aims to promote the adoption of broadband-friendly practices and policies worldwide. ITU Secretary-General Hamadoun Touré says, ‘Broadband is the next tipping point, the next truly transformational technology. It can generate jobs, drive growth and productivity, and underpin long-term economic competitiveness. It is also the most powerful tool that we have at our disposal in our race to meet the Millennium Development Goals, the deadline for which is now just five years away.’”

Moreover, according to ITU, “Over the past year, there has been strong growth in fixed broadband subscriptions. By the end of 2010, fixed broadband penetration will reach 8 percent globally. But penetration levels in developing countries remain low: 4.4 subscriptions per 100 people compared to 24.6 in developed countries.”

While high-speed Internet is still out of reach for many people in low-income countries, mobile telephony is becoming ubiquitous, with access to mobile networks now available to over 90 percent of the global population. ITU’s new data indicate that among the estimated 5.3 billion mobile subscriptions by the end of 2010, 3.8 billion will be in the developing world. Furthermore, 940 million of the 5.3 billion subscriptions will be for 3G services.

Access to mobile networks is now available to 90 percent of the world population and 80 percent of the population living in rural areas and people are moving rapidly from 2G to 3G platforms, in both developed and developing countries. In 2010, 143 countries were offering 3G services commercially, compared to 95 in 2007.

The ITU report says mobile cellular growth is slowing worldwide. In developed countries, the mobile market is reaching saturation levels with on average 116 subscriptions per 100 inhabitants at the end of 2010 and a marginal growth of 1.6% from 2009-2010. At the same time, the developing world is increasing its share of mobile subscriptions from 53 percent of total mobile subscriptions at the end of 2005 to 73 percent at the end of 2010. In the developing world, mobile cellular penetration rates will reach 68 percent at the end of 2010 - mainly driven by the Asia and Pacific region. India and China alone are expected to add over 300 million mobile subscriptions in 2010. In the African region, penetration rates will reach an estimated 41 percent at the end of 2010 (compared to 76 percent globally) leaving a significant potential for growth.

Impressions of Obama's Visit to Ghana

Official White House photo
by Chuck Kennedy

Many of my friends and colleagues have asked about my impressions of President Obama's recent visit to Ghana. Specifically, will Mr. Obama's visit increase foreign direct investment (FDI) into Africa? Will highlighting Ghana's successes in democracy and rule of law motivate other nations to expedite policy changes? Mr. Obama's speech to the Ghanaian Parliament on July 11, 2009 focused "on four areas that are critical to the future of Africa and the entire developing world: democracy, opportunity, health, and the peaceful resolution of conflict." I will discuss the first two points in this blog.

Addressing the issue of democracy, Mr. Obama said, "Governments that respect the will of their own people are more prosperous, more stable, and more successful than governments that do not. This is about more than just holding elections. It's also about what happens between elections. Repression can take many forms, and too many nations, even those that have elections, are plagued by problems that condemn their people to poverty. No country is going to create wealth if its leaders exploit the economy to enrich themselves -- or if police -- if police can be bought off by drug traffickers. No business wants to invest in a place where the government skims 20 percent off the top -- or the head of the Port Authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy, that is tyranny, even if occasionally you sprinkle an election in there. And now is the time for that style of governance to end."

Ghanaians created a good example when Mr. Obama said, "Across Africa, we've seen countless examples of people taking control of their destiny, and making change from the bottom up." As I discussed in this blog, Ghana's presidential election, and subsequent run-off election on December 28, 2008, represented Ghanaians' support of the democractic process and self-determination. In John Atta Mills' narrow victory over Nana Akufo-Addo, each candidate and their respective supporters, and all Ghanaians respected the election process that allowed for a peaceful political transition.

Regarding creating economic opportunities, I agree with Mr. Obama, "With better governance...Africa holds the promise of a broader base of prosperity." Africans are very entrepreneurial and there are many investment opportunities in agriculture, banking, information and communications technology (including mobile applications), manufacturing, and renewable energy. Regarding renewable energy, Africa could be a natural research and development center testing the latest innovative solutions to meet the energy demands in developing and industrialized nations alike. "Think about it: Across Africa, there is bountiful wind and solar power; geothermal energy and biofuels. From the Rift Valley to the North African deserts; from the Western coasts to South Africa's crops -- Africa's boundless natural gifts can generate its own power, while exporting profitable, clean energy abroad," said Mr. Obama.

I am unsure if Mr. Obama's visit will have a direct impact on increasing FDI, but his visit exemplifies Ghana's success in building a stable democracy that supports rule of law and creating a business climate that will attract the attention of investors in the coming years.

I also want to mention Julia Wilson's interview on CNBC about investing in Africa (video is posted below). Ms. Wilson is the Founder and Chief Executive Officer of Wilson Global Communications LLC, an integrated marketing communications and strategic public relations consultancy headquartered in Washington, D.C. Ms. Wilson noted there are great risks in investing in Africa, but investors have to perform their due diligence just like they would for any market. Furthermore, according to Ms. Wilson, investors should take a regional approach to investing in Africa. I support this strategy, which is similar to the approach investors often make when investing in Europe or large geographic nations such as India and China. While I agree there are several opportunities, in Ms. Wilson’s words, "to help Africans help themselves," Africans must continue the path to eradicate corruption and promote operational transparency.

Like his recent predecessors, Mr. Obama's trip has highlighted the success and opportunities that exist in Africa. Young people make up a large percentage of Africa's population, which make them significant producers and consumers in a global economy. As Mr. Obama explained, "Africans have shown the capacity and commitment to create their own opportunities. But old habits must also be broken." The time is now for Africa to demonstrate their willingness and ability to participate proactively in a vastly global economy.

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

The Role of the Private Sector in Stabilization: Providing Sustainable Employment in Afghanistan

On June 10, 2009, I attended "Role of the Private Sector in Stabilization: Providing Sustainable Employment in Afghanistan," a conference sponsored by the Afghan American Chamber of Commerce (AACC) in cooperation with the National Defense University-Near East South Asia (NDU-NESA) Center for Strategic Studies in Washington, D.C. I served on a panel titled, "Practices and Ideas for Financing SME Businesses and Economic Growth," which discussed sustainable solutions to Afghanistan's recovery and reconstruction through private sector development. While the focus of the conference was on private sector development, it was clear that any sustainable economic solution will require a collaborative effort of the governments, nongovernmental organizations, private investors, and the local population. Immediate needs include access to capital, capacity building in public sector, public infrastructure development and maintenance, and access to international markets to facilitate exportation of Afghan-made goods.

The one-day conference brought together several speakers representing government agencies, nonprofit organizations, Afghan entrepreneurs, and American investors. Major General Arnold Fields, USMC (ret.) Special Inspector General for Afghanistan Reconstruction (SIGAR), correctly said, "People want to live their lives well" and the people of Afghanistan should be more involved with redevelopment since they provide the best information and resources. Saad Mohseni, Chairman and Chief Executive Officer of Moby Capital Partners, elaborated further by claiming the private sector can do a better job at economic development than the government. He recommends a sector-by-sector approach and noted patience is needed since the government and people will make mistakes.

A repeated message throughout the conference was the need to improve access to capital. Bernie Carreau, Senior Research Fellow at National Defense University's (NDU) Center for Technology and National Security Policy (CTNSP) recommended that the Afghan Diaspora needs to be more engaged in private sector development and increasing foreign direct investment (FDI). Mildred Callear, Chief Operating Officer of the Small Enterprise Assistance Fund (SEAF), a Washington, D.C.-based global investment firm focused on providing growth capital and operational support to businesses in emerging markets and those underserved by traditional sources of capital, discussed SEAF's Afghan Growth Finance fund. Created in 2007, the size of the Afghan Growth Finance fund is USD $25 million and provides investments in the $500,000 to $2 million range. Several small and medium-sized enterprises (SMEs) from a wide array of sectors including agro-processing, construction, media (local language), technology and Internet service providers are benefiting from SEAF. According to Ms. Callear, for every $1 invested generates $12 in the local economy.

Several Afghan entrepreneurs questioned the effectiveness of government-sponsored development projects. Mahmood Karzai, Chief Executive Office of Afghanistan Investment Company and First Vice-Chairman of the Afghanistan Chamber of Commerce & Industries (ACCI), noted that government contractors are compensated whether regardless of the project's success whereas Afghan entrepreneurs draw salaries only when their respective business generates a profit. David Beg of Barakat Group of Companies and president of Metro Pact Corporation, a Virginia-based company whose focus is international trade and government relations management, asserted that government contractors do not invest with their own capital and government funds should be directed to those who are willing to invest in themselves. In the panel, "Countering the Drug Cartels: Boosting the Legitimate Agricultural Economy," several of the speakers pointed out that increasing employment in the formal sector will have a direct effect on reducing the lucrative opium and related narcotic trade.

During the panel discussion on private sector finance strategies, Francis Skrobiszewski, an investment fund advisor and member of the AACC Board of Directors and chair of the AACC Working Group on Private Sector Investment and Access to Capital spoke about the need and opportunity to create a "US-Afghanistan Investment Fund" to finance Afghan private sector development and sustainable jobs supporting peace and stability, including the Afghanistan-Pakistan (Af-Pak) border areas. Mr. Skrobiszewski said, "Using private sector risk-taking and decision-making approaches with appropriate funding and proper mandate to complement traditional governmental initiatives such a Fund could creatively adapt and implement existing mechanisms and models to counter the drug cartels, which utilize their own commercial approaches in agricultural regions.

Philip Mistretta with the U.S. Department of Defense said Afghanistan's banking system has grown rapidly with 17 licensed banks, $2.4 billion in deposits, and $1.0 billion in loans as of January 2009. Furthermore, according to Mr. Mistretta, the Afghanistan Central Bank and Finance Ministry have established a market-oriented legal, policy and regulatory framework, and other non-bank financial institutions, such as donor-supported microfinance institutions, operate throughout Afghanistan. He noted that Afghanistan needs to develop financial markets for foreign exchange, debt instruments, and (eventually) equity securities.

Linton Wells II, Ph.D., Distinguished Research Professor and Transformation Chair at NDU explained information and communications technology (ICT) has not been utilized very well in Afghanistan and having access to ICT determines the winners and losers. There is a need for better collaboration between the Afghan government and private sector, according to Dr. Wells. This blog post, "Cheap and Effective Solutions for Humanitarian Emergencies," provides additional information about about Dr. Wells' work on STAR-TIDES, a research project focused on affordable, sustainable support to stressed populations.

My presentation focused on the need to develop a bottom-up approach to achieve sustainable social and economic development. For example, one of Afghanistan's greatest challenges is information (knowledge) sharing. I explained there are several investment and entrepreneurial opportunities in ICT (mobile solutions, including telemedicine, distance learning, and entrepreneur training), renewable energy to power villages, manufacturing and processing facilities. In addition, while I agree there is an immediate need to increase capital, there is an equally important need to facilitate access to export markets. My presentation further explained the need to create centers for entrepreneur development as a community resource and incubator for SME development. I ran out of time before I had the chance to explain the need to create investment vehicles such as private equity and enterprise funds (e.g., the US-Afghanistan Investment Fund) to support private sector development and SME growth.

An afternoon panel, "Reducing Corruption via Sound Economic Governance," focused on rule of law issues in Afghanistan. Clare Lockhart, co-founder and Director of The Institute for State Effectiveness explained the need to create a legal framework to facilitate business growth and handle legal disputes. Mariam Atash Nawabi, an attorney, television host, and co-founder of the Afghanistan Advocacy Group presented Afghanistan's comprehensive rule of law network through the creation of several administration agencies.

While the conference provided essential information regarding the role, challenges, and opportunities of the private sector in Afghanistan, there remain a few unanswered questions:

1. What are the entrepreneurship opportunities for women?
2. Is success in Afghanistan's private sector for American investors contingent on the U.S. maintaining a military presence?
3. What is the vision of a regional solution to Afghanistan's recovery and reconstruction?
4. How can Afghanistan become competitive in a global economy? What is Afghanistan's competitive advantage?
5. How will Afghanistan build an educated workforce necessary for sustainable economic development?

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.

Protectionism on Foreign Trade Hurts Developing Nations

On May 25, 2009, The New York Times published an editorial, "Trade and Hard Times," which accurately explains the importance of supporting foreign trade and avoiding pitfalls of protectionism. The editorial says, "Today, trade is collapsing, one more casualty of the global financial crisis. That is especially bad news for countries that are dependent on trade for economic growth, including many developing nations that had nothing to do with the financial mess." I completely agree. Foreign trade is important for developing nations in getting access to outside markets for their goods. While many developing nations have a service sector that contributes to their respective gross domestic product (GDP) and provides an income for families, developing nations need access to outside markets in order to have a viable chance to truly realize GDP growth and move in a positive trajectory from developing to industrialized status. (Picture of the vocational student who made the bowl is from one of my trips to Uganda)

The Times editorial correctly explains, "Foreign trade has been a potent force for good over more than half a century. It propelled Japan's emergence from the ashes of World War II and helped it become an industrial powerhouse. It is the cornerstone of development strategies from China to Brazil. It is what links countries all over the world in a network of production that underpins global prosperity." Many industrialized countries that enjoy the benefits of a thriving economy (despite a contrary perception during our global economic recession) would not have grown from a destroyed foundation caused by conflict or natural disaster. In addition to Japan as noted above, Germany, with the financial help of the United States, Canada, and European nations, relied on foreign trade to rebuild socially and economically after World War II.

Moreover, according to the Times, "Exports from the United States declined 30 percent and imports 34 percent in the first quarter of the year from the previous three months. Imports into countries that use the euro from outside the area were down 21 percent compared with the first quarter of last year. At this rate, the World Trade Organization’s dire projection in March that global trade would decline 9 percent this year will soon start to look outright boastful. The drop in trade is spreading economic weakness across the world, as one country’s drop in imports translates into a fall in exports, and production, in another." Here in the United States, protectionism will muddle the situation further by restricting trade and reducing economic growth opportunities. Certainly the Ugandan girl pictured above can sell her goods on the local market to her neighbors and passing tourists, but the real potential lies in helping her gain access to outside markets such as Europe, Canada, and the United States.

The New York Times editorial notes that governments of the 20 biggest economies committed $250 million of trade finance over the next two years: "They should keep those pledges, and they may have to do more." While increasing funding may be necessary in the short-term, long-term solutions in achieving sustainable economic development lies within crafting a comprehensive private sector development strategy that facilitates access to markets through foreign trade. This is true in many developing nations such as Afghanistan, Iraq, and Haïti.

U.S. Government Creates an Online Community for Small Businesses

On March 18, 2009, the United States Small Business Administration (SBA) announced the creation of the Business Gateway Program and "a new Web initiative – http://community.business.gov – the first government-sponsored online community built specifically for small businesses."

The Business.gov Community is a "place where you and fellow business owners can discuss and share the information that you need to start and run a successful business. Every business owner's issues are different: You may need help with a specific problem or you may have valuable insight to share." Registration is free (although the password requirement is a bit cumbersome) and I found the website easy to navigate.

The Community is open to discussions and questions on important issues to business owners. The community is divided into the 3 areas:

1. Discussion Topics in which members ask and answer questions, and discuss business issues;
2. Idea Exchanges in which members give ideas on how to improve and refine the pages on the Business.gov website; and
3. Expert Insight & News which provide articles on timely business topics.

In addition to the Business.gov Community, I am a registered user of the U.S. Department of Interior Office of Insular Affairs (OIA) Island Business Link, which "is an online global network of businesses and organizations interested in growth opportunities in the U.S. affiliated Pacific islands and U.S. Virgin Islands." I joined the Island Business Link because of my interest in the Federated States of Micronesia (please see "The Way Forward: Utilizing Fiber Optic Technology for Sustainable Economic Development"). The purpose of OIA's initiative is to help facilitate business and procurement opportunities.

It is too early to determine the monetization value of joining these online communities, but I find them useful in gaining information to the challenges and opportunities of conducting business in challenging market conditions. These communities serve as an opportunity for entrepreneurs to learn from each other's successes and mistakes. Please feel free to share your experiences with online communities designed specifically for business development.

UN Continues its Support for Afghanistan

United Nations Secretary-General Ban Ki-moon made a surprise visit to Afghanistan today, February 4th (see "On surprise visit, Ban reaffirms UN support for Afghanistan"). During Mr. Ban's meeting with Afghanistan President Hamid Karzai, the Secretary-General reiterated the UN's support for "Afghanistan remains a key priority in 2009. The United Nations Assistance Mission in Afghanistan (UNAMA) will have strong support and strong engagement with increased support from the United Nations General Assembly and general membership." Mr. Ban continued, "[The United Nations] strategy is simple: to implement the plan agreed to by the Afghan Government and 88 donors in Paris in June last year. This plan is clear and what we need is to get on with it to bring tangible changes on the ground while continuing to assess the situation." (Photo courtesy of the UN News Centre)

According to the UN News Centre press release launching the Humanitarian Action Plan for Afghanistan for 2009 in Geneva on February 3rd, "The United Nations and its partners appealed for $604 million to help meet the needs of Afghans made vulnerable by natural disasters, lack of access to basic social services, increasing food insecurity and the worsening security situation. Some $354 million of the appeal will go towards food aid, while almost $100 million will be used to rid the strife-torn nation of landmines, Under-Secretary-General for Humanitarian Affairs John Holmes told reporters...."

I recognize there are significant challenges in Afghanistan, but where does economic development and support of Afghan entrepreneurs fit in the United Nations' strategy? The appeal states, "Extreme poverty--42 per cent of the population live on less than $1 per day--and lack of development increase the suffering of the population during times of crisis and limit their coping strategies." Security is a significant problem, but the definition of "security" should also include economic security.

Afghans have a great entrepreneurial spirit and they recognize their role to be the primary driver in stabilizing the current crises and positioning the country to better compete in a vastly competitive global economy. Afghanistan hosts numerous economic opportunities such as mining (marble, gold, copper, precious and semiprecious stones), agriculture (pomegranates, wheat and beekeeping), and renewable energy (micro-hydro generators, wind, and solar energy). Trade and commerce should have a larger role in Afghanistan's development strategy and I recommend that the United Nations, The World Bank, and nongovernmental organizations increase their efforts in promoting economic development.

Haïti: Using Tourism as a Means for Sustainable Social and Economic Development

As explained in post, Haïti: Pearl of the Caribbean, despite the ongoing problems in Haïti, there are several beautiful destinations for visitors in this unique country. Growing a viable tourism sector could provide Haïti the economic and social tools to resolving many of its development needs. As part of my assessment project, I visited key locations the Haïtian Ministry of Tourism designated for tourism development and was provided with several documents and a presentation that collectively provided details to Haïti's tourism strategy.

The Tourism Ministry's impressive 94-slide presentation provided details of the vision and objectives of the tourism strategy. The presentation included statistical data of the number of tourists who visited Latin America, Central America, and the Caribbean, both as a region and by a few selected countries. According to the statistics provided from the presentation, in 2005, Haïti had 110,000 visitors compared to 3.9 million, 3.7 million, 2.26 million, or 1.5 million in Dominican Republic, Puerto Rico, Cuba, and Jamaica, respectively. Regarding the number of hotel rooms, Dominican Republic (60,000), Puerto Rico (13,500), Cuba (50,000), and Jamaica (22,500) compared to Haïti's 800 rooms available to house its visitors.

Photo of the Port of Jacmel:
Marc Roger

Haïti's tourism strategy is based on three components: history, experience, and the environment, which provide a strong basis for establish an ecotourism industry. Other strengths to the tourism strategy include establishing a partnership between the Haïtian parliament and municipalities; strengthening private enterprises including private-public partnerships; drafting regional and international cooperation agreements; recognizing the need to train tourism professionals and create a national branding and marketing strategy; and developing channels for research funding.

The tourism development plans I reviewed are very comprehensive regarding urban planning and land use issues, but based on my assessment lack a realistic implementation timeline with measured benchmarks and defined clear accountable results. In addition to defining and establishing benchmarks, I recommend establishing a collaborative partnership among the other Haïtian governmental departments and integrate the tourism development strategy into a national strategy to ensure that tourism is balanced with broader economic, social, and environmental objectives at national and local levels. In other words, the tourism development strategy should serve as an anchor to rebuild and strengthen Haïti's education, health care, private sector, capacity building in the public sector, public infrastructure development and maintenance, and protection and restoration of natural resources.

This national strategy should be based on the knowledge of environmental and biodiversity resources and integrated with national and regional sustainable development plans. It should also enhance prospects for economic development and employment while maintaining protection of the environment.

To achieve maximum success, the planning and implementation process should be completely transparent to all stakeholders including government agencies, civil society, private business, and the general population. Moreover, the Haïtian government should encourage the development of partnerships with primary stakeholders and provide stakeholders with ownership shares in projects and a shared responsibility for success.

Photo of Ile à Vaches: Marc Roger

Branding and marketing is essential in promoting tourism in Haïti. The first step is defining a "corporate image" to promote a positive view for Haïti, in particular in terms of safety and security for travel and tourism. In addition, marketing various activities as part of an ecotourism package will provide value for the visitor.

Another hurdle the government will have to overcome is financing the strategic plan. By partnering with international aid agencies, foreign governments, the private sector, and most importantly, the Haïtian Diaspora abroad should engage in financing the implementation of the tourism plan. I recommend creating a foreign equity fund that will allow the Diaspora to collectively contribute and participate in developing and implementing the tourism strategy. Through this fund, the Diaspora will have an opportunity to take an active role in their home country's development while receiving a financial return to their investment.

The Diaspora would contribute up to 70 percent of the fund's assets while the Haïtian government, whether through financial reserves or foreign assistance, contribute the difference. A financial holding corporation would be formed with government officials and representatives from the Diaspora community serving on the board and third-party managers managing the assets.

Photo: Marc Roger

Despite the ongoing crises in Haïti, there are several great places to visit. I am impressed that the Haïtian government has a vision to grow an ecotourism industry and I appreciated the opportunity to assess their strategic plan. With the right tools and tactics, this strategic plan should serve as the centerpiece to a national sustainable development strategy.

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.