The Role of Information and The Role of Information and Communications Technology (ICT) in Communications Technology (ICT) in

Trade and Economic Growth in Trade and Economic Growth in EthiopiaEthiopia

Assefa Admassieand

Woubalem Taye

Presentation Outline

Introduction Trade Landscape Trade Related Policy Assessments ICT Landscape and Policy Assessments Legal and Regulatory Framework Private Sector Readiness for E-Business. Conclusions and Recommendations.

1. Introduction Advances in ICTs have dramatically changed

the World economy over the last few decades: Advances in the Information Technology (Computers usage for Storage, Processing &

Retrieval) Advances in the Communication

Technologies (Telecom & Computer Networks, Broadcasting, &

the Internet) Access to information and knowledge via ICT:

Makes business more competitive and Productive

Empower people with knowledge open new opportunities, perspective &

challenges.

1. Introduction…cont’d Knowledge has replaced traditional productivity

inputs, as input for growth

With regard to trade: Knowledge has changed international trade, and

introduced new business intermediaries

Significant spillover effects on economic growth: 1% ↑ stock of infrastructure→1% ↑ GDP (WB

1994) Poverty also ↓ (the case of Grameen Bank

village phone system)

1. Introduction…cont’d IC Technologies facilitate the delivery of basic

social services: Health Education Agricultural extension services Good governance

In general: Those who can best receive, process, adopt

and innovate information are winners! Conducting old businesses in new ways and

embracing new business opportunities has now become part of any economic transformation.

Growing use of ICT as a medium for business information/knowledge processing and exchange.

1.1. Motivation and Objective Not much is known about the application of ICT in

facilitating domestic and international trade. Objectives of the study

Assessing the ICT and trade policy environment Identify gaps in the legal and regulatory frameworks Assessing the awareness and usage of ICT in trade

by SMMEs Methodology (several methods):

Systematic analysis and review of policy documents Review ICT and trade statistics from secondary data Primary survey data Interviews with knowledgeable informants Case studies.

-2--2-Review of the Recent Trade landscape in Review of the Recent Trade landscape in

EthiopiaEthiopia

2.1. General Overview of the Ethiopian Economy

Ethiopia: Is Among the poorest countries on Earth (PCI of $160) Is Land-locked Is primarily rain-fed low productive Agrarian economy >15% children cannot celebrate their 5th birth day 47% of children are malnourished 871 per 100,000 MMR 48 million people do not have access to clean water Only 17% have access to electricity Average Ethiopian lives only 43 (F) yrs or 42 (M) yrs Etc…

2.1. General Overview of the Ethiopian Economy

Population (millions)

020406080

Population(millions)

2.1. General Overview of the Ethiopian Economy

GNI per capita (US$)

0100200300400500600

GNI per capita,Atlas method (US$)

2.1. General Overview of the Ethiopian Economy

Adult Literacy Rate(% ages 15 and over)

0

20

40

60

80

Ethiopia Tanzania

Adult Literacyrate(% ages 15and over)

2.1.1. An overview of the trade sector

Many reforms and promotions in the trade sector: Deregulation of domestic prices Liberalization of foreign trade Privatization Abolition of export taxes and subsidies Devaluation Harmonized customs and duties Maximum customs duty has now been

significantly reduced.

2.1.1. Overview of …cont’d

Contribution of export trade has been growing at about 7.4% - 1995/96 to 2005/06.

2009 is the target accession date to WTO

Ethiopia is also a member of COMESA 23 African countries (300 million pop.)

Member of NEPAD Beneficiary of:

AGOA Economic Partnership Arrangement (EPA)

2.1.2. The Structure of Export (in millions of USD)

Export commodity Year

2002/03 2003/04 2004/05

Coffee 165.26 223.45 335.37

Leather and leather products 52.22 43.59 63.73

Pulses 19.97 22.58 35.47

Oilseeds 46.09 82.66 102.29

Fruits and vegetables 9.58 12.72 16.07

Meat and meat products 2.42 7.66 14.59

Live animals 0.481 1.91 12.82

Chat 58.02 88.02 99.96

Gold 42.08 48.71 52.50

Others 86.66 69.15 84.96

Total 482.78 600.45 817.74

Of which non coffee 317.52 377 482.37

2.1.2. The Structure of Export (in millions of USD)

050

100150

200250300350

2002/03 2003/04 2004/05

Year

Coffee

Leather and leather products

Pulses

Oilseeds

Fruits and vegetables

Meat and meat products

Live animals

2.1.2. The Structure of Imports (%)

Year Raw material Semi finished goods

Fuel Capital goods

Consumer goods

Misc.

1995/96 2.5 17.5 12.9 35.9 27.1 4.1

1996/97 2 19.2 18.4 38.8 20.6 0.9

1997/98 2 16.4 24.4 29.8 19.7 7.7

1998/99 1.7 16.8 11.4 33.7 28.1 8.3

1999/00 1.2 12.7 15.5 29.2 26.8 14.5

2000/01 1.5 18.3 18.8 28.2 30.1 2.8

2001/01 1.8 17 15.8 28.3 34.6 2.5

2002/03 1.2 14.8 15.5 29.6 35.2 3.7

2003/04 1.3 18.1 12.2 31.6 35.1 1.5

2004/05 1.4 18.3 18.4 33.0 27.1 1.8

2.1.3. Main Destinations of Exports

Destination 2001 2002 2003 2004

Africa 1026.7 (2) 656.9 (3) 1491.0 (3) 703.4 (3)

Europe 830.2 (3) 1791.4 (1) 1619.4 (1) 2588.5 (1)

Asia 1761.2 (1) 1216.9 (2) 1326.4 (2) 1808.1 (2)

North America

31.1 166.3 225.2 355.5

Others 10.3 17.7 21.3 65.8

Total 3659.5 3849.2 4683.3 5521.3

2.1.3. Main Sources of Imports

02000

400060008000

10000

1200014000

2001 2002 2003 2004

Year

Mill

s, U

SD

Africa

Europe

Asia

North America

Other

The Structure of Ethiopian Trade

Observations: The bulk of export consists of primary

agricultural commodities, where volatility in price and demand is common at the international market

While more than half of imported items are composed of:

capital goods, semi-finished goods and raw materials

Asia, Europe and the Middle East are the main Trading Partners for Ethiopia.

Significance of Inter-regional Trade is limited.

-3--3- Review of the Policy Domain Review of the Policy Domain

3.1. Review of Recent Trade and Related Policies

Gov’t plays a vital role in the creation of enabling env’t in the use of ICT for trade

Policy can enable or enhance adoption of ICT or act as a barrier and suppress the e-Economy.

Contribution of e-Commerce and e-Biz to growth ultimately depends on policy env’t

Which policies?Which policies?→→

3.1. Review of Recent Trade and Related Policies

Main Strategies and Policies reviewed: ADLI SDPRP PASDEP Rural and Agricultural Dev’t Policy Trade Industrial Policy Customs Procedures & Regulations Foreign Exchange Directives Standardization & Quality Control ICT Policy.

3.1.1. ADLI

Since 1993, ADLI is the a focal development strategy for the Ethiopian Government.

The strategy aims at increasing agricultural production and productivity by introducing Green Revolution type technologies-fertilizer and improved seeds Commercialization of agricultural production

beyond the subsistence level Make agriculture internationally competitive Export oriented agricultural production

There is no consensus on its appropriateness.

3.1.1 ADLI…cont’d

ICT have become important in enhancing productivity and reducing marketing costs.

ICT have important role in accessing info on: Weather conditions Market prices Appropriate technology selection and

application Agricultural marketing information, etc.

However, with regard to the use of ICTs in facilitating trade ADLI has not made any concrete suggestions.

3.1.2. SDPRP

Poverty reduction is among the highest priorities of the Government as expressed in the SDPRP.

It has expressed its commitment towards the achievement of the MDGs - halve poverty by 2015.

SDPRP is based on four building blocks: Capacity building – one of the blocks.

ICT is taken as a cross-cutting edge in all of the four building blocks

As part of the capacity building program Ministry of Capacity Building (MoCB) was established in 1998.

National ICTs Policy implementation and evaluation capacity is one of the 14 capacity building programs.

3.1.2. SDPRP…cont’d

A draft ICTs policy has been prepared. A full-fledged ICT Authority has been

established. Main elements of the ICT policy capacity

building: National ICTs human resource dev’t Capacity building in ICTs educ. and training

infrastructure of higher educ. system Capacity building in colleges and universities Establish national ICT technical institute Development of ICT curriculum for medium

and higher level educ. institutes.

3.1.2. SDPRP…cont’d During the SDPRP-there have been major efforts:

Expansion of telephone coverage Introduction of broadband technologies Etc.

However, there is limited commitment towards reducing cost of ICT access and Utilization of ICT facilities by the private sector Lack of incentives -tax and tariff incentives.

3.1.3. PASDEP

The most consolidated and recent policy framework for the yrs 2005-2010

It carries forward important strategic directions pursued under the SDPRP with particular emphasis on greater commercialization of agriculture Private sector development and Scale-up efforts towards the MDGs.

PASDEP acknowledges that Information Technology is central to growth and poverty reduction. To leap frog forward the ICT sector

3.1.3. PASDEP Major undertakings planned with regard

to the ICT sector development: Promoting human resource development in the

ICT field, Mainstreaming the use of ICT in all sectors of

the economy, administration of government, and in the education system,

Developing the necessary telecommunications infrastructure,

Promoting research and development through ICT, and

Creating enabling legal and regulatory frameworks.

3.1.3. PASDEP… cont’d Another notable developments: the idea of

strengthening the infrastructure backbone: Road Water supply Power supply Telecommunications

With regard to telecommunications: ↑ fixed tel. subs ↑ cellular subs ↑ internet subs

These are all encouraging developments which may facilitate the use of ICTs in trade.

3.1.3. PASDEP Plan on Telecom infrastructure

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

Fixed Mobile Internet

2010

2002

3.2. Sector Specific Policies3.2.1. Rural and Agric. Dev’t Policy

The agricultural sector is constrained by a number of bottlenecks: Underdeveloped infrastructure Backward agricultural technologies Disease and pests Population explosion Environmental degradation Low institutional capacity, etc.

As a derivative of ADLI, the Agricultural Policy underlines the importance of transforming the sector from subsistence to a market-based commercial agriculture. Export markets are the target

3.2.1. Rural Dev’t and…cont’d The widespread adoption of ICT infrastructure

holds considerable promise for the country. ICT Application Examples:

Video conferencing between coffee farmer (Uganda) and the coffee dealer/expert (US),

application of ICT in agricultural surveys and research database in Nigeria and Indonesia.

Deploying market networks and information system is acknowledged.

However, Ethiopian farmers are small-scale subsistence producers, who can't access modern marketing information systems. State driven information and market

network system is needed.

3.2.1. Rural Dev’t and…cont’d The policy recognizes the need for expanding

telecom services up to kebele level. Positive development

The policy, however, makes no systematic reference as to how the development and application of ICT in the sector could be achieved:

Market and information network, Development of localized content

developments, Dissemination of standard and quality

information, inspection, Price and weather information, Etc.

3.2.2. Trade Policy

The trade regime is part of the overall incentive structure for dev’t.

Both domestic and international trades are vital for economic growth.

For a variety of reasons, Ethiopia has not fully realized the benefits from its trade in the past.

Some encouraging efforts in the trade sector: Streamlining customs procedures Removal of export duties and taxes Liberalization of forex + retention scheme+

export credit guarantee scheme Establishment of a Trade Point Dismantle quant’v restrictions and reduce the

level and dispersion of tariff rates.

3.2.2. Trade Policy…cont’d Poor export performance is largely attributed to

non-price factors: Information on market prices Speed of delivery After sales service Etc.

ICT is vital to realize faster economic Growth. Trade can be promoted through harnessing ICT to

improve: The banking infrastructure Sound and efficient payment system Deepen capital market

In recent years, several countries are using ICT to achieve dev’t goals: Example: Tunisia’s application of ICT in trade

3.2.2. Trade Policy…cont’d

Ethiopian Trade Point was established with objectives of: Receiving, collecting, compiling and

disseminating trade information, Sending, receiving and distributing electronic

trading opportunities, Promoting domestic products at int’l market,

Etc.

However, very little has been achieved. Still an up-to-date and interactive web-

based database and information dissemination system does not exist.

3.2.2. Trade Policy…cont’d

Reasons: serious capacity, skill, and budget

constraints Backward method of info dissemination

methods Non-public and limited number of itemized

up-to-date price and opportunities information

Recurrent restructuring Lack of reliable investors database etc

3.2.3. Industrial Dev’t Strategy Relatively conducive industrial environment in the

1950s and 1960s: Tax exemptions Remittance of forex Import and export duty relief Tax exemption on dividends Modest protection of domestic industries, etc.

Poor performance during the Derg regime (0.57% average growth 1980-91) Restricted private participation

Relatively neglected during the current regime Priority to agriculture ADLI diluted the role of

Industry.

3.2.3. Industrial Dev't Strategy… cont’d

It was only after 2001, the country has a produced an Industrial Development Strategy

The Industrial Development Strategy gives priority to: Textile and clothing Leather and leather products Agro-processing Construction SMMEs

Good governance through: Improved licensing Tax collection Income and Property registration

Banking industry Reduce information asymmetry inter-bank

networking

3.2.3. Industrial Dev’t Strategy… cont’d

The strategy acknowledges the importance of infrastructure: Creating employment, Investment opportunities, Facilitate industrial growth

ICT could contribute to the dev’t of local business, inter-continental and regional trade, and local entrepreneurship.

IDS articulates the importance of rigorous effort on the dev’t of ICT

It underscores the role of ICT for: Proper income , expenditure and property

registration for the tax system,etc.

3.2.3. Industrial Dev’t Strategy… cont’d

Some Practical Issues: Unavailability of SMS service – which is the cheapest

means of communications Monopoly control of core part of telecom business

Minor and tiny telecom activities are left for private sector participation: End-user telecom equipment vending Tele-shops and kiosks Cyber cafes, etc.

Universal Service Access (USA) is an excuse for the declaration of monopoly.

Lesson from other LDCs reveals that USA can still be achieved under greater participation of private sector in the telecom business.

3.2.4. Investment Promotion Strategy

Several investment proclamations and amendments since the early 1990s

Focal points for promoting, coordinating, and facilitating investment:

The MoTI, The Ethiopian Investment Authority and Regional inv’t Bureaus

Compared to other African countries Ethiopia is poor in attracting FDI

Many licensed projects have not been implemented

One reason could be the underdeveloped ICT infrastructure

Requirements for an investment permit: Signed application In person or photocopy of his power of attorney Photocopy of memorandum and Article of

Association Photocopy of identity cards

All are paper-based No provision of ICT in processing investment licensing

using Electronic forms Interactive websites Advanced e-processing.

No reliable web site: www.investinethiopia.org. could not be verified if it works.

3.2.4. Investment Promotion Strategy

3.2.5. Foreign Exchange Policy Foreign exchange regime reflects:

The economic settings Management system Policies Structure and level of development Performance of the external trade and balance of

payments position Degree of independence of central bank

A number of financial liberalization measures have been undertaken since 1991.

Currently, payments for imports and export, can be made by: Letter of Credit (LC) Cash Against Documents (CAD) Advance Payment (AP)

All are paper based documents!

3.2.5. Foreign Exchange…cont’d

No Ethiopian national resident in Ethiopia or Ethiopian Co. is allowed to maintain a bank account abroad without the authorization of NBE.

No person may export or enter into any commitment to export without prior approval of the Bank and unless the exporter undertakes to surrender the resultant sales proceeds in forex to an authorized bank

Only One-Way payments through Credit Cards

In general, Forex directives have no room for: Electronic payment system for cross-border transactions Electronic processing of imports and exports Electronic application forms and Electronic signatures.

3.2.6. Customs Procedures and Regulations

The dev’t of ICT and the role of Customs and Clearance institutions is vital in trade practices and conclusion of transaction.

Ethiopian Customs Authority (ECuA): Collect duties and taxes on import and export Implement international laws and conventions Control import and export of restricted goods

Various incentive structures: Exemption from export taxes Duty drawback scheme Voucher pass scheme Bonded manufacturing warehouse scheme

Beneficiaries should present several paper-based documents.

3.2.6. Customs …cont’d

Currently, with the Civil Service Reform, ECuA is among the Champions.

Enormous success! Customs automation (Automated System for

Customs Data – ASYCUDA++) – about 20 offices networked so far

Mandatory minimum level of required document

43 days to 8 hours clearance time Simplified declaration process using Direct

Trade Input (DTI)- however, only 12 agents are remotely connected.

More effort is still needed: Automation process Capacity building and staffing Training and skill dev’t, Etc.

3.2.7. Standardization and Quality Control

The Quality and Standards Authority of Ethiopia (QSAE) aims: To promote quality management Promotion and application of Ethiopian

standards, Etc. Core areas of activities:

Regulation enforcement and Calibration Laboratory testing and Standards information,

Batch product inspection Standards information and public education

However, no emphasis is given to the quality/standards of almost all ICT equipments and the health and environmental implication as well as their disposal.

4. ICT Landscape, Policy and Regulatory Frameworks

-5--5-Private Sector Readiness in Using ICTs in Private Sector Readiness in Using ICTs in

Trade (SMMEs)Trade (SMMEs)

5.1. Introduction SMMEs:

Foster competition Ensure efficient utilization of resources Instant to respond to new opportunities Create employment opportunities Reduce poverty Breeding ground for entrepreneurs in LDCs Market driven Expand the tax base. Etc.

5.1. Introduction

ICTs can benefit SMMEs in many ways: Increase productivity Increase efficiency of internal biz operation –

inventory management, accounting and budget

Cheap communications Expand client base – e-Marketing Facilitate capacity building –

e-Learning/Training Facilitate government services – business

registration and filing of taxes.

5.1. IntroductionThere are several ways by which the ICTs can be

useful for SMMEs in Ethiopia: Facilitate the marketing of agricultural products

in the global market Facilitate the promotion and development of

tourism Facilitate access of artisans & artists in SMMEs

to the world markets Provide opportunities for firms to enter into B2B

and B2G supply chains business process reengineering e.g. BPO- to create jobs and generate revenue.

Etc.

5.2. Application of ICTs by SMMEs5.2.1. Background to the SMMEs Study

With the aim of understanding the level and usage of ICTs by SMMEs in Ethiopia a small survey was organized.

Coverage of the survey: Addis Ababa Sampling frame: list of registered and currently

operational SMMEs A two-stage stratified sampling - according to

their area of operation and level of paid-up capital

Four areas of operation: Customs and clearance Export Export and import Foreign trade auxiliary (import only is

excluded)

5.2.1. Background … cont’d

Export category by typeLevel of registered

Paid-up capital TotalWith telephone Sample

Customs and Clearance Cat 0 less than 20,000 173 158 2

Customs and Clearance Cat 1 20,001 - 100,000 47 46 1

Customs and Clearance Cat 2 100,001 - 500,000 62 60 1

Export Cat 0 less than 20,000 342 295 4

Export Cat 1 20,001 - 100,000 130 117 2

Export Cat 2 100,001 - 500,000 268 205 3

Import Export Cat 0 less than 20,000 475 444 6

Import Export Cat 1 20,001 - 100,000 415 388 6

Import Export Cat 2 100,001 - 500,000 480 450 7

Foreign trade Auxiliary Cat 0 less than 20,000 207 180 3

Foreign trade Auxiliary Cat 1 20,001 - 100,000 187 161 2

Foreign trade Auxiliary Cat2 100,001 - 500,000 286 229 3

Total   3,072 2,733 40

Sample size   41  

Percentage of sample in the Population   1.46%  

5.2.1. Background … cont’d

40 SMMEs representing 1.46% of the Licensed SMMEs population.

Problems: Missing contact address Mismatch between registered and

actual address Non-response

5.2.2. Year of establishment and Location

Year of establishment of sampled firms Location of sampled firms

Num. Per. Sub District Num. Per.

Before 1991 4 10.0 Addis Ketema 1 2.6

1992- 2000 7 17.5 Arada 3 7.7

2001 – 2004 11 27.5 Bole 14 35.9

2005 – 2006 18 45.00 Gulele 2 5.1

Total 40 100.0 Kirkos 11 28.2

Kolfe 1 2.6

Lideta 1 2.6

Nefas-silk 2 5.1

Yeka 4 10.3

Total 39* 100.0

5.2.3. Enterprise and Owners profile

Majority of the firm managers are male(93%)

80% have either college diploma or degree

48% are sole proprietorship, 43% partnership

The majority (65%) are engaged in retail and whole sale trade

More than 50% employ less than five workers

5.2.4. ICT Penetration and Utilization

What type of ICTs do they use? Fixed line, mobile, fax, PBX, PCs, LANs,

Website, internet. Number of Tel. Lines Frequency Percentage

1 - 3 29 72.5

4 – 6 3 7.5

7 – 10 4 10.0

16 1 2.5

TOTAL With Fixed lines 37 92.5

W/O Fixed Line 3 7.5

Total 40 100

5.2.4. ICT Penetration …cont’d

Number of Mobile Tel. Lines

Frequency

Percentage

1 14 35.9

2 7 17.5

3 7 17.5

4 7 17.5

6 2 5.0

20 1 2.5

41 1 2.5

TOT. W. Mob. lines

39 97.5

Do not use mobile

1 2.5

Total 40 100

Purpose to connect to the Internet

0

10

20

30

40

50

60

70

80

Elec

tronic

mail

(e-m

ail)

Infor

mati

onse

arch

To gi

vepr

oduc

t/ser

vice

infor

mati

on to

custo

mer

s

To pu

rcha

sego

ods a

nd/or

serv

ices

Purpose

Firm

s(%

)

Series1

5.2.4. ICT Penetration …cont’d E-mail services are the most important use of

internet. Annual Expenditure for the Internet Connection

Birr No. of

companies Percent

0 - 20,000 14 40

20,001 to 40,000 6 17

40,001 – 60,000 7 20

60,001 – 80,000 3 9

Above 80,000 5 14

 Total 35 100

5.2.5. Destination and Sources of Trade Transaction

Continent Destination Supplier

Num. Per. Rank* Num. Per. Rank

North America 7 17.5 10 2 5.0

Europe 15 37.5 23(2) 13 32.5 30(2)

Middle East 12 30.0 24 (1) 15 37.5 25(3)

Far East including China

9 22.5 20(3) 17 42.5 35(1)

Africa 8 20.0 17 6 15.0

Others 2 5.0 8 2 5.0

5.2.6. Sales via the Internet

Reasons Number of SMMEs

Percent of SMMEs

Rank

improve company image 7 17.5

reduce marketing cost 11 27.5 10(3)

reduce transaction costs 13 32.5 18(1)

speed up sales 11 27.5 16(2)

improve customers satisfaction 11 27.5

reach to new customers (geographical expansion of markets)

9 22.5

become competitors with other firms 6 15.0

increase sales 10 25.0

avoid corruption 7 17.5

The most important reasons for internet sales?

5.2.6. Sales via the Internet

About 45% stated that they have received orders via the internet.

However, online payment has not been possible.

5.2.7. Purchase via the Internet

About 45% of the firms have made orders via the internet to purchase goods and services.

What Motivates?Main Motivations Number Percent Rank

reduce production/service procurement cost

16 40.0 25(2)

speed up product/service procurement process

16 40.0 49(1)

outreach to new suppliers 14 35.0 15(3)

Because of competition from competitors

10 25.0

prevent theft and crime 12 30.0

avoid corruption 8 20.0

Others 1 2.5

5.2.8. Advantages of Using ICT in trade

Advantage Number of firms

Percent of firms

Rank

Reduces transaction cost 37 92.5 60(1)

Expedite sales and purchases 26 65.0 22(3)

Better security of transaction 26 65.0

Helps to deliver goods and services faster

26 65.0 39(2)

Improve customers satisfaction

30 75.0

Avoid corruption 17 42.5

Others 2 5.0

5.2.9. ICT Skills in SMMEs

The level of education of the managers and basic ICT skill are used as indicators of their utilization of ICTs.

Level of Education of Managers

 

Male 

Female 

 Tota

l

With ICT Skills W/O ICT Skills With ICT SkillsW/O ICT

skills

No. % No. % No. % No. %

High School Diploma/TVET 2 5 0 0 0 0 0 0 2

College Diploma 14 38 0 0 3 100 0 0 17

College Degree 12 32 0 0 0 0 0 0 12

Post Graduate Studies 4 11 0 0 0 0 0 0 4

Below 12th grade 5 13 1 0 0 0 0 0 5

  37 99.49 2.5 6 3 100 0 0 40

5.2.9. ICT Skills … cont’d

 Skills & Access M Per. F Per. Total

SMMEs who employed ICT Professionals 17 94% 1 6% 18

SMMEs' employees who are computer literate 39 61% 25 39% 64

SMMEs 'employees who have access to PCs 38 60% 25 40% 63

SMMEs' employees who have access to the Internet 35 65% 19 35% 54

Employees skill and access to PCs and the Internet

5.2.10 Contribution of Internet to Total Sales Revenue

Contribution in Percent

Number of firms

Percent of rims

0 12 30.0

0 – 10 2 5.0

25 – 50 4 10.0

50 – 75 3 7.5

75 – 100 6 15

Non response 13 32.5

5.2.11. Availability of Gov’t Regulations, Legal and Regulatory Framework

Resp. Num. Per. of sampled firms

Availability of Government Information

Yes 15 37.5

No 17 42.5

Don’t know 8 20.0

Availability of Electronic forms Yes 13 32.5

No 17 42.5

Don’t know 10 25.0

More than one-third indicated that some relevant gov’t information and some electronic forms are available on the internet.

5.2.11. Gov’t Regulations …cont’dProblem Num.of firms Percent of Firms Rank

Lack of clear legal framework to establish cross border online service

15 37.5 27 (1)

Lack of legal provision for the conclusion and validity of electronic contracts

15 37.5 17 (2)

Lack of legal framework for recognizing electronic signature

16 40.0 12 (4)

Lack of legal framework for the recognition of electronic transaction of goods and services

16 40.0 15 (3)

Absence of e-payment procedure 15 37.5

Problems related to after sales services 10 25.0

Problem of security 8 20.0

Problems related to customs procedures 10 25.0

Problems related to tax system 11 27.5

Others 1 2.5

Many firms feel that there is no legal and regulatory provision that authorizes the establishment of online cross border business.

5.2.12. Obstacles and Constraints on the Use of ICTs by SMMEs

Main barriers to e-Commerce in Ethiopia

Barrier Num. Per. of firms

Rank

Products/ services not suitable for sales via the internet

14 35.0

Customers not ready to use Internet purchases

16 40.0 33(3)

Absence of an online payment system

23 57.5 40(1)

Absence of legal framework for electronic commerce

21 52.5 35(2)

Logistic problems with the delivery network

12 30.0

Lack of ICT skills 11 27.5

Others 2 5.0

-6--6-Conclusions and Recommendations Conclusions and Recommendations

6.1. Conclusions

Although the potentials that ICTs can offer for human and economic development are well known, Ethiopia has not been able to fully benefit from developing the ICTs industry as a sector and using ICTs as an enabler.

Not much is known about the use of ICTs in facilitating domestic and international trade

The main goal of this project has been to assess the use of ICTs in facilitating trade and thereby identify the gaps in policy and regulatory frameworks to promote e-trade.

6.1. Conclusions On the positive side:

ICT is considered as a cross-cutting edge in the SDPRSP and PASDEP documents.

The industrial development strategy recognizes that an efficient and reliable telecommunication infrastructure is crucial to expand the ICT sector and improve the usage of the technology for industrial development in the country.

Practical efforts are observed on the expansion of ICTs infrastructure

Although, still more efforts are needed, ECuA’s reform and modernization are encouraging.

The draft ICT policy has clear guiding principles for the implementation process including long, medium & short term plans.

6.1. Conclusions On the negative side: Most sectoral policy documents reviewed did not

clearly articulate the role gov’t can play to facilitate the use of ICTs. The agricultural policy has yet to provide specific

directions on the use of ICTs in the system of production and in the distribution of agricultural products.

The trade policy does not explicitly recognize and appreciate the role of ICTs in facilitating trade.

Very little attention has been given to the role of the private sector’s participation in ICTs development

The current Foreign exchange directives have serious bottleneck for the development of e-commerce

The absence of an appropriate legal and regulatory framework is one of the main constraints for the expansion of online trade.

6.1. Conclusions …cont’d

The result of the SMMEs survey: some firms have started to be engaged in

online trading great interest to use ICTs in trade practices

Major Problems: absence of legal and regulatory framework poor ICT related infrastructure high cost of the technology

6.2. Tentative Recommendations Mainstreaming of ICTs in all sectors of the economy. Ensure ICT friendly legal and regulatory

environment: The use of electronic document electronic signature legal recognition enforceability

Develop ICT oriented education and training systems, science and technology policies and strategies

Liberalization of the telecom infrastructure Providing incentives for ICT development :

tax, private sector capacity building programs, trade facilitation centers

6.2. Tentative … cont’d appropriate institutional arrangement that will

facilitate an effective co-ordination, monitoring and evaluating ICTs application.

Formulate comprehensive communication & broadcasting policies.

Encouraging capacity building programs on ICT skills development in the public & private sector.

develop specific ICT private sector development programs like Technology parks, business ICT incubators for Business Process Outsourcing (BPO).

6.2. Tentative … cont’d Encouraging SMMEs to use ICTs by:

Improving the business processes Linking them to the global economy Simplifying registration and other legal

processes Providing business & ICT skills education at

all levels Improving the costs to access ICT

infrastructure, the internet, Personal computers.

Thank you