Saturday, December 6, 2008

Internet power 'fails the poor'


The much-hyped advent of e-commerce in developing countries is not having the positive impact expected, new research suggests.

The power of the internet has been much vaunted as a way of enabling poorer countries to increase their share of trade with richer countries.

As such, many countries have adopted - or are in the process of adopting - expensive technology infrastructure to harness that power, often egged on by software firms.

But the reality of e-commerce is very different, according to a new report researched in Bangladesh, Kenya and South Africa and funded by the UK Department for International Development.

"We didn't find any big firms that are migrating to e-commerce in developing countries," John Humphrey from the Institute of Development Studies told BBC News Online.

"Over and over we are told that capitalising on personal contacts is the way to broaden business opportunities," said Robin Mansell, one of the report's authors.

Building trust

The problem, according to Ms Mansell, is that international trade rarely occurs between complete strangers.

The internet and e-mail alone are unlikely to generate the type of trust needed for US buyers to take the plunge and source their wares from Africa or other unfamiliar trading partners.

After investigating 180 open e-marketplace websites and interviewing 74 managers of exporting firms, the report concluded that little business with new firms was being generated from business-to-business websites.

This situation is further hindered by the lack of suitable online payment methods or the legal acknowledgement of electronic signatures.


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