Forum on ICTs, Trade and Economic Growth

Opening Statement by
Mr Ahmed Tussa
State Minister of Trade and Industry
Ethiopia

14th March 2006
The advent of new information and communication technologies has redefined the way various activities are carried out at national, regional and global levels. One of these activities is trade. The digital economy is radically changing international trade, affecting business practices and introducing new business intermediaries, leading to an emerging e-trade environment. E-trade calls for the conducting of old business in new ways and the embracing of new business opportunities.

According to studies by the Organisation for Economic Co-operation and Development (OECD), the effective use of ICTs by enterprises can result in greater productivity leading to greater competitiveness and thus sustainable economic growth, a precondition for poverty reduction. ICTs are expanding the possibilities of developing economies to participate in international markets. The Internet is dramatically changing the way goods and services are produced, delivered, sold and purchased. It leads to an ever-growing number of people and businesses connected digitally, ready to participate in and contribute to the global knowledge economy. Small business owners in developing countries are empowered by the information, communication and knowledge they are now able to access using ICTs such as mobile phones and hand held Personal Digital Assistants (PDAs). Trade in goods and services is expanding as a result of new technologies. In addition, ICTs are enabling trade in other sectors by enhancing market access and broadening the customer base, facilitating customs, transport and logistics. ICTs are playing an economic role by changing production processes within firms.
However, all these opportunities can be accessed only if countries are ready to restructure their economies accordingly. This requires putting in place trade and economic growth policies that deal with the structural transformations associated with such changes. The task is not easy considering the social conflict that will result unless the restructuring is an outcome of a broad based consultation with all stakeholders. It is encouraging to see that this Forum is being attended not only by ICT experts but also by experts in trade, heads of financial institutions, Chambers of Commerce and other actors in the economy.
The African Situation

In the developing world, and particularly in Africa, E-trade can offer new opportunities to export-oriented companies, especially Small & Medium Enterprises (SMEs). They can source production inputs more efficiently thereby eliminating intermediaries, reducing supply- and export-distribution chains, and business transaction costs. As a result, enterprises in developing countries will be strategically repositioned in the international marketplace.

Categories of export opportunities that have emerged for African countries to tap into include services exporting opportunities through the use of ICTs, software development and hardware exports and E-Commerce activities. We are already witnessing African firms making use of such opportunities and participating in the global knowledge economy.

Establishing a favourable e-trade environment will greatly facilitate activities by enhancing trade efficiency and facilitating the integration of African countries into the global economy. E-commerce – broadly defined to mean the exchange of goods and services for value using electronic transactions on open or closed networks, has a lot to offer for advancing Africa’s development.

The African private sector, which consists of small, medium, and micro-sized (SMMEs) and the informal sector, is widely regarded as a potential engine of growth in the information economy. Of the numerous potential applications emerging from the global information economy, some have greater strategic importance for Africa than others, and may have more significant impact on socio-economic development.

Consequently, there are a number of initiatives that need to be undertaken by African countries to fully benefit from the positive impacts of e-Trade. An important component is ICT policy support geared towards creating the appropriate enabling environment for e-Trade to flourish, as well as other activities such as capacity building and research in pilot initiatives to support the process.

The Ethiopian Situation

In the last decade, Ethiopia has worked tirelessly to transform its economy from a closed, highly regulated, centrally planned and dominated public sector to an open, deregulated and market-based economy. The main elements of the Ethiopian development strategy have been: (i) maintenance of macroeconomic stability, (ii) competitive and flexible exchange rates, (iii) liberalization of foreign trade, (iv) promotion of private sector development, decontrol of marketing and privatization of state enterprises, (v) the development of agriculture and food security, and (vi) increased access to basic education and health, and to the road network.

The Ministry of Trade and Industry of the Federal Democratic Republic of Ethiopia is responsible for the formulation of policies and incentive schemes aimed at enterprises in the productive sector. As a result of the liberalization of the restrictive policy in 1991/92, increasing trends have been witnessed in the contribution of the private sector to the over all growth of the economy. The investment climate has improved in terms of the provision of macroeconomic stability, institutional and legal environment, efficient taxation system as well as maintaining peace in the country. Hence, during the last two years, value added in services grew by about 6.2%, industrial output by 7%, and construction by 8.2%. The establishment of an enabling environment, provision of infrastructure as well as encouraging a balanced and profitable industrial structure are among the major strategies to develop the sector.

As far as ICTs are concerned, the Government has taken major steps with regard to network expansion, including the mobile network. Accordingly, telephone coverage by Ethiopian Telecommunication Cooperation (ETC) has increased from 400,000 lines at the beginning of 2000/01 to over 1 million at the end of 2004/05. Ethiopia has made huge investment in basic multi media infrastructure backbone and is executing a project to lay fiber optic cables. This has facilitated SchoolNet and WoredaNet projects and ICT programmes to take off. Further more, corporate reforms by the ETC to increase efficiency, the partial liberalization of the ETC in terms of letting the private sector to distribute mobile phones, reducing the cost of international calls as well as Internet connection can be cited as a positive move in bringing development to this sector. In order to overcome the challenges in this sector, upgrading and expanding the backbone infrastructure as well as improving the service of mobile and fixed phones are identified as priority areas in (ETC's) strategic plan.
Despite the achievements, the implementation of power, roads, and telecommunications infrastructure expansion still remains a challenge.
Elements of the Forum and The Way Forward
According to the agenda, the forum is expected to discuss in detail the issues involved in the use of ICTs to facilitate international trade, e-trade and e-commerce. These include the economic dimension of international e-Trade, international trade and policy issues in e-commerce, the main requirements for establishing an enabling environment for the development of e-trade & e-commerce, including the legal and regulatory elements of the telecommunications environment; security of networks, authentication and certification issues as well as skills/capacity building.