Transition economies in the UNECE region can harness e-commerce in their post-Covid recovery, but many barriers remain
During the COVID-19 pandemic, driven by the constraints imposed by social distancing measures and movement restrictions, businesses and consumers in transition economies in the UNECE region (e.g. Central Asia , South Caucasus, Western Balkans and Eastern Europe) – reflecting trends – have moved rapidly to digital channels, adapting to new business models and adopting new consumption habits. According to the World Bank’s “Business Survey, Covid-19: Impact on Business”, 36.6% of businesses in Georgia, 40% in the Republic of Moldova, 24% in North Macedonia and 18% in Albania have started or increased online business activity in response to the pandemic.
The UNECE report published today “Post-pandemic Covid-19 Economic Recovery: Harnessing. E-commerce for UNECE economies in transition” shows that although challenges existed long before, the pandemic has revealed and exacerbated the digital divide within these countries. It also revealed the challenges of harnessing the benefits of e-commerce. Adapting to new trade and business models has been particularly difficult in transition economies, which are struggling with a lack of connectivity, modest degrees of financial inclusion, weak digital financial services such as online payments, a lack of skilled human capital, a significant gender gap, and logistical challenges. ‘supply.
The report, which is part of a broader effort led by the UNCTAD-led e-commerce for all initiative in cooperation with selected United Nations regional commissions, aims to identify policies and initiatives that could support these economies, build their willingness to engage in and benefit from e-commerce as a contributor to post-pandemic recovery.
Despite the many hurdles they face, many transition economies in the region are actively working to develop the fundamental preconditions for advancing digitalization. Central Asian countries, for example, have stepped up their e-government efforts as the pandemic unfolded, creating better access for individuals and businesses. Kazakhstan, Kyrgyzstan and Uzbekistan had started the process of bringing public services online before the pandemic hit. This trend has further intensified during the pandemic, including in areas such as taxation and customs, creating an enabling environment for e-commerce, including reducing costs for business and government. In March-April 2020, for example, the Republic of Moldova adopted measures regarding public digital signatures and Turkmenistan adopted a law on documents, including document flows and electronic services. Central banks in some countries have temporarily allowed companies and banks to reduce or waive transaction costs and fees on digital payments and mobile money transfers. Customs and tax payments in Georgia continued to be made online through the Tax Customs Service platform and were further streamlined by introducing simplified procedures for tax refunds. Several countries have taken steps to address the financing gap faced by SMEs, including exploring digital financing channels, direct lending, guarantee schemes and concessional lending. Armenia, for example, has introduced several measures to help SMEs during the pandemic, including measures relating to concessional financing, grants, preferential loans and grants.
Nevertheless, there remains an urgent need to address the challenges related to connectivity, financial inclusion and digital financial services in order to advance digitalization and transition to a digital economy in the region. Governments can harness the benefits of e-commerce by advancing the adoption and implementation of trade facilitation measures, including those related to paperless trade, pre-arrival processing, expedited shipments and electronic payments. International standards developed by the United Nations Center for Trade Facilitation and Electronic Business (UN/CEFACT) hosted by UNECE are essential for the exchange of trade-related information between parties.
Over the past four decades, UN/CEFACT has developed some 50 recommendations on trade facilitation and hundreds of e-commerce standards, technical specifications and guidance documents on the electronic exchange of trade data. Given the significant data gaps on e-commerce in transition economies, this report provides an excellent overview, highlights key challenges and identifies policies and recommendations that can support countries in the UNECE region and ensure their equitable participation in the economy.