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Transition economies in the UNECE region can harness e-commerce in their post Covid-19 recovery, but many obstacles remain

Publication cover UNCEFACT

During the COVID-19 pandemic, driven by the constraints imposed by social distancing measures and restrictions on movement, businesses and consumers in the economies in transition in the UNECE region (e.g. Central Asia, Southern Caucasus, Western Balkans and Eastern Europe) – mirroring global trends – moved rapidly to digital channels, adapting to new business models and adopting new consumption habits. According to the World Bank’s “Enterprise Survey, Covid-19: Impact on Firms”, 36.6 per cent of firms in Georgia, 40 per cent in the Republic of Moldova, 24 per cent in North Macedonia and 18 per cent in Albania started or increased online business activity in response to the pandemic.

The report published today by UNECE “Post-pandemic Covid-19 Economic Recovery: Harnessing. E-commerce for the UNECE Transition Economies” shows that even though challenges existed long before, the pandemic revealed and exacerbated the digital gap within these countries. It also unmasked challenges in harnessing the benefits of e-commerce. Adaptation to the new business and trade models were especially tough in economies in transition, which struggle with lack of connectivity, modest degrees of financial inclusion, weak digital financial services such as online payments, lack of trained human capital, significant gender gap, and logistic and supply issues.  

The report, which is part of a wider effort made by the UNCTAD-led e-Trade for all Initiative in cooperation with some United Nations Regional Commissions, aims to identify policies and initiatives that could support these economies, to enhance their readiness to engage in and benefit from e-commerce as a contributor to the post-pandemic recovery.

Despite the many obstacles they face, many economies in transition in the region are working intensively towards developing the fundamental prerequisites for advancing digitalization. Countries in Central Asia, for example, intensified efforts towards e-government as the pandemic unfolded, creating better access for individuals and businesses. Kazakhstan, Kyrgyzstan and Uzbekistan had begun the process of moving public services online before the pandemic hit. This trend further intensified during the pandemic, including in areas such as tax and customs, creating an enabling environment for e-commerce, not least by reducing costs for business and government. In March–April 2020, for example, the Republic of Moldova adopted measures with respect to public digital signatures and Turkmenistan adopted a law on documents, including document flows and electronic services. Central banks in some countries temporarily permitted companies and banks to lower or scrap transaction costs and fees on digital payments and mobile money transfers.  Customs and tax payments in Georgia continued to be made online through the revenue customs service platform and were further streamlined by introducing simplified procedures for tax refunds. Several countries undertook measures to address the lack of financing faced by SMEs, including exploring digital financing channels, direct lending, guarantee schemes and concessional lending. Armenia, for example, introduced several measures to assist SMEs during the pandemic, including measures relating to concessional financing, subsidies, preferential loans, and grants.

Nevertheless, there is still an urgent need to address challenges related to connectivity, financial inclusion, and digital financial services in order to advance digitalization and shift to a digital economy in the region. Governments can harness the benefits of e-commerce by advancing the adoption and implementation of trade facilitation measures, including those related to paperless trade, pre-arrival processing, expedited shipments and electronic payments. The international standards developed by UNECE-hosted United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) are crucial to exchange trade-related information between parties.

During the past four decades, UN/CEFACT has developed about 50 trade facilitation recommendations and hundreds of e-business standards, technical specifications, and guidance materials on electronic exchange of trade data. Given the significant gaps in data on e-commerce in transition economies, this report offers an excellent overview, spotlight the key challenges, and identifies policies and recommendations that can support countries in the UNECE region and assure their fair participation in the economy.

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