June 10, 2020

Kiribati sets sights on overcoming hurdles to ecommerce

by UNCTAD / in News

Originally published by UNCTAD on 20 May 2020

Digital solutions implemented to combat the spread of COVID-19 give fresh impetus to efforts to harness the development gains of ICT and ecommerce.

To contain the spread of the coronavirus, Kiribati reduced physical contact among government staff by introducing in March electronic payment of salaries of those who were previously paid in cash.

Many government employees who didn’t have bank accounts before the pandemic were obliged to open them.

The Pacific nation also started processing online documents for incoming vessels and flights bringing essential goods or repatriating foreigners, to enhance physical distancing among border security staff.

Further, the government updated its national trade portal with information on other measures taken to combat COVID-19 and useful links to critical services, for ease of access.

New impetus

The low-lying island nation’s digital solutions in the wake of the coronavirus pandemic have given new impetus to its efforts to harness the development gains of information and communications technology (ICT) and ecommerce.

An UNCTAD assessment of Kiribati’s e-trade readiness has recommended policy actions aimed at seizing opportunities and removing barriers to increase the country’s overall competitiveness in ecommerce and the broader digital economy.

“We’re committed to creating an enabling environment for e-trade,” said Atarake Natara, Kiribati’s Minister for Commerce, Industry and Cooperatives, citing the country’s 20-year development plan that puts a premium on promoting ecommerce.

“An effective ecommerce ecosystem will offer us increased trade opportunities through better access to worldwide markets and business resources,” Mr. Natara said.

Last year, Kiribati updated its national ICT policy with strategies for boosting ecommerce. Its ministries have crafted similar strategies over the past three years.

“We commend Kiribati for accelerating the digitalization of business and government procedures in line with the assessment’s recommendations. This is proving essential in ensuring the continuity of essential services during the COVID-19 crisis,” said Shamika N. Sirimanne, UNCTAD’s Director of Technology and Logistics.

She said the development of an inclusive ecommerce policy and of a sound regulatory framework, as recommended by the UNCTAD assessment, would go a long way in sustaining ecommerce growth in Kiribati, as part of the country’s COVID-19 recovery efforts.

The Kiribati assessment by UNCTAD is one of nine funded by the Enhanced Integrated Framework (EIF), of which five took place in the Pacific – Kiribati, Samoa, Tuvalu, Solomon Islands and Vanuatu.

“We’re pleased to have supported every least developed country in the Pacific to conduct assessments that lay the foundations for digital trade,” said Ratnakar Adhikari, EIF Executive Director.

“We look forward to working closely with Kiribati and other development partners to help them address the identified challenges, especially in the areas of enhancing affordability of digital services and putting in place a reliable payment system,” he said. ​

Barriers to overcome

The study identifies several barriers that hinder Kiribati’s e-commerce potential. It highlights the low volume of ecommerce activity within the country’s scattered islands, due to logistical difficulties that raise the cost of intra-island transactions.

Spread across 33 atolls and 3.5 million square kilometres of ocean, the people of Kiribati face significant economic and public service delivery challenges.

Only 37% of Kiribati’s population has access to mobile internet. The country’s total internet penetration is even lower, at 15%, leaving most people in digital darkness.

Broadband data products are expensive, costing up to three times more than in Fiji, also an island nation. Recent government efforts to liberalize the sector are aimed at lowering the cost.

Infrastructure and legal hurdles

Kiribati’s limited infrastructure and difficult connections with outer islands complicate logistics for businesses and individuals alike, precluding them from engaging in ecommerce.

UNCTAD is helping Kiribati tackle the challenge by providing technical assistance to improve business registration, customs procedures and boost cross-border paperless trade.

Through its ASYCUDA programme, UNCTAD is supporting Kiribati to modernize its customs following the country’s accession to the Revised Kyoto Convention, and to provide the platform to build a national single window environment.

Financial inclusivity remains low in Kiribati, while digitalization of payments is constrained by the lack of solutions from mobile network operators and banks.

In addition, it’s yet to adopt laws regarding e-documents and e-transactions, as well as those governing e-contracting, which underpin digital payments and e-funds transfers.

Skills and access to finance

Awareness of ecommerce is low in Kiribati, prompting 71% of the respondents to call for capacity-building to improve knowledge and skills in the private and public sectors.

Access to financing is also limited, as the country’s small banking system is not well-positioned to fully cater to the needs of the private sector through business lending.

The country’s micro, small and medium enterprises need more access to finance, said 73% of the assessment’s respondents.

UNCTAD has so far conducted 27 assessments in least developed countries since 2017 and recommended a raft of policy actions to seize the development opportunities offered by ecommerce.

Credits

Header image of a boat in Kiribati - ©Warren Jackson via Flickr Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0) license.

Disclaimer

Any views and opinions expressed on Trade for Development News are those of the author(s), and do not necessarily reflect those of EIF.