Blockchain has proven to be a springboard for LDCs to catch-up with other countries on the e-commerce, trade and telecommunications field
The contrast between LDCs and other countries is great in terms of digital competitiveness. Often, LDCs fall back in comparison due to a wavering telecommunication infrastructure and internet-based innovation. However, there have been recent efforts in the right direction. This includes the increased availability of smartphones, which heighten the case for blockchain technology as a means to further telecommunications infrastructure, trade and e-commerce. This ultimately bridges the gap between LDCs and other countries.
The push towards digitization is reinforced by blockchain technology. Given its transparency, traceability and diversity of application, it’s at the forefront of the movement.
Very few countries and sectors haven’t experienced the effects of the COVID-19 pandemic and digitalization has proven ever more important in addressing the crisis. For instance, the Senegalese Trade Minister has created an e-commerce platform providing essential goods through SMEs; proving vital for those in major urban areas. Senegal’s openness to innovation leaves room for blockchain to heighten the movement; particularly for e-commerce.
Another country looking to promote its e-commerce and overall digitalization is Kiribati, an independent country in the centre of the Pacific Ocean. In light of the social distance precautions, Kiribati has reduced physical contact among government staff by replacing salaries paid in cash with an electronic payment service.
According to UNCTAD (United Nations Conference on Trade and Development), Atarake Natara, Kiribati’s Minister for Commerce, states that “We’re committed to creating an enabling environment for e-trade”. Atarake Natara continues stating that the final goal is to create an effective e-commerce ecosystem offering “increased trade opportunities through better access to worldwide markets and business resources”.
While these efforts are a step in a right direction, there are certain barriers to overcome. This is namely the lack of internet access, expensive broadband data products and low volume of e-commerce activity. UNCTAD is actively supporting Kiribati to help resolve some of the infrastructural issues presented above.
Moreover, blockchain can mitigate transaction friction for trade in goods and services through cybersecurity, scalability and immediate transitions. Consequently, adopting such a movement would benefit both e-wary customers and businesses by increasing customer numbers and e-commerce sales.
Cross-border trade is also negatively affected by the COVID-19 pandemic; leading to complete border closure in some countries given a lack of preparation in LDCs. However, blockchain has enabled LDCs to make more confident, secure and efficient transactions with ease. Vanuatu’s Electronic Single Window System (ESWS) is a new blockchain technology that uses smart contracts to approve exports and essential documents all captured in real-time for all participants to see. Mombasa and Kenya have adopted a similar approach through IBM which allows flowers to be shipped to the Netherlands, opting for smart contracts over traditional and extensive documents and signatures.
UK-based startup Electroneum, for instance, enable airtime and data top-ups with ETN across 140 countries via their mobile app.
The pandemic has undoubtedly affected countries in different ways; yet this hasn’t always been for the worst. In effect, the silver lining in the current situation is the openness to innovation and strive for greater efficiency ignited to ride the crisis. Blockchain has ultimately proven to be a key player in stimulating the economy; rectifying the damage caused by the pandemic.
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