WORLD TRADE  
ORGANIZATION   
WT/COMTD/W/193 
14 February 2013 
 (13-0844) 
Committee on Trade and Development 
 
 
  
 
   
 
ELECTRONIC COMMERCE, DEVELOPMENT  
AND SMALL, MEDIUM-SIZED ENTERPRISES 
 
Background Note by the Secretariat
1 
 
    
 
     
 
    
 
     
                                                      
1 This document has been prepared under the resp onsibility of the WTO Secretariat and is without 
prejudice to the positions of Members and to their rights and obligations under the WTO.   WT/COMTD/W/193 
Page 2  
 
  Table of Contents 
 
I.  INTRODUCTION .................................................................................................................. .. 3 
II.  THE GROWTH OF THE INTERNET .................................................................................. 3  
III. THE DIGITAL DIVIDE:  STILL A REAL ITY? .................................................................. 5  
IV.  THE GROWTH OF E-COMMERCE .................................................................................... 6  
1.  What is e- commerce? ........................................................................................................... ..... 6 
V.  B2B, B2C OR B2G? .............................................................................................................. .... 7 
1.  Business-to-Business (B2B) .................................................................................................... .. 7 
2.  Business-to-Consumer (B2C) ................................................................................................... 8 
3.  Business-to-Government (B2G) ............................................................................................... 8  
VI.  ACCESSING THE WORLDWIDEWEB TH ROUGH MOBILE TELEPHONY .............. 8  
VII. HOW DO POORER COUNTRIES BENE FIT FROM MOBILE TELEPHONY? ......... 10  
1.  What are the prospects of th e global mobile market? ......................................................... 11  
2.  How do poorer countries benefit from mobile telephony?  Agriculture, On-line 
supply and demand information, Fisheries and Labour mobilization ............................... 12  
3.  Agriculture ................................................................................................................... ........... 12  
4.  On-line data and information services .................................................................................. 14  
5.  Market Access ................................................................................................................. ........ 14 
6.  Fisheries ..................................................................................................................... .............. 15  
7.  Labour Mobilization ........................................................................................................... .... 16 
VIII. MOBILE MONEY ..................................................................................................................  18 
1.  Inherent Benefits ............................................................................................................. ........ 19 
IX.  E-COMMERCE AND SMALL, MEDIUM ENTERPRISES ............................................. 21  
X.  POLICY ISSUES - WHAT RESTRICTS SMES FROM MORE FULLY USING 
E-COMMERCE? ................................................................................................................... . 23 
XI.  CONCLUSION .................................................................................................................... ... 29 
ANNEX ......................................................................................................................... ........................ 31  
 
 
         WT/COMTD/W/193 
 Page 3 
 
 
  The number of mobile phones in use worldwide betw een 2000 and 2012 grew from less than 1 to more 
than 6 billion.  The mobile revolution is transform ing livelihoods, helping to create new businesses, 
and changing the way we communicate, work and earn and spend income.  The mobile phone network 
is already "the biggest machine" the world has ever seen, and now that machine is being used to 
deliver development opportunities on a scale never befo re imagined.  During this second decade of 
the new millennium, maximizing the potential of mobile phones is a cha llenge that will engage 
governments, the private sector, and the development community alike.   
Source:   World Bank, Information and Communications for Development 2012:  Maximizing Mobile  
 
I. INTRODUCTION 
1. This background paper was prepared in respon se to a request for a workshop on Electronic 
Commerce, Development and SMEs made at the WTO's Committee for Trade and Development (CTD) in July 2012 (see Annex 1).  Th e paper focuses on the relationship between 
electronic-commerce (e-commerce), development and small and medium-sized enterprises (SMEs) 
and on how some of the latter have used e-commerce to promote, market, service and sell their products nationally and internati onally.  Various types of e-commerce are discussed such as business-
to-business, business-to-consumer and business-to-gove rnment.  And the vast potential of mobile 
commerce is described given the key role it pl ays in developing and least-developed countries 
(LDCs).  This paper by no means pretends to be  an exhaustive study of the subject under discussion 
but does attempt to provide an overview of bot h the opportunities and challenges facing SMEs in 
least-developed and developing countries.   
2. A key focus of the paper is on why some small and medium-sized enterprises have used the 
internet and realized significant increases in their exports and business activities overall, whereas 
others are barely making use of the huge potential offe red by the internet and its various applications.  
Development-related issues are discussed such as how low levels of investment, inadequate 
infrastructure or a lack of appropriate legislation can negatively affect e-commerce or stifle its potential.  The need to overcome infrastructural  bottlenecks in telecommunications, transport, 
electricity grids and logistics are addressed alongs ide policy issues such as consumer protection, 
security of transactions, privacy of records, and inte llectual property.  The paper has a strong focus on 
mobile telephony and mobile-commer ce (m-commerce) in general because of the key role both play 
in many low-income developing countries and becau se of the vast potential such technologies have 
for improving trade and business opportunities. 
II. THE GROWTH OF THE INTERNET 
3. The first decade of the new millennium h as witnessed a profound change and dramatic 
increase in the way business and trade takes place el ectronically.  Each day more users in least- 
developed and developing countries are accessing the internet through terminals.  A growing 
percentage of users are now also  accessing the web through mobile technology.  Predictions call for 
the internet and especially the use of mobile app lications to expand expone ntially in the decades 
ahead.  There is enormous potential for using in formation and communication technologies (ICTs) to 
contribute to the social and economic progress of deve loping countries worldwide.  A key role in this 
regard is played by small and medium-sized businesses. 
4. UNCTAD's recent Information Economy Report 2010 shows how ICT use by micro- and 
small and medium-sized enterprises (SMEs) h as improved not only business performance but has 
helped improve livelihoods in some of the world's poorest regions and communities.  Many 
entrepreneurs in developing countri es now have a real possibility to benefit from ICTs in their 
business activities.  In many cases, this has resulted in  gains in enhanced productivity.  By improving 
communication channels, both domestically and interna tionally, the application of relevant ICTs can WT/COMTD/W/193 
Page 4  
 
  greatly enhance the competitiveness of business.  Gove rnment efforts to further improve, upgrade and 
expand ICT use by the private sector should, therefor e, be reinforced.  UNCTAD's study finds that 
governments and their various partners, including th e private sector, are far from taking full advantage 
of the opportunities that are emerging in the new IC T landscape.  This is evident in part from the 
relatively limited attention that has been given to IC Ts in strategies aimed at promoting private sector 
development (PSD).
2 
5. The rapid technological advances in ICT and th e steady increase in the number of users are 
changing the global economic landscape.  From 1990 to early 2000, the estimated number of internet users grew more than tenfold to roughly 300 million.   This had a direct effect on the way in which 
people communicate and do business.
3  Today, however, these 300 million users represent barely 
two-thirds of the size of the subscribers active on "Facebook" alone.  Today, there are more than five 
times as many internet users as there were in 2000.  Growing from two billion at the start of this 
decade, there were an estimated 2.25 billion users in 2011.  Chart 1 describes the increase in internet 
users over the past ten years. 
Chart 1:  Global numbers of individuals using the internet, 2001-2011 
 
Source:  ITU 
 
6. Of all the internet users in 2011, 1.3 billion were from the Asia-Pacific region, the Middle 
East, Africa or Latin and South America indicating a shift in the regions with the most people on line.
4  However, in spite of this growing trend in in ternet use, developed countries still continue to 
                                                      
2 UNCTAD's Information Economy Report 2010.  
3 Goldstein, Andrea and O'Connor, David. "E-Commerce for Development: Prospects and Policy 
Issues." Organization for Economic Cooperation and Development, September 2000. Available at: http://unpan1.in .org/intradoc/groups /public/documents/apcity/unpan004061.pdf   
4 http://www.pwc.com/gx/en/technology/publi cations/assets/the-new-digital-economy.pdf    WT/COMTD/W/193 
 Page 5 
 
 
  surpass developing countries in terms of number of connections.5  Chart 2 highlights the number of 
individuals using the internet per 100 inhabitants.  While the Africa region has a penetration rate of 
12.4, Europe has the highest penetration rate with 68.4 out of every 100 Europeans having access. 
Chart 2:  Individuals using the internet per 100 inhabitants - 2011 
Source:  ITU 
III. THE DIGITAL DIVIDE:  STILL A REALITY?  
7. The term "digital divide" is commonly used  to explain the gap between individuals, 
households, businesses and geographic areas at di fferent socio-economic levels regarding 
opportunities to access information and communication t echnologies as well as the use of the internet 
for a wide variety of activities.  The "digital di vide" is used to denote differences both among and 
within countries.6  Since 2000, the phrase "digital divide" has come to symbolize the gap in ICT 
capabilities between developed and developing countries.   However, civil society organizations such 
as the World Wide Web Foundation believe that the digital divide is more a symptom of other, more fundamental problems in a given country.  These can in clude an education divide, a health divide and 
a governance divide. It is not always the cause of a lower level of development.
7  Many examples 
have shown that narrowing the "digital divide" can assist in narrowing differences in other areas of 
developmental concern.  The importance of prior itising the development of e-commerce lies in the 
fact that as the pace and scope of the technol ogical revolution increases and expands, so does the 
potential digital divide.  Governments can help to ensure, by a mix of investment incentives, 
competition policy and social policy, that users bene fit not only from being connected to the internet 
                                                      
5 http://www.bbc.com/news/technology-11576486   
6 Understanding the Digital Divide. http://www.oecd.org /internet/internet economy/1888451.pdf   
7 George Sadowsky, ed. "Accelerating Developm ent. Using the Web: Empowering Poor and 
Marginalized Populations." World Wide Web Foundation. WT/COMTD/W/193 
Page 6  
 
  but also from any technological evolutions which can increase the speed of data flows and reduce 
costs. 
8. The internet plays a large role in e-commerce and has continued growing worldwide in terms 
of users and penetration.  Alt hough developed economies still accounted  for the majority of internet 
users in 2006 and are still very much ahead in te rms of internet penetra tion, developing economies 
have been catching up quickly.  The number of u sers in developing countries actually surpassed that 
of developed countries sometime in 2010.
8  Technological progress has indeed been thriving in both 
developing and developed countries a nd this trend is expected to continue as the sector attracts more 
research funds and investment.  
Chart 3:  Individuals using the in ternet by level of development 
38%
62%2011
Developed
Developing
56%44%2006
Developing
Developed
 
Source:  ITU  
 
IV. THE GROWTH OF E-COMMERCE 
9. There is no question that e-commerce has grown ra pidly since the first users started to browse 
the worldwide web in search of goods and services.  Today, sales realized over the internet represent a 
significant proportion of overall commercial sales.  In  1991, the internet had less than three million 
users around the world and its application to e-comme rce was non-existent.  Almost a decade later, by 
1999, an estimated 300 million users accessed the inte rnet and approximately one quarter of them 
made purchases online from electronic commer ce sites, worth approximately US$110 billion.9  This 
year global, business-to-consumer e-commerce sal es are set to pass the US$1.25 trillion mark.10 
1. What is e-commerce? 
10. For purposes of the trade focus of this paper, e-commerce is the sale or purchase of goods or 
services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders.  Even though goods or  services are ordered electronically, the payment 
and the ultimate delivery of the goods or ser vices do not have to be conducted online.  An 
e-commerce transaction can be between enterprises, households, individuals, governments, and other 
public or private organisations.  Included in these electronic transactions are orders made over the 
web, extranet or electronic data interchange.  The type of transaction made is defined by the method 
                                                      
8 ITU.  
9 http://www.oecd.org/eco/economicoutlookanalysisandforecasts/2087433.pdf  
10 http://www.internetretailer.com/2012/06/14/glob al-e-commerce-sales-w ill-top-125-trillion-2013   WT/COMTD/W/193 
 Page 7 
 
 
  of placing the order.  Normally excluded are orde rs made by telephone calls, facsimile or manually 
typed e-mails.11 
11. The United States (US) remains the world's biggest e-commerce market, followed by the 
United Kingdom and Japan.  It is estimated that the growth rates for electronic transactions carried out 
over the net will be approximately ten to 15% in the coming years.  China, however, saw e-commerce 
sales grow by more than 130% in 2011 and it is like ly to be only a short matter of time before it 
becomes the world's single largest e-commerce market.12 
Chart 4:  Mobile-cellular subscriptions by level of development 
 
Source:  ITU 
 
V. B2B, B2C OR B2G? 
12. There are numerous types of commercial transac tions that occur on line, from buying goods 
such as books or clothes to purchasing services such as airline tickets or making hotel or car rental reservations.  Since the main focus of this paper is on how SMEs use the internet, the discussion here 
will concern only a few services which relate closely to SME economic activity.  These include: electronic communications in the area of Business- to-Business (B2B), Business-to-Consumer (B2C), 
Business-to-Government (B2G) and mobile e-commerce.  
1. Business-to-Business (B2B) 
13. B2B is e-commerce between businesses such as between a manufacturer and a wholesaler, or 
between a wholesaler and a retailer.  This is th e exchange of products, services, or information 
between businesses rather than between businesses and consumers.
13  Global B2B transactions 
comprise 90% of all e-commerce.  According to research conducted by the US-based International 
Data Corporation (IDC), it is estimated that global B2B e-commerce, especially among wholesalers 
and distributors, amounted to US$12.4 trillion at th e end of 2012.  If the expansion in e-commerce 
                                                      
11 "http://www.oecd-ilibrary.org/s ites/sti_scoreboard-2011-
en/06/10/index.html;jsessionid=v04de9q27yt1.delta?cont entType=&itemId=/content/chapter/sti_scoreboard-
2011-64-en&containerItemId=/content/serial/20725345&accessItemIds=/content/book/sti_scoreboard-2011-
en&mimeType=text/html " 
12 http://www.internetretailer.com/2012/06/14/glob al-e-commerce-sales-w ill-top-125-trillion-2013   
13 http://searchcio.techtarget.com/definition/B2B   WT/COMTD/W/193 
Page 8  
 
  continues at this rapid pace in developed mark ets as is expected, then B2B and B2C e-commerce 
transactions will account for about 5% of all in ter-company transactions and retail sales by 2017.
14  
2. Business-to-Consumer (B2C) 
14. Although B2C e-commerce receives a lot of attention, B2B transactions far exceed B2C 
transactions.  According to the IDC, global B2C tr ansactions are estimated to reach US$1.2 trillion at 
the end of 2012, ten times less than B2B transac tions.  B2C e-commerce entails businesses selling to 
the general public typically through catalogues that  make use of shopping cart software.  Although 
B2C e-commerce only accounts for only a small shar e of e-commerce as a whole, it continues to 
grow.  B2C e-commerce is highest in Norway, Denmark, Sweden, the United Kingdom and the US 
and covers mainly computer-relate d products, clothing and digitized products.  Despite the low value 
of its transactions, B2C e-commerce has received th e most attention, partly because issues such as 
consumer trust and data prot ection have received considerab le concern from policy makers.15 
3. Business-to-Government (B2G) 
15. Business-to-Government or B2G commerce is generally defined as e-commerce between 
companies and the public sector.  It refers to the us e of the internet for public procurement, licensing 
procedures, and other government -related operations.  In B2G e- commerce, the public sector 
generally assumes the pilot role in establishing e-co mmerce in an effort to make its procurement 
system more efficient.  The size of the B2G e- commerce market as a component of total e-commerce 
is still rather insignificant as government e-pr ocurement systems still remain comparatively 
undeveloped.16 
VI. ACCESSING THE WORLDWIDEWEB THROUGH MOBILE TELEPHONY 
16. The most popular ICT in developing countries and one which is progressing very rapidly in 
Africa and Asia, in particular India, is the m obile phone.  Mobile phones are increasingly playing a 
larger role in the expansion of e-commerce in de veloping countries, especially amongst users without 
terminal connections.  The chart below shows that in  the past ten years, mobile-cellular subscriptions 
in developing countries have increased nearly tenf old.  Not only have they helped to improve how 
businesses are run, they are also helping to cl ose the poverty gap.  Mobile phones are making it 
possible for rural farmers to engage in mob ile money services, allowing them to open saving 
accounts, earn interest on their deposits and acces s a variety of credit and insurance products.17 
17. Mobile e-commerce is exactly the same as e-co mmerce except that the access mechanism is 
via a wireless phone or terminal.  In recent year s many developing countries have seen a surge in 
mobile commerce.  Internet penetration across A frica, for example, remains low and computers are 
often too expensive to purchase.  However, there are currently 695 million mobile phone subscribers 
in Africa.  This has given Africans a simple and pervasive means of sharing information and 
conducting business, even in spite of the fact that  online business transactions can be logistically 
complicated to execute.18 
                                                      
14 OECD Economic Outlook 67 and International Data Corporation (IDC). IDC  is the premier global 
provider of market intelligence, advisory services, and events for the information technology, 
telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. 
15 UNCTAD IER 2004 
16 E-commerce and E-Business, Zora yda Ruth Andam, UNDP-APDIP 
17 http://www.bbc.co.uk/news/10156667  
18 UNCTAD IER 2002.  WT/COMTD/W/193 
 Page 9 
 
 
  Chart 5:  Mobile-cellular subscrip tions per 100 inhabitants, 2001-2011 
020406080100120140
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Per 100 inhabitantsDeveloped
World
Developing
The developed/developing  country classifications  are based on the UN M49, see:
http://www.itu.int/ITU ‐D/ict/definitions/regions/index.html
Source: ITU  World Telecommunication  /ICT Indicators  database
 
Source:  ITU 
 
18. In many developing countries mobile phones are still mostly used for voice communication 
and texting.  Recently, however, they are increasi ngly being used for data applications such as 
m-commerce and m-banking.  In a number of African countries, notably Kenya, South Africa, 
Tanzania and Zambia, mobile telephones are bei ng used to do personal banking services.  And 
entrepreneurs are using calling and texting services to acquire locally relevant information and 
services.  In the near future, inte rnet-enabled phones may help to deliver the same services but more 
efficiently.  Microenterprises and SMEs, many of which are in the informal sector in developing countries, appear to be the most positively affect ed by the adoption of mobile telephony.  In the 
agriculture and fisheries sectors in Asia and Afri ca, for example, mobile phones are now frequently 
used to conduct sales and purchases, to establish de livery times and destinations and to negotiate 
prices.  While these are classic transactions normally carried out over personal computers, they are being done on location using mobile technology.  Fo r fishermen, mobile phones are regularly used to 
check weather reports and to receive early warnin g announcements of severe weather conditions on 
land or at sea.
19 
19. This fast growth of mobile e-commerce stems from the cost advantage of mobile 
infrastructure over fixed-line installation.  Mobile  network consumers can simply buy a prepaid card 
and a handset at an affordable price (usually subs idized by the operator) and start using their mobile 
phone as soon as the first base stations are in place.20  In recent years, a few innovative African 
companies have found ways to harness the potential of mobile commerce and information sharing, 
                                                      
19 UNCTAD IER 2009. 
20 UNCTAD IER 2002. WT/COMTD/W/193 
Page 10  
 
  changing the way in which Africans communicate.  Th is development has taken place in spite of the 
fact that online business transactions can still be logistically complicated to execute.
21 
20. Mobile web adoption is growing at a faster rate  today than the internet did in the 1990s and 
early 2000s.  Emerging markets like India, China, Tu rkey and Brazil have seen  an exponential growth 
in mobile web use with figures that have surpassed ma ture markets.  Mobile 3G subscriptions in the 
US grew by 26% in 2011 whereas Brazil, Turkey, China and India saw growth of 79%, 104%, 172% 
and 1,050% respectively.22 
Table 1:  Evolution of Mobile-cellular subscriptions per region 
Mobile-cellular 
subscriptions (millions) (per 100 people) 
  2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 
Developed 992 1,127 1,243 1,325 1,384 1,413 1,514 82.1 92.9 102 108.3 112.6 114.5 122.3 
Developing 1,215 1,619 2,126 2,706 3,263 3,898 4,457 22.9 30.2 39.1 49.1 58.4 68.9 77.8 
World 2,207 2,747 3,369 4,031 4,647 5,311 5,972 33.9 41.7 50.6 59.9 68.2 77.1 85.7 
Africa 87 129 174 246 297 363 434 12.4 17.9 23.5 32.4 38.2 45.6 53.1 
Arab States 85 126 175 214 265 310 350 27.1 39.3 53 63.4 76.6 87.8 96.9 
Asia and Pacific 834 1,074 1,398 1,773 2,166 2,625 3,009 22.6 28.8 37.1 46.6 56.3 67.6 76.7 
CIS 166 227 267 312 356 377 408 59.7 81.8 96.1 112.2 127.7 135.1 146 
Europe 550 610 677 714 718 726 747 91.6 101.1 111.6 117.1 117.1 117.9 120.8 
The Americas 459 552 649 741 814 876 989 52.1 62 72.1 81.5 88.5 94.3 105.4 
Source:  ITU - Updated on June 2012 
VII. HOW DO POORER COUNTRIES BENEFIT FROM MOBILE TELEPHONY?  
21. Mobile telephony has transformed life for many consumers in developing countries.  Mobile 
phones help improve the livelihood of the poor thro ugh better communications and greater access to 
information.  Many poor farmers are now able to receive better prices for their crops because they 
have access to information on market prices, primar ily via mobile phones.  TradeNet, a Ghana-based 
trading platform, is one such example, allowing farmers to access prices and offers from traders by 
mobile phone.  
22. Mobile phones have also spawned a wealth of micro-enterprises, offering work to people with 
little education and few resources, such as selling airtim e and repairing or refurb ishing handsets.  In 
Bangladesh, for example, with micro-credit from the Grameen Bank, over 100,000 Bangladeshi 
women have set up mobile phone exchanges in villa ges where there are few if any landlines and are 
now earning their living as "Grameen phone ladies".  Such village phone schemes have subsequently 
spread from Bangladesh to Uganda and Rwanda and to many other poor communities in LDCs.  
23. Mobile phones have helped consumers to bridge  the digital divide between regions in many 
developing countries.  This is thanks to wireless technologies that enable the consumer to use mobile 
phones for communications and internet access without the need of a PC and cable connection.  China 
and India are the two largest mobile phone markets amongst developing countries, and indeed in the 
world.  However, similar to other developing c ountries, the mobile phone penetration rates in China 
and India remain relatively low, at 62.8% of the population and 51.6% respectively in 2010, leaving a 
significant potential for growth.  
                                                      
21 See http://news.rusbiz.com/newslist/290954.html   
22 http://www.mobify.com/about/   WT/COMTD/W/193 
 Page 11 
 
 
  24. According to a 2010 International Teleco mmunications Union report on mobile phone 
penetration in developing countries, mobile cellular penetration in Africa stood at 45.2%.  In Central 
and South America, it had grown to 94.5%.  Meanwhile, across Asia and the Pacific in 2010, mobile cellular penetration stood at 69.2%, which was highe r than mobile cellular penetration in Europe 
eight years earlier at 67%.  In comparison, mob ile phone use in Europe had grown to 117.7% by 
2010. 
25. The same report noted that internet user penetr ation in Africa grew over 20-fold in the decade 
to 2010, from 0.5 % to 10.8%, and that this gave A frica higher internet user penetration in 2010, than 
in the Commonwealth of Independent States (CIS) five years earlier.  It noted that, in CIS, internet 
penetration grew from 10.2% in 2005 to 34% in 2010.  
26. According to the report, LDCs forged ahead in mobile but still need to come on line.  The 
ITU noted that in 2010, 833 million people were livi ng in the 49 LDCs.  In spite of these being the 
world's poorest countries, mobile phone services acro ss the LDCs grew steadily throughout the first 
decade of the new millennium.  It added that, in  2010, almost two thirds of people in LDCs, had 
mobile cellular coverage, with penetration reachi ng 34% up from just 5% only five years earlier, and 
close to the global figure for 2005.  In just two of  the 49 LDCs was mobile penetration still below 5% 
in 2010.
23 
Village Phones:  
The concept of Village Phone is an idea which ca ught people's imagination.  Grameen Bank members 
have entered the age of information technolog y by leasing and purchasing cellular phones.  The 
mobile phones not only create a new business opportuni ty for the poor, but also bring access to 
information, market, health and other services to the remote rural areas of Bangladesh.  This was a 
major innovation:  placing modern cell phones in the hand of the woman from poorest households in 
remote villages, something that no telecom operator had dared to do in the past.  With Grameen Bank 
financing a Grameen Bank borrower buys a mobile  phone to become the Telephone Lady of the 
village.  She provides the telecommunication services to the village while earning profits for herself.  
By the end of 2007, there were more than two hundred ninety-five thousand village phone ladies. 
Source:  http://www.Grameen-info.org  
27. Some governments are tackling the problem of low mobile phone penetration through specific 
actions to encourage investment and development.   In Chile for example, the government allotted 
spectrum in multiple bands for mobile broadband in  underserved rural areas.  Chile offered subsidies 
through a reverse auction (resulting in a governme nt subsidy of more than US$100 million) to 
develop mobile broadband in around 1,500 municipalities in rural areas, where no broadband service 
was available.  Extending coverage to these areas could mean that 90% of Chile's population would 
have broadband coverage.  Minimum service conditions for broa dband access and a ceiling on prices 
was established.  The winner of the auction, Entel Mo vil, started deploying mobile broadband in these 
areas in September 2010.  The rapid expansion of  mobile broadband services in the country, has 
permitted Entel Movil to achieve the largest share of mobile broadband conn ections in the country, 
surpassing its other two main competitors.24 
1. What are the prospects of the global mobile market? 
28. Developing countries – particularly major em erging economies – will continue to drive 
growth of the global mobile phone market.  This is due to their large population, low penetration rates 
                                                      
23 "http://www.i-policy.org/ 2011/09/mobile-penetration-leaps-as -internet-access-still-wobbles-in-97-
economies-.htm "  
24 World Bank, Information and Communications for Development 2012. WT/COMTD/W/193 
Page 12  
 
  and rising disposable incomes, although the true  growth potential depends also on government 
policies to help liberalise the market and enha nce competition among network providers.  During 
2011-2020, the number of mobile subscr iptions in Africa and the Middle East is forecast to grow at an 
average rate of 5.6% per year, compared to the global average of 3.7%.  However, the expected 
growth in Africa and the Middle East is from a relati vely low base:  in 2010, the mobile penetration 
rate in Africa stood at 56.5% of the population.  
29. The Asia-Pacific region will continue to be the largest regional mobile phone market, with 
3.9 billion subscriptions in 2020 (up from 2.4 billion in  2010).  China will continue to be home to the 
world's largest number of mobile phone subscriptio ns, with 1.3 billion subscribers in 2020 (up from 
839 million in 2010).  However, India – currently the world's second largest mobile phone market – 
will have significant growth potential not only in the Asia-Pacific region but globally, with the 
number of mobile phone subscriptions forecast to grow at an average annual rate of 5.7% during 
2011-2020, to reach 1.1 billion in 2020.  From a luxury product used primarily in developed 
countries, mobile telephony has become universally ava ilable.  It is now an integral part of life for 
many. 
30. Meanwhile, in the developed world, the co mmercial deployment of next-generation 
technologies and devices will increase usage of advanced  mobile services, which in turn will open up 
many new, e-commerce business opportunities and especially in developing countries.
25 Meanwhile 
more data applications are now regularly being used in developing countries to conduct business 
(m-commerce), engage in retail or commercial banking activities (m-banking) and to find work 
(m-labour).  
Low cost international capacity  is probably one of the key 'tipping points' for improved internet 
access in developing countries and disadvantaged co mmunities.  In Kenya, for example, fixed and 
mobile broadband services exploded following the a rrival of plentiful and cheap international 
bandwidth from competing submarine cables. In ternational capacity in Kenya between 2002 and 
mid-2011 showed massive growth after submarine cabl es began to arrive in the country in mid-2009.  
 
Source: World Wide Web Foundation 2011 
 
2. How do poorer countries benefit from mobile  telephony?  Agriculture, On-line supply 
and demand information, Fisheries and Labour mobilization 
31. Mobile technology can be utilized by sma ll and medium-sized businesses operating in the 
agricultural and fisheries sectors.  It also h as uses for labour and transport mobilization, for 
micro-credit services and for mobile money.  This  section provides an overview as to how mobile 
technology is being used by SME business operators in  various sectors in developing countries.  Some 
examples are provided. 
3. Agriculture 
32. Greater productivity can help boost farmers' income, especially for small-scale farmers and 
fishermen, who have limited resources to grow and market their produce.  Creating a more efficient value chain at local or national levels also requires engaging many st akeholders, from farmers 
growing crops and raising cattle to suppliers and distributors.  The pot ential benefits of using mobile 
phones to connect these diverse stakeholders along th e agricultural value chain are numerous.  For 
rural populations, many of which are geographically  dispersed and isolated from commercial activity, 
the information and communication capabilities offered by the mobile phone are invaluable.  Of the 
6 billion phones in use today, some  70% are accessible to the world’ s poor and whose main source of 
                                                      
25 http://blog.euromonitor.com/2011/05/qa-the-importance-and-prospects-of-mobile-telephony.html   WT/COMTD/W/193 
 Page 13 
 
 
  income and employment comes from the agricultura l sector.  Mobile phones and other mobile devices 
have begun to change the way stak eholders in the agricultural sector make decisions regarding inputs, 
production, marketing, processing and distribution, all decisions that can potentially lead to greater 
efficiencies, reduced transac tion costs and increased incomes.26 
As has already been discussed, access to market information servi ces can significantly increase a 
poor farmer's revenue and help bring the farmer over the poverty threshold. Manobi Development 
Foundation in Dakar, Senegal, for example, is an organisation that has done substantial work with 
and for SMEs. Its experience has shown that a po or developing country farmer who is marginally 
literate or who has never even had a mobile phone can easily and quickly circumvent both the 
education and the technology divide. 
 
33. Farmers in developing countries are increasingl y utilizing mobile technology to increase their 
commercial potential.  According to a World Bank study released in 2012, the benefits for farmers 
who use mobile phones includes access to agricultura l information concerning stock piles and prices, 
data visibility for value chain efficiency and be ing able to tap into new and existing markets.27  When 
farmers have access to information about prices an d stocks, it helps them to reduce the risk of 
under-selling and of either over or under-supplying th eir crops in a given market.  The World Bank 
study shows that access to price information by fa rmers has helped to increase farming income by 
24%.  Sellers realized even greater gains of up to  57% with overall price reductions for consumers of 
around 4%.  Information transmitted by mobile phone al so includes access to early warning systems 
to mitigate the risk of losses due to extreme w eather conditions or to the spread of disease.  
Lack of traceability during the growing and procurement process  is a major constraint for 
producers growing for high-value export markets, such  as specialty coffee.  For the cooperatives and 
companies that manage the exports, emerging mobi le technology—smartphones and tablets—can play 
a major role in capturing, tracking, and accessi ng valuable information from growing practices to 
crop quality.  Sustainable Harvest is a coffee im porter that works with 200,000 farmers in Latin 
America and East Africa.  Extending its relationship- based procurement model to the digital platform, 
the organization and its farmer training offices hav e introduced a new coffee traceability program 
called the Relationship Information Tracking System , or RITS, to help coffee growers become more 
efficient, reliable, and quality-focused through a ne w mobile or tablet-based information tracking 
system. RITS provides farmer cooperatives with the ability  to trace each step of the value chain using 
a cloud-based application.  The application also tracks the certification status of each delivery, 
processes farmer payment, and generates reports on  farmer productivity, payments, and samples.  
Roaster clients can access videos, photos, qual ity, and lot information from their supplier 
cooperatives.  The application has been designed fo r Apple's iPad and iPhone, but it can be used in 
any smartphone through the web browser.  Devices with large touchscreens a llow for easier input of 
a large variety of information.  The application c an record information offline, and then upload to the 
online database when connectivity is restored.  In 2011 Sustainable Harvest also launched RITS Ed, 
an iPad app that delivers agricultural training videos on organic coff ee production and quality 
control that co-op managers can use to assist their members. 
 
Sources: 
"http://siteresources.worldbank.org/EXTINFORMAT IONANDCOMMUNICATIONANDTECHNOLOGIES/Reso
urces/IC4D-2012-Report.pdf " 
 
                                                      
26 Halewood, Naomi J. and Surya, Priya, Mobilizing the Agricultural Value Chain, 
"http://siteresources.worldbank.org/EXTINFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/R
esources/IC4D-2012-Chapter-2.pdf " 
27 World Bank 2012 Information and communications for developing countries; Maximizing Mobile", 
2012.  WT/COMTD/W/193 
Page 14  
 
  34. Another benefit concerns sharing informati on and contacts over the mobile phone and setting 
up regional or national farmer orga nizations and even cooperatives.  This helps to give farmers a 
collective voice and more visibility in agricultura l value chains.  Farmers or their respective 
cooperatives can establish links to large-scale s uppliers and distributors, thereby obtaining key 
information on what and when to deliver.  Throu gh mobile phones, small-scale farmers are therefore 
able to leverage economies of scale by join ing forces, pooling resources and increasing their 
bargaining power. 
4. On-line data and information services 
35. Mobile services can also enable better access to markets and other value-chain stakeholders.  
Sellers are increasingly using their websites to rela y on-line information on transport and logistics, 
with some of these services being provided on mobile phones.  For example, through the use of voice 
and short message service (SMS) in Morocco, farmer s coordinate with local truckers to improve 
product transport and to identify where the best locati ons are for them to deliver their products.  Some 
farmers also make use of two-way trade by bringi ng products back from larger, regional markets to 
sell in their own rural communities.  
36. Product traceability has become increasingly re levant to those developing countries which 
want to gain or expand into new export markets.   The use of ICT has led to improved consumer 
protection and food safety on the one  hand and better livelihood outcom es for farmers on the other.  
Radio frequency identification (RFID) chips are al so used to trace animal movement, enabling the 
monitoring of animals from cradle to grave.  The use of the system in Namibia to replace traditional 
paper-based recording has increased the accuracy of the data and the speed in which it is 
disseminated, leading to higher monetary returns on livestock. 
37. RFID has also been used for th e prevention of animal poaching. Governments are now able to 
trace elephant and rhino herds and can take st eps to mitigate illegal poaching activities.  Such 
approaches are increasingly showing positive results in Africa and are contributing to sustainable 
development and to continued prospects for tourism.
28 
5. Market Access 
38. Mobile phones, although owned and used by indi viduals, can nevertheless have an important 
impact in linking markets and key stages of the value chain.  A recent study of farmers conducted in Bangladesh, China, India, and Viet Nam found that 80% of farmers in these countries owned a mobile 
phone and used them to connect with agents and traders in business-to-business transactions to 
estimate market demand and selling prices.  The st udy found that more th an 50% of these farmers 
would make arrangements for sale over the phone.
29  Another study found that as remote communities 
in Uganda were provided with access to a mobile ne twork, the share of banana s sold rose from 50 to 
69% of the crop.30 
                                                      
28 http://news.mongabay.com/2012/0808-hance-ivory-forensics.html  
29 Minten B., T. Reardon, and K. Chen. n.d. “The  Quiet Revolution of‘Traditional’ Agricultural Value 
Chains in Asia Evidence from Staple Food Value to Fo ur Mega-cities.” Unpublished draft, International Food 
Policy Research Institute, Washington, DC. 
30 Muto, M., and T. Yamano. 2009. "The Impact of Mobile Phone Coverage Expansion on Market 
Participation: Panel Data Evidence from Uganda." World Development 37 (12): 1887–96.  
http://www.sciencedirect.com/sci ence/article/pii/S0305750X09000965  
  WT/COMTD/W/193 
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  "In June 2011, a grain trader arrived at my gate  offering me 30 kwacha per kilo for my peanuts," 
Sara Maunda said.  "My SMS from Esoko told me that the price was more than four times the trader's 
price.  When I showed him, he said, 'These people are lying to you—you will go very far and find that 
you have lost money.'"  Maunda trusted both her instincts and the text messages.  She and four 
neighbors rented a pick-up truck in Madisi, the nearest town, and headed south to Lilongwe, 
80 kilometers away, to sell their groundnut crop th emselves.  She said "the market price there was 
five times the vendor's offer. My share of the sal e cleared 24,000 kwacha ($130) after all expenses.  If 
I had sold to the vendor at my village I would have made only 4,500 kwacha ($27)." 
Source:  USAID Frontlines July/August 2012 
 
39. As mobile service and applications providers  in agriculture become more knowledgeable 
about the needs of the farmers as well as thei r behaviour, they are developing increasingly 
sophisticated applications.  In 2000, the Indian  Tobacco Company (ITC), a large conglomerate in 
India, broke new ground by establis hing e-Choupal—kiosks with com puters—in rural villages, where 
farmers are able to access information about prices, planting times and methods and weather 
conditions.  Since then the compan y has been working to provide its services over mobile phones and 
has piloted a new virtual commodity exchange, Trad ersnet.  The latter enabl es the direct purchase and 
sale of coffee, for example, by producers and wholesale purchasers over an internet-based trading 
platform.  SMS messages are sent to users' mobile phones every morning with the offers available for 
purchase that day.  At the end of the day, users receive another message with details as to what 
actually transpired.31 
40. The company Esoko in Ghana was established by Tr adeNet to serve as a central repository for 
price information to be run by a centralized agen cy such as the government.  The company is now a 
mobile and web-enabled repository of current mark et prices and a platform to enable buyers and 
sellers to make offers and connect to one another.  Esoko has been able to offer differentiated services 
to a diverse customer base and, in a recent study of farmers with small land holdings in northern 
Ghana, it found that farmers had seen a 10% increa se in revenue since they began receiving Esoko 
delivered market prices by SMS.32 
6. Fisheries 
41. New ICT products are also being used across th e fisheries sector, from resource assessment, 
capture or culture to processing and commercializati on.  Some are specialist applications such as 
sonar devices for locating or tracking fish.  Othe rs are general purpose applications such as Global 
Positioning Systems (GPS) used for navigation and location finding. Mobile phones are mainly used 
for trading, information exchange and emergency c ontact within fishing communities.  They are also 
being used to relay web-based information and netw orking resources.  A wide range of technologies 
can be adapted and introduced in all but the mo st remote communities and, once appropriated by 
users, can have positive impacts on their lives.  In a study on the fisheries sector it was concluded that 
"mobile phones reduced price dispersion and waste and increased fishermen' s profits and consumer 
welfare."33 
42. Like for agriculture, fishermen and merchants buying and selling fish communicate through 
voice calls, via SMS messages or by accessing specialist Wireless Application Protocol (WAP) services.  The WAP is a technical standard for accessi ng information over a mobile wireless network.  
                                                      
31 Naomi Halewood and Priya Surya, Mobilizing the Agricultural Value Chain, World Bank 2012 
Information and Communications for Development. 
32 Halewood and Surya, Mobilizing the Agricultural Value Chain, World Bank 2012, Information and 
Communications for Development. 
33 Robert Jensen, "The Digital Provide: Informati on (Technology), Market Pe rformance, and Welfare 
in the South Indian Fisheries Sector", The Quarterly Journal of Economics (2007) 122(3): 879-924, p. 919.  WT/COMTD/W/193 
Page 16  
 
  The WAP browser technology was created for older mob ile devices.  It allows  users to access adapted 
web information and other data even if they do not have newer generation "smart" phones.  New 
generation phones and higher bandwid th access are supplanting WAP in  most developed countries.  
However, the need for low-cost mobile services and low penetration of newer phones has thus far kept 
WAP alive in many developing countries. 
CASE STORY: MANOBI Senegal 
In 2003, in collaboration with Sonatel (the Sene galese phone operator), Alcatel, IDRC and InfoDev, 
the Senegalese telecommunications company Manobi began to provide fishermen with real time 
weather reports and market prices using WAP and SMS technology via mobile phones.  The 
interactive technology enabled fishermen to input fi sh stock information for marketing as well as 
departures and estimated times of return so that local  fishing unions could be alerted in emergencies.  
The project successfully persuaded Sonatel to instal l a phone base station near the beach, ensuring 
network coverage up to 14km from the shore.  In  2005, Manobi launched a Geographic Information 
System (GIS), using GPS and GSM technologies to increase protection at sea for fishermen and their 
boats, in partnership with insurance companies.  It  provides precise real-time localization up to 45 km 
offshore.  Fishermen pay an insurance premium b ased on time spent at sea, with their mobile phones 
acting as security for both them  and the insurance company. 34   
 
43. Before the introduction of WAP, mobile servi ce providers had limited opportunities to offer 
interactive data services.  They n eeded interactivity to support internet and such web applications as 
email by mobile phone, tracking of stock-market pri ces, sports results and news headlines.  By using 
WAP browsers, fishermen can actually sell their catch while still out at sea with buyers and 
processors knowing the details of the day's catch  well before the boat returns to port. 
7. Labour Mobilization 
44. Labour pools in many developing economies are comprised predominantly of low to 
semi-skilled workers.  While high-skilled workers regular ly use the internet to look for jobs, there is a 
lack of a centralized platform for job information for the semi-skilled.  Since many cannot afford to 
regularly buy newspapers or visit cyber cafes to look for jobs, they have to rely on word of mouth.  
On the other hand, those who are providing jobs, ar e inundated with thousands of applications from 
jobseekers whose qualifications are not suitable fo r the positions in question.  Since recruiting 
procedures cost companies a lot of time and consid erable resources, mobile technology is seen as a 
way to mobilize labour markets.  In India, for ex ample, the company Babajob was inspired by the 
concept that most people improved their livelihoods  through finding better paying jobs.  However, 
many of the ways used to finding such better paying  jobs used platforms which catered mainly to the 
professional community and not to those with few job skills.  Babajob's platform, however, allows 
workers in India to find jobs in their respective fields.35  Whilst Babajob uses SMS for user 
registration and information collection and distributio n, new platforms using other protocols are being 
established in other developing countries.  On e of these is m-Kazi in Kenya which relies on 
Unstructured Supplementary Service Data (USSD) , a protocol used by GSM cellular telephones to 
communicate with the service provider's computers.36 
 
                                                      
34 New Directions in Fisheries, ICTs benefit Fishing Communities, FAO, 2007. 
35 http://mobileactive.org/case-studies/babajob-bringing-jobs-bottom-pyramid  
36 http://en.wikipedia.org/wiki/GSM   WT/COMTD/W/193 
 Page 17 
 
 
  What is GSM?  The Global System for Mobile Communica tions (GSM) standard was developed as a 
replacement for first generation (1G) analog cellula r networks, and originally described a digital, 
circuit switched network optimized for full dupl ex voice telephony. From its inception, GSM had 
basic text and data capabilities not possible on an alogue phones and systems. This was expanded over 
time to include data communications, first by circuit switched transport, then packet data transport via 
GPRS (General Packet Radio Services) and EDGE  (Enhanced Data rates for GSM Evolution or 
EGPRS).  Further improvements were made when  the 3GPP developed third generation (3G) 
universal mobile telecommunications system standa rds followed by fourth generation (4G) and more 
recently, so called LTE or Long Term Evolution advanced standards. 
 
45. USSD can be used for WAP browsing, prepaid callback service, mobile-money services, 
location-based content services, menu-based inform ation services, and as part of configuring the 
phone on the network. 
46. USSD messages are up to 182 alphanumeric characters in length. Unlike SMS, USSD 
messages create a real-time connection during a USSD session.  The connection remains open, 
allowing a two-way exchange of a sequence of da ta.  This makes USSD more responsive than 
services that only use SMS.  USSD is a menu system  that allows m-Kazi, for example, to capture 
jobseeker qualifications, location, and personal info rmation in order to more effectively match the 
right employers to the potential employee (see text box).  
CASE STORY: M-KAZI, Kenya 
 
m-KAZI is the first platform that serves the semi-s killed labour market in Sub-Saharan Africa.  Its 
mobile recruitment tool efficiently connects jobseekers and employers.  It allows jobseekers to 
register their qualifications using the most basic mobile phones and receive SMS alerts for jobs they 
qualify for.  Employers can in turn target candidates on the m-KAZI database who meet their 
requirements.  While the vast majority of Kenyans lack consistent access to the internet, over 65% of 
the population owns a mobile phone.  The m-KAZI ser vice can be used by anyone with access to a 
basic mobile phone and allows those with limited access to information to receive job opportunities 
anytime and anywhere.  The use of mobile tec hnology for recruitment results in more qualified 
candidates and ultimately higher quality employees, helping companies become more efficient. 
 
m-Kazi services are accessible across the two major networks that hold 95% of the mobile market 
share in Kenya;  Safaricom and Airtel. 
 
m-KAZI's client base cuts acro ss multinational companies, SM Es, NGOs and governmental or 
intergovernmental agencies.  Due to the high turnov er rate of semi-skilled labour, employers find this 
platform useful for rapid recruitment.  SMEs, especi ally the ones who cannot afford to use other tools 
for job vacancy advertisement (i.e. newspaper) and/or  do not have time and resources to sort through 
thousands of CVs benefit the most.  m-KAZI curre ntly has over 4000 subscribers and anticipated a 
very large media campaign and influx of registrants in November 2012.  
 
47. M-Kazi is already a success in Kenya and it plan s to increase its portfolio across Sub-Saharan 
Africa.  Similar platforms are slowly emerging.  The ability for such services to efficiently mobilize 
the labour market, create employment and increase efficiency while reducing costs for SMEs is now gaining momentum.  Expectations are that such  services will continue to grow in developing 
countries. WT/COMTD/W/193 
Page 18  
 
  VIII.  MOBILE MONEY 
48. Mobile money services are increasing in popularity.  They have helped to improve how 
businesses operate and now they are also contributing to  helping to close the poverty gap.  One of the 
major barriers to poverty reduction is access to form al financial systems for the poor.  The use of 
informal instruments means that th e poor are limited in their ability to save, borrow, repay debt and 
manage risk responsibly.  Mobile money services in developing countries are gaining in prominence 
mainly due to their effective way of conducti ng payments and providing access to finance, 
particularly in areas where access to physical bank  branches or even ATM machines is minimal.  
They are helping to increase productivity and effici ency while at the same time reducing transaction 
costs. 
49. Mobile financial services comprise mobile finan ce (including credit, insurance and savings), 
mobile banking (including transactional and inform ational) and mobile payments (including 
person-to-person, government-to- person and business-to-business).  
What is a Communications Protocol?   A communications protocol is a system of digital message 
formats and rules for exchanging those messages in or between computing systems and in 
telecommunications.  A protocol may have a formal  description.  Protocols may include signalling, 
authentication and error detection and correction capabilities.  A protocol definition defines the 
syntax, semantics, and synchronization of communication; the specified behaviour is typically 
independent of how it is to  be implemented.  A protocol can th erefore be implemented as hardware or 
software or both. Communications protocols have to  be agreed upon by the parties involved.  To 
reach agreement a protocol may be developed into  a technical standard. Communicating systems use 
well-defined formats for exchanging messages.  Ea ch message has an exact meaning intended to 
provoke a defined response of the receiver.  A protoc ol therefore describes the syntax, semantics, and 
synchronization of communication.  A programmi ng language describes the same for computations, 
so there is a close analogy between protocol s and programming languages: protocols are to 
communications what programming languages are to computations. 
Source:  http://en.wikipedia.org/wiki/Protocol  
50. The graph below indicates that the use of mob ile money in developing countries, especially in 
Sub-Saharan Africa is substantially more than othe r regions in the world.  According to the World 
Bank, the potential advantages of the mobile money industry arise because of the inherent 
characteristics of the services on offer;  the widesp read usage and network effects and the purposeful 
and innovative applications which are being designed to provide users with more efficient and easier 
operating systems.37  
                                                      
37 WB, Maximizing Mobile, p. 63.   WT/COMTD/W/193 
 Page 19 
 
 
  Chart 6:  Number of Mobile Money Deployments by World Bank Region, March 2012 
 
Source:  GSMA Mobile  Money Tracker 2012 
1. Inherent Benefits 
51. Mobile money is an accessible and convenient medium for the delivery of financial services 
and has already shown itself to be as, if not more  reliable than traditional, informal methods of 
banking.  In some countries, mobile banking servi ces have been shown to be less expensive than 
average banking services.  Lower costs therefore dire ctly translate into extra income for the poor.  
52. One of the most successful and fastest growing mobile banking services is M-Pesa, founded 
in April 2007 by Safaricom, a Kenyan telecomm unications company.  Safaricom launched the new 
mobile phone ‐based payment and money transfer service to offer its customers an array of services 
ranging from depositing money into an account stored  on a customer's cell phone, to sending balances 
using SMS technology to other users (including selle rs of goods and services) and to redeem deposits 
for regular money.  It also allows users to settle their bills.  Users are charged a small fee for sending 
and withdrawing money using the service.  M ‐Pesa has spread quickly, an d has become the most 
successful mobile phone ‐based financial service in any developing country.  By 2012, in less than five 
years' time, a stock of about 17 million M ‐Pesa accounts had been registered in Kenya.  M-Pesa is a 
branchless banking service, meaning that it is design ed to enable users to complete basic banking 
transactions without the need to visit a bank branch.  The continuing success of M-Pesa in Kenya has been due to the creation of a highly popular , affordable payment service with only limited 
involvement of a bank.
38 
53. Services supplied by M-Pesa are considered to be  much safer than carrying important sums of 
cash in person.  In addition, there are other be nefits such as privacy and autonomy.  These are 
especially important aspects for example for marg inalized groups of women who, through such 
mobile money services, now have direct access to their personal savings accounts. 
                                                      
38 http://en.wikipedia.org/wiki/M-Pesa  WT/COMTD/W/193 
Page 20  
 
  What is Mobile payment?  Also referred to as mobile money, mobile money transfer, and mobile 
wallet generally refer to payment services operate d under financial regulation and performed from or 
via a mobile device. 
Financial institutions and credit card companies as well as internet companies such as Google and a 
number of mobile communication companies, su ch as mobile network operators and major 
telecommunications infrastructure such as w-HA fr om Orange and handset multinationals such as 
Ericsson have implemented mobile payment solutions. 
Mobile payment is an alternative payment method. Instead of paying with cash, check, or credit cards, 
a consumer can use a mobile phone to pay for a wide  range of services and digital or hard goods such 
as music, videos, ringtones, online game subscripti on or items and other digital goods. Users can also 
settle payments for transportation fare (bus, subw ay or train), parking and to make purchases of 
books, magazines, tickets  and other hard goods. 
There are four primary models for mobile payments: Premium SMS based transactional payments, 
Direct Mobile Billing, Mobile web paymen ts (WAP) and Contactless NFC (Near Field 
Communication) 
Additionally there is a new emerging model from Haiti: direct carrier/bank cooperation. Mobile 
payment is being adopted all over the world in diffe rent ways.  The mobile payment market for goods 
and services, excluding contactless NFC transactions and money transfers, is expected to exceed 
$300 billion globally by 2013, which would be double the figure as of February 2011.  In developing 
countries mobile payment solutions have been depl oyed as a means of extending financial services to 
the community known as the unbanked or under-banked,  which is estimated to be as much as 50% of 
the world's adult population, according to Fina ncial Access' 2009 Report "Half the World is 
Unbanked".  These payment networks are often used for micropayments.  The use of mobile 
payments for Financial Inclusion has attracted the in terest and funding of international aid foundations 
like the Bill and Melinda Gates Foundation, USAID and MercyCorps. 
Source:  www.en.wikipedia.org/wiki/Mobile_payment  
 
 
54. Mobile money is to date mainly being used  for sending money.  Access and use of more 
sophisticated financial services such as savings, credit  and insurance could prove far more beneficial 
to the poor.  Services such as those provides by K ilimo Salama, a micro-insurance product that uses 
M-PESA to provide pay outs to smallholder farmers whose crops fail are now being developed.  As 
individuals develop financial histories with mobile  money, the ability to provide credit can expand 
because financial institutions will be able to assign credit scores.  
Through Kilimo Salama, farmers can minimize risk  by paying an extra 5% for a bag of seed, 
fertilizer or other inputs from participating local agro -dealers.  That translates to about nine Kenyan 
shillings (Kshs) to insure a one-kilogram bag of im proved, higher-yielding maize seed, and 25 Kshs to 
insure a 10-kilogram bag of fertilizer.  The agro  companies participating in the program, MEA 
Fertilizers and Syngenta East Africa Limited, match the farmers' investment  to cover the full 10% 
premium it takes to cover the cost of the progr amme.  The project partners hope to expand the 
programme to include other agribusiness companies in the upcoming years. 
Agro-dealers registered and trained by Kilimo Sala ma have been equipped w ith a camera phone that 
scans a special bar code at the time of purchase, which immediately registers the policy with UAP 
Insurance over the Safaricom's mobile data networ k.  This innovative mobile phone application, 
which was developed by the Syngenta Foundation, then sends a text (SMS) message confirming the 
insurance policy to the farmer's mobile phone.  Some 30 weather stations in the targeted regions have  WT/COMTD/W/193 
 Page 21 
 
 
  been renovated with automated, solar-powered sy stems capable of broadcasting regular updates on 
weather conditions and rainfall quantities.  When da ta transmitted over Safaricom's 3G data network 
from a particular station indicates that drought or other extreme conditions (including excessive rains) 
are destined to cripple crops, all farmers registered  with that station automatically receive payouts 
directly via Safaricom's M-PESA mobile money transfer service. 
"This is the first project to use mobile phones to set  up insurance contracts and issue payouts to poor, 
smallholder farmers in Africa, deploying both our  vast data infrastructure and globally acclaimed 
M-PESA service," said Betty Mwangi, Chief Officer, New Products Division at Safaricom.  "We are 
happy to support a project that organizes a co mplex business administration over our expansive 
national 3G network.  The close link to rural shops and farmers insures that thousands of farmers will 
have fast, efficient, and reliable service and shows that there is great potential for many other 
applications that link mobile technology with the need s of farmers and people in rural areas.  This is 
the kind of innovation that underwrites our market leadership."39 
IX. E-COMMERCE AND SMALL, MEDIUM ENTERPRISES 
55. The term SME has a wide range of definitions  varying from country to country and between 
the sources reporting SME statistics.  Some of the co mmonly used criteria used to define an SME are 
net assets, number of employees and the levels of sales and investment.  The most commonly used criterion used to define SMEs is, however, the tota l number of employees.  Even the definition of an 
SME on the basis of a specific criterion is not uni form across countries.  For instance, a specific 
country may define an SME to be an enterprise with less than 500 employees, while another country 
may define the cut-off to be 250 employees.
40  
56. In both developed and developing countries,  SMEs make up a majority of business and 
employ the majority of workers in both manufacturing and services sectors.  SMEs cater mostly to their domestic market and their contribution to GDP , although normally very small, can vary greatly 
depending on the value of the goods or services they produ ce.  While less than 6% of the formal work 
force is employed in manufacturing in SMEs in A zerbaijan, Belarus and Ukraine, this share is more 
than 50% in other developing countries such as Ghana, Turkey and Ecuador.
41  Research has indicated 
that countries with large SME sectors also tend to benefit from the significant contribution which SMEs make to GDP. 
57. An UNCTAD study has shown that SMEs, while ge nerally lagging in ICT, have the most to 
gain from increases in productivity thanks to e-comme rce.  SMEs, however, actually run the risk of 
missing opportunities in both productivity and profitability by not engaging in e-business.
42  SMEs 
also have a large role to play in the economies of developing countries because it is in these same 
countries that have the greatest potential to benefit from e-commerce.43  The extent of ICT use by 
SMEs is dependent on both sector and size of the business.  Typically, those SMEs which are export 
or import-oriented as well those involved in the to urist sector have stronger incentives to invest in 
implementing ICTs in their respective businesses.44 
58. Global developments and other competitive for ces are increasingly driving firms to engage in 
ICT-based strategies.  The growing interaction th at SMEs are having with foreign suppliers and 
clients is leading most firms in developing countri es to connect to the internet for e-mail purposes.  
                                                      
39 www.sciencecodex.com/first_microinsurance_plan_uses_mobile  
40 http://siteresources.worldbank.org/DEC/Res ources/84797-1114437274304/SME_globe.pdf   
41 http://siteresources.worldbank.org/DEC/Res ources/84797-1114437274304/SME_globe.pdf   
42 UNCTAD IER 2004. 
43 UNCTAD IER 2004. 
44 UNCTAD IER 2011. WT/COMTD/W/193 
Page 22  
 
  The adoption of ICT by SMEs in developing countries is largely a market-driven process and 
eventually it is expected that competition in ICTs will lead to greater affordability and allow SMEs to 
engage more in e-commerce.  Global competition is a major driver in this process, particularly for 
export-oriented businesses.  Many buyers in deve loped countries which would like to purchase 
agricultural goods or handicrafts in developing coun tries expect their suppliers, usually SMEs in 
developing countries, to be connected to the global online supply chain.
45 
59. Although research has indicated that it is mo stly large multinational companies that have 
benefitted the most from e-commerce, SMEs have been found to have the greatest potential for 
productivity gains through e-commerce.  For most SMEs , however, the internet is mostly restricted to 
use by managers, for e-mail communication and for basi c internet searches, particularly in developing 
countries with slow modes of access to the internet .  Even in rare circumstances when SMEs have 
websites, the websites are generally limited to presenti ng goods and services on offer.   It is unusual to 
see these same companies providing a means to purchase their products or services online.46  Despite 
several studies that have demonstrated the co rrelation between ICT adoption and a company's 
profitability, one of the major reasons many enterp rises have not integrated ICT and e-commerce into 
their business strategies is the perceived limited impact on business profitability often coupled with 
the argument that few suppliers a nd customers are actually online.47  On the other hand, when SMEs 
are able to see the added benefits of using IC T, they are more willing to adapt their businesses 
strategies.48  
60. E-commerce presents a number of opportunities for SMEs.  The main reason lies in that 
e-commerce has the ability to beco me a field-leveller providing as many opportunities for SMEs in 
developing countries as in developed countries.  Since all internet sites co-exist, small businesses have 
access to just as much internet space as do large multinational companies.49 
61. SMEs in developing countries that are located in  rural areas are usually more disadvantaged 
in terms of internet access.  The ru ral-urban digital di vide is created or exasperated by more expensive 
connection fees, an insufficient number of  lines and unreliable internet connectivity.50  Mobile 
commerce, however, now provides more opportunities fo r SMEs, especially in rural areas.  Statistics 
indicate that mobile technology is actually spreading into rural areas at a rapid pace.  According to the 
ITU, the percentage of the world not covered by a mobile cellular signal was 39% in 2003.  By 2010, 
that figure had dropped to 10%.51  
62. E-commerce has been hailed by many as an opportunity for developing countries to gain a 
stronger foothold in the multilateral trading system.  E-commerce has the ability to play an 
instrumental role in helping economies benefit more  from trade.  Unlike the requirements necessary to 
run a business from a physical building, e–commerce does not require storage space, insurance, or 
infrastructure investment on the part of the retaile r.  The only pre-requisite  is a well-designed web 
storefront to reach customers.  Additionally, e-co mmerce allows for higher profit margins as the cost 
of running a business is markedly less.52  
63. Another added advantage provided by e-commerc e is that it allows for better and quicker 
customer service.  In some cases customers coul d have direct access to their own personal accounts 
                                                      
45 UNCTAD IER 2004. 
46 UNCTAD Report 2005. 
47 UNCTAD IER 2004. 
48 UNCTAD IER 2004. 
49 E-Commerce:  The next global frontier for small businesses. The Journal of Applied Business 
Research. Volume 17, Number 1. 
50 UNCTAD IER 2004. 
51 http://www.itu.int/ITU-D/ic t/statistics/index.html   
52 UNCTAD IER 2004.  WT/COMTD/W/193 
 Page 23 
 
 
  online and can avoid calling companies on the phone .  This can save both time and money.  Adding 
customer online services such as overnight pack age delivery services can also have commercial 
benefits.  These can be complemented by packag e tracking services which allow customers to check 
the whereabouts of their packages online.  This he lps provide good levels of customer satisfaction 
with very little effort from the side of the business.53 
X. POLICY ISSUES - WHAT RESTRICTS SMES FROM MORE FULLY USING 
E-COMMERCE? 
64. E-Commerce is generally presented in very positive terms but, along with the potential 
benefits, come potential problem s for developing countries.  The adoption of e-commerce in 
developing countries differs greatly from one country to the other.  But many face a number of similar 
obstacles to e-commerce.  These mainly include a lack of financial, legal, and physical infrastructure 
for the development of e-commerce.  The develo pment of various types of e-commerce depends 
primarily on the existing structure of an industrial sector and how it fits into a given sectoral value chain.  Additionally, the difference of cultures and business philosophies across developing countries 
has also been seen to limit the applicability and tr ansferability of the e-commerce models designed by 
some developed countries.
54 
Regulating Bottlenecks in the Broadband Supply Supplying broadband services involves a 
combination of network elements, processing, and business services that can be thought of as the 
broadband supply chain. This supply chain can be divided into four main components: 
(a) international connectivity;  (b ) domestic backbone;  (c) metropolitan connectivity;  and (d) local 
connectivity.  Bottlenecks in any of the links of the chain will stifle competition and the development 
of broadband.  Hence, effective regulatory framewo rks must identify and address such instances of 
market failure in a timely and effective manner.  As concerns domestic infrastructure or what some 
refer to as the national backbone infrastructure, a focus on networks is key.   Constituting the second 
level of the network element supply chain, a c ountry's high-capacity domestic backbone network is 
essential for broadband connectivity since it provides the link from international gateways to local 
markets as well as domestic connectivity between major cities and towns.  However, backbone 
networks require extensive investments.  A major im pediment to reducing these costs, particularly in 
many developing countries, relates to vertical in tegration in which the b ackbone network providers 
are vertically integrated with the local access netw ork operators.  This results in a single end-to-end 
provider that can wield great market power.  As such, other service providers may not have access to 
the backbone or may face high costs for interconnec ting, a problem addressed in growing debates on 
open network access. 55 
 
65. Although SMEs have numer ous reasons for engaging in e-comme rce, the security concerns of 
the customers remain an important impediment to expanding e-commerce services and business.  
Probably, the biggest drawback is the reluctance of customers to provide online information about 
their credit cards.  Ensuring both trust and familia rity through a well-functioning website has proven 
to be one of the major e-commerce success-factors.56  In the same vein, the growth of broadband has 
created a greater need for users to protect their security and privacy in an "online" environment.  Both 
individual users and businesses report that computer  viruses are the "malware" they encounter the 
                                                      
53 http://www.manjeetss.com/articles/a dvantagesdisadvantagesecommerce.html  
54 See at: http://www.sciencedirect.com/science/article/pii/S0378720607000298  .Business-to-business 
adoption of eCommerce in China. 
55 Broadband Strategies Toolkit at:  http://broadbandtoolkit.org/3.5  
56 E-commerce:  the role of famili arity and trust David Gefen, OMEGA, The International Journal of 
Management Science. WT/COMTD/W/193 
Page 24  
 
  most.
57  Security continues to be a problem for onlin e businesses as customers have to feel confident 
about the integrity of the payment proc ess before they commit to the purchase. 
Business Development Department inviti ng SMEs to make use of e-commerce  
BANGKOK, 6 July 2012 – The Department of Bu siness Development (DBD) is encouraging SME 
operators to seek new opportunities via e-commerce wh ile introducing the DBD Registered symbol to 
ensure security for online shoppers. 
Deputy Minister of Commerce Siriwat Kajornprasar t revealed that he has assigned the DBD to 
support Thai SMEs in doing business via e-commerce.  Due to the huge growth and increasing 
popularity of e-commerce, he said Thai SMEs s hould consider expanding their businesses online in 
order to find new opportunities and reduce production co sts at the same time.  E-commerce can also 
help enhance the potentials of Thai compani es to compete in the international market. 
Source:  The Thai Financial Post  Published on August 6, 2012  
 
66. The potential of e-commerce can only be achieved given adequate infrastructure.  In most 
developing countries this constraint presents a major obstacle.  Smaller, low-income internet markets 
in developing countries, particularly in Africa, ha ve been unable to attract sufficient investment in 
infrastructure, which combined with lack of competit ion – results in bandwidth cost that can be up to 
100 times higher than in developed countries.  In most cases, these countries remain outside the reach 
of fibre optic cables and must turn to satellites fo r international – and sometimes even domestic – 
connectivity.  This happens even in spite of significant improvements brought about by technology.58  
Peru enforces net neutrality, l ooks to roll out fibre backbone 
 
25 July 2012 - The Peruvian government has a nnounced that it will support the deployment of a 
national fibre-optic backbone for broadband access, Andina reports.  The announcement followed the 
passing last week of the Law for the Promotion of Broadband and Construction of Optical Fibre 
Backbone.  Telecoms regulator Osiptel will oversee  the rollout, and ensure access is competitive, 
whilst the Agency for the Promotion of Private I nvestment (ProInversion) has been tasked with 
selecting a company to carry out the installation.  Osiptel is understood to be drawing up technical 
criteria for the network, which will link all provincial capitals, and have connections to all districts.  
Further, the broadband bill ensures net neutrality, making it illegal for an internet service provider 
(ISP) to block, interfere with, discriminate agains t or restrict the right of any user to use an 
application, regardless of origin, destination or nature.59 
 
67. Many have noted that the most significant fact or that would enable the necessary broadband 
growth in developing countries is the existence of  alternative broadband infrastructures, in particular 
cable.  Furthermore, a number of developing count ries also face challenges such as an unreliable 
supply of power which is another major cause for concern.  Many SMEs also lack the logistics for the 
                                                      
57 OECD, " http://www.oecd-ilibrary.org/s ites/sti_scoreboard-2011-
en/06/10/index.html;jsessionid=v04de9q27yt1.delta?cont entType=&itemId=/content/chapter/sti_scoreboard-
2011-64-en&containerItemId=/content/serial/20725345&accessItemIds=/content/book/sti_scoreboard-2011-
en&mimeType=text/html " 
58 UNCTAD IER 2004. 
59 "www.telegeography.com/products/c ommsupdate/articles/2012/07/25/p eru-enforces-net-neutrality-
looks-to-roll-out-fibre-backbone/ "  WT/COMTD/W/193 
 Page 25 
 
 
  prompt and reliable delivery of goods and services particularly in the case of B2C e-commerce.  
These obstacles put SMEs at a distinct disadvantage.60 
68. Another area of concern is the lack of techni cal skills which keeps SMEs from realizing their 
full e-commerce potential.  Many developing count ries do not have a workforce that has sufficient 
training in ICT and mobile technology.  This gr eatly disadvantages many SMEs that may be seeking 
to diversify or to branch out into e-commerce.  Making sure en terprises possess the required set of 
skills and capabilities to use relevant technologies productively is key to securing the economic benefits of e-commerce.  Many entrepreneurs in developing countries, and especially in LDCs, lack the necessary capacity or awareness to take full ad vantage of ICTs.  Even if they have access to 
mobile phones or the internet, they may not know how best to leverage them for their business 
operations.  In some circumstances they may even fa il to see the value of investing in the technology 
required so as to be able to take adva ntage of the opportunities of e-commerce.
61  
Chart 7:  Enterprises with their ow n website, latest year 2006-2009 (%) 
 
35.129.24576.7
44.8
37.7
22.820
0102030405060708090
Per cent of firms having their own Website
 
Source:  World Bank Enterprise Surveys 
69. Slow internet diffusion in developing countries can be attributed to market and infrastructural 
factors controlling the availability of ICTs.  In Tan zania, for instance, a lack of electrical supply, a 
low tele-density and a lack of purchasing power resulted  in a low, rural internet usage.  The cost of IT 
equipment can also discourage SME take up of e-commerce.  The costs of computers, servers, parts 
etc. can be prohibitive for SMEs and can sometimes be  subject to high tariffs or inconsistent tariff 
regimes.  For example, providing incentives by lowering tariffs on computer terminals, but not on parts, can make buying lower cost replacement pa rts for simple repairs an unattractive option.  
Moreover, manufacturers of ICT products focus on large distributors often located in developed 
countries.  
                                                      
60 UNCTAD IER 2004. 
61 UNCTAD IER 2011. WT/COMTD/W/193 
Page 26  
 
  70. Financial infrastructure is also key. For exam ple, the unavailability of credit cards can be a 
major hurdle.  Past studies have found such pr oblems for B2C e-commerce in Russia, India and 
Latin America.  In Asia, 35–40% of transactions ar e cash-based.  Other aspects of financial systems 
are also underdeveloped.  In some countries and regions, local banks do not process online credit card 
transactions or other forms of electronic payment sy stems.  Since mobile money targets the poor in 
developing countries and encompasses two very distin ct industries (telecommunications and financial 
services), developing the necessary cross-sectoral partnerships - including bridging cultures and 
regulations - may therefore be difficult.  Furthermore,  in order to get the mobile money industry to be 
viable, agents and consumers have to be convinced at a large scale.  Operators are faced with the 
trade-off between higher costs to recoup their inv estments or lower costs to reach scale and build a 
mass market.   WT/COMTD/W/193 
 Page 27 
 
 
  Table 2:  Business and consumer-level e-commerce barriers in the developing world 
Barrier Type Consumer Level  Business Level 
 
  
 
Economic  Low credit card 
penetration. Lack of electrical supply. 
Low tele-density. 
Lack of purchasing power. 
  
  
Low commerce 
Adoption rate among businesses 
 
  
 Underdeveloped  
financial systems. Internet less attractive 
for traditional economic 
sectors. Lack of economies of 
scale. 
Unavailability of ICT and other supporting 
infrastructure. 
 
 
Sociopolitical  Inadequate legal 
protection for 
Internet 
purchases    
Preference to face-to face 
communications  
over e-mail. Precedence of established 
relationships.  
Lack of DES laws. 
  
 
 
Cognitive  General and  
computer 
illiteracy and lack 
of English language skills 
Lack of availability of 
local language websites Lack of awareness 
and knowledge of 
e-commerce benefits Lack of confidence in 
service providers.  
 
 
 
 
Low ecommerce adoption  
rate among 
consumers  
  
 
 
 
 
  
Lack of knowledge to 
use ICTs profitably. High degrees of risk 
aversion. 
Lack of workforce with e-commerce expertise. 
 
Source:  Kshetri, Nir. Barriers to e-commerce and competitive business models in developing 
countries, 2007 Elsevier B.V. 
 
71. The internet is also less attractive for trad itional economic sectors (e .g., agriculture) that 
account for a significant proportion of developing countries' economies.  For instance, a study 
indicated that cost savings from e-commerce – as a pe r cent of total input costs – is only 2% for firms 
in traditional sectors such as coal compared to 40% in electronic components.  The rapid growth of 
e-commerce in the US, for example, can be attribut ed to infrastructure already in place and an easy 
availability of a physical delivery system.  Such sy stems are rarer in developing countries.  In the 
Caribbean region, for example, logistics cha llenges are among major barriers to e-commerce 
diffusion.  It is difficult for small developing c ountries and especially isla nd states to attract FedEx 
and UPS to provide delivery services.  Finally, band width availability is low in developing countries.  
A lower bandwidth means that a longer time is need ed to transfer data and hence a lower relative 
advantage of the internet.62 
                                                      
62 Kshetri, Nir. Barriers to e-commerce and compe titive business models in developing countries, 2007 
Elsevier B.V. WT/COMTD/W/193 
Page 28  
 
  72. In a study published in 2008 on the adoption ICT by small hotel establishments in Southern 
Africa, some key factors were examined such as the role of government and government policy and 
attributes relating to the owners of the hotels, thei r organization and their ability to adopt more ICT in 
their commercial activities.
63  Even though the study focused on small hotels using the internet, many 
of the study's findings are applicable to other industries in which SMEs operate, such as sales and 
distribution of products, manufacturing and services tr ade.  The study found that internet, websites 
and fixed-line and mobile phone networks are the most common technologies adopted by SMEs to 
support their e-business operations.  The results also suggest both formal and informal networks as 
important for ICT adoption.  These include key so urces of information, technology and social and 
business support.  In addition, financial and ow ner manager support, including personal skills and 
experience are also crucial in the adoption of ICT.   Power outage is identified as a major barrier.  
73. Government intervention is largely indirect a nd crucial in areas such as setting up of national 
ICT policy, infrastructure, dissemination of inform ation, facilitating public -private partnerships, 
capacity building and constructing and maintaining a power supply.  While obviously not a course of 
action for all SMEs in developing countries, research has shown that there are things SMEs can do to 
take more advantage of the internet possi bilities.  While many of these "Key Policy 
Recommendations" in the chart below require both la rge investments in infrastructure, people and 
equipment, there are options which governments might  wish to follow should they really wish to 
maximize use of e-commerce generally.  
                                                      
63 ICT Adoption and Development of E-business among SMEs in South Africa 
Knowledge Chinyanyu Mpofu: http://www.isbe.org.uk/Mpofu09  
 
  WT/COMTD/W/193 
 Page 29 
 
 
  Key Policy Recommendations made by the OECD for SMEs  
• Move beyond policies for basic connectivity and ICT readiness to facilitate more widespread 
uptake and use of complex ICT applicatio ns and e-business uptake by small firms .  Target 
programmes where there are demonstrated market  failures (e.g. R&D in centives, frameworks for 
standards, skill formation, information and demo nstrations on best practice and benefits from 
adoption and use of ICT), taking into account th at commercial considerations and returns drive 
business adoption of new technologies.  
• Encourage rollout of affordable quality broa dband networks to underpin the competitiveness 
and growth of SMEs.   Continue to liberalise network infrastructure and promote broadband 
competition and liberalisation in network services a nd applications.  Where the needs exist, and 
without pre-empting private initiative or inhibiting competition, complement private investment with 
public financial assistance to expand coverage for under-served groups and remote areas.  
• Strengthen the infrastructure for trust, securi ty (including spam and viruses), privacy and 
consumer protection.   Intellectual property protection of ICT innovations and digital products is 
necessary to build the confidence among SMEs that is essential if such firms are to take full advantage 
of the potential of domestic and cross-border on-line activities.  
• Expand, in conjunction with business and cons umer groups, SMEs' use of low-cost on-line 
dispute resolution mechanisms .  Strengthen cross-border co-opera tion between stakeholders and the 
development of rules with cross-border application.  
• Develop and distribute digital content, incl uding by expanding the commercial use of 
information about the public sector, education and health care.   E-government services to 
enterprises should be used as a tool to improve effi ciency of government interactions and operations 
with SMEs.  
• Reduce ICT skill impediments to the growth of SMEs .  Strengthen government and private roles 
to improve basic ICT skills and developing framewo rks to encourage higher level ICT and e-business 
skill formation (including marketing, organisational,  security, trust and management skills in addition 
to ICT skills) in conjunction with educa tion institutions, business and individuals. 
Source:  OECD, ICT, E-Business and SMEs, 2004 
 
XI. CONCLUSION 
74. This background note has examined different ways of using e-commerce and has looked at 
some specific sectors where SMEs are using the inte rnet to sell their wares directly to customers 
through online transactions.  As noted, a growing nu mber of such transactions are now also taking 
place via mobile applications.  This trend is to expand exponentially in the decades ahead.  As has 
been seen, there is enormous potential for using information and communication technologies to 
contribute to the social and economic progress of developing countries worldwide. 
75. Many entrepreneurs in developing countries and certainly many owners and managers of 
SMEs have a real possibility to benefit from ICTs in their day to day business activities.  This has 
already resulted in gains in enhanced productivity, be it in the area of B2B, B2C or B2G e-commerce.  
However, as this paper shows, SMEs in many de veloping and LDCs are not always maximizing the 
use of the internet.  In this regard, the role of  governments and their various partners, including the 
private sector, need to take more advantage of the opportunities that are emerging in the new ICT 
landscape.  And governments need to ensure that users benefit not only from being connected to the 
internet but also from any technological evolutions  which can increase the speed of data flows and 
which can help reduce costs to consumers.  
76. The paper has focused on how mobile telephony h as transformed life for many in developing 
countries.  Mobile phones help improve the livelih ood of the poor through better communications and 
greater access to information.  Many poor farmers are now able to receive better prices for their crops WT/COMTD/W/193 
Page 30  
 
  because they have access to info rmation on market prices, primarily via mobile phones.  The African 
company TradeNet, a Ghana-based trading platform, was provided as a key example.  
77. Mobile phones have also spawned a wealth of micro-enterprises, offering work to people with 
little education and few resources, such as selling ai rtime and repairing or refurbishing handsets.  
When farmers have access to information about pric es and stocks, it helps them to reduce the risk of 
under-selling and of either over or  under-supplying their crops in a given market.  Information 
transmitted by mobile phone also includes access to early warning systems to mitigate the risk of 
losses due to extreme weather conditions  or to the spread of disease. 
78. This background note has examined different ways of using e-commerce and has looked at 
some specific sectors where SMEs tap into vita l market information on which their businesses 
depend.  Others still are involved with the developm ent or the dissemination of mobile services such 
as mobile banking, credit and insurance services.  
79. It is important to remember, however, that SM Es are not alone in their involvement with 
e-commerce.  The government and the private sector have vital roles to play not only in allowing 
e-commerce to take place but to ensure that it grows and benefits not only SMEs  but also consumers.  
Much of the support to e-commerce depends on having or providing the right infrastructure, 
regulations and the policy mix allowing e-commerce to thrive.  
80. High-quality and reliable transactions over the internet need advanced telecommunications 
systems and ones that offer broadband and mobile broadband services at affordable prices to both 
companies and private users.  This requires an  enabling environment where competition between 
telecommunications providers is robust.  Also requi red is a workforce with solid ICT skills.  Such 
skills are crucial for the further development of e- commerce and other mobile applications.  The latter 
are critical in the quest to produce relevant and hi gh-quality applications.  Here too governments can 
play a vital role in ensuring that secondary and voc ational schools teach the necessary skills to help 
build a viable digital economy and one that is capable of adapting to th e needs of its users.  WT/COMTD/W/193 
 Page 31 
 
 
  ANNEX 
Work on Electronic Commerce in the WTO's General Council and  
the Committee on Trade and Development 
 
 
1. Following the Declaration on Global Electronic Commerce by the Geneva Ministerial 
Conference in 19981, the General Council adopted the same  year a Work Programme on electronic 
commerce defining e-commerce as the production, distribution, marketing, sale or delivery of goods and services by electronic means.
2  The  Work Programme foresaw a broa d spectrum of issues related 
to electronic commerce that was to be examined by  the Council for Trade in Services, the Council for 
Trade in Goods, the Council for T rade-Related Aspects of Intellectual Property Rights  (TRIPS) and 
the Committee on Trade and Development (CTD), w ith the General Council exercising an oversight 
function and considering any issue of a cross-cutting nature in Dedicated Discussions held under the 
auspices of that body.  
Dedicated discussions under the auspices of the General Council 
 
2. Since the inception of the Doha Round in 2001, seven dedicated discussions on electronic 
commerce have been held under the auspices of th e General Council.  A main issue throughout the 
discussions has been on the extensions of the mo ratorium on customs duties on e-commerce.  While 
to date no agreement has been reached to make th e moratorium permanent and binding, it was decided 
in December 2011 to maintain the moratorium in place until the Ninth Ministerial Conference in 
2013.  Other issues discussed throughout the period concerned such cross-cu tting issues as questions 
related to the classification of the content of cer tain electronic transmissions, development-related 
issues, fiscal implications of e-commerce, the re lationship (and possible substitution effects) between 
e-commerce and traditional forms of commerce, the imposition of customs duties on electronic 
transmissions, competition policies and the jurisdicti on and applicable law and other legal issues.  
Most of these discussions, however, remained inconc lusive with Members realizing that more work 
would be required to further clarify the various issues. 
Work undertaken in the CTD 
 
3. The Work Programme on electronic commerce requ ested the CTD to exam ine issues such as 
(i) the effects of e-commerce on the trade and econo mic prospects of developing countries and their 
SMEs in particular;  (ii) the challenges and ways to enhance the participation of developing countries 
in e-commerce and the role of improved access to in frastructure and transfer of technology, and of 
movement of natural persons;  (iii) the use of in formation technology in the integration of developing 
countries in the multilateral trading system;  (iv) th e impact on the traditional means of distribution of 
physical goods;  and (v) the financial implications for developing countries.  
4. In the years following the adoption of the Work Programme, the CTD addressed certain 
issues by inviting speakers from other internationa l organisations, by discussing country experiences 
and by holding two seminars, i.e. on E-commer ce and Development in 1999 and on Government 
Facilitation of E-commerce for Development in 2001.   After the Doha Ministerial Conference in 
2001, a seminar on the Revenue Implications of  e-commerce was held in 2002.  In 2003, the 
Secretariat and the CTD produced a background note3 and a report4 on the work that had been 
undertaken in the CTD on e-commerce. 
                                                      
1 WT/MIN(98)/DEC/2. 
2 WT/L/274. 
3 WT/COMTD/W/110. WT/COMTD/W/193 
Page 32  
 
  5. In 2011, a communication from Cuba, Ecuador, Ni caragua, the Pluri-national State of Bolivia 
and the Bolivarian Republic of Venezuela titled "E ffective participation of developing countries in 
electronic commerce as a means to combat poverty"
5 provided new impetus to the CTD's work on 
e-commerce.  In particular, Ministers decided at the Geneva Ministerial Conference on 17 December 2011 to instruct the General Council to emphasize a nd reinvigorate the development dimension in the 
Work Programme.  This was to be done thr ough the CTD which would examine and monitor 
development-related issues linked to e-commerc e such as the need for technical assistance and 
capacity building and the facilitation of access to  e-commerce by micro, SMEs, including small 
producers and suppliers, of deve loping countries and particularly of least-developed country 
Members.
6 
6. At the CTD's 85th Session held on 16 July 2012, Cuba  and Ecuador proposed the idea of 
holding a Workshop on E-Commerce, Developmen t and SMEs (WT/COMTD/W/189) and suggested 
that the Secretariat prepare a background paper on the subject and organize a workshop which would 
involve public and private sector representatives as well as individual experts.  
7. At the CTD's 86th Session on 19 November 2012, it was agreed that the workshop on 
Electronic Commerce, Development and SMEs would be held on 8 and 9 April 2013.  The two-day 
workshop would focus on the private sector, in ter-governmental organizations and also non-
governmental actors and would seek the active par ticipation from SMEs fro m least-developed and 
developing countries located in Asia, Africa a nd the Latin American and Caribbean regions.  
 
__________  
                                                                                                                                                                     
4 WT/COMTD/47. 
5 WT/GC/W/635-G/C/W/650-WT/COMTD/W/179, and its addendum. 
6 WT/L/843.