Digital Trade Dialogues: Spotlighting Colombia 
 
eTrade Alliance Colombia Policy Dialogue

By Morgan Wilsmann

The eTrade Alliance has a robust workstream to conceptualize and promote policy solutions conducive to MSME ecommerce. On July 28th, 2021, the eTrade Alliance along with the Latin American eCommerce Institute and the Colombian Chamber for eCommerce hosted the Colombia Digital Trade Dialogue to explore policy and technology solutions to support Colombia’s new National Ecommerce Policy and to enable Colombian MSMEs and especially women-led and rural MSMEs to engage in cross-border ecommerce.

 

The timing of the event was fitting, as many governments in emerging markets are paying attention to the uptick in digital trade spurred on by the COVID-19 crisis. In Latin America specifically, Colombia is emerging as a regional leader in adopting pro-ecommerce policies to build on increasing demand, and thanks to the government’s successful initiative to bring internet connectivity to 70% of the population, a large number of Colombian MSMEs were able to participate in ecommerce when the crisis began. According to speaker Simon Osario, the Deputy Director of Sectoral Digital Transformation, compared to last year, there was a 139% increase in digital transactions, giving strong evidence that many Colombian consumers were ready and willing to buy remotely, including through WhatsApp and other social media platforms.

 

The Dialogue included discussions on:

 

  • Challenges to Colombian MSMEs’ use of cross-border ecommerce, including with the United States (such as MSMEs’ capacity to engage in ecommerce and access to secure online payments, low-cost cross-border logistics, and finance);

 

  • Policy and technology solutions to these challenges in several key areas such as cross-border payments, ecommerce capacity-building, and logistics and trade facilitation;

 

  • Pilot program ideas and policy initiatives to operationalize discussed solutions to promote MSME ecommerce, including through the Alliance’s work, both at national and local levels

 

Colombia is ranked 51st out of 190 countries in the eTrade Alliance’s Best Place for MSME Ecommerce Index that uses 54 measures to estimate the best place to start an online business, and ranks 11th out of 52 countries in the eTrade Alliance’s Digital Policy and MSME E-Commerce Index, which measures policies conducive to MSME ecommerce across mostly emerging markets. Colombia is in other words a regional leader in cultivating ecommerce enabling policies and practices – having passed a National Policy of Electronic Commerce at the end of 2020. As Colombia’s Vice President, Marta Lucía Ramírez declared in her opening statement for the Dialogue - Colombia is on track to reach its goal: to be among the top 30 countries in using ecommerce to drive economic growth, resulting in a growth in SMEs and  providing more jobs and higher wages for Colombian workers. 

 

Opening Remarks

The event was opened by co-host Maria Fernanda Quiñones, Executive President, Colombian Chamber of Electronic Commerce; and Marcos Pueyrredon, President or Alliance partner eCommerce Institute.

 

The Alliance was extremely honored to hear opening remarks from the Vice President of Colombia, Her Excellency Marta Lucía Ramírez. The Vice President underscored the importance of digital education, and the government’s plan to expand access to ecommerce for all— particularly women, for whom ecommerce could provide greater financial autonomy.

 

Simón Osorio, Deputy Director of Sectoral Digital Transformation at the Ministry of ICT and Larry Sacks, Director of the USAID Colombia Mission, discussed concrete use cases for ecommerce to enable Colombian firms to export and USAID’ s growing portfolio of work on digital entrepreneurship.  

 

Diagnostics on Colombian MSMEs’ use of ecommerce and ongoing work in Colombia to promote

ecommerce for MSMEs in support of economic recovery and regional development 

 

 Participants: 

 

Setting the stage for the three panels, Suominen presented diagnostics on Colombian MSMEs’ use of ecommerce: Colombian online seller MSMEs have acquired new clients, increased revenue, diversified export locations, and fostered an increase in digital businesses. Also new and young companies are migrating online fast – a third of firms less than three years old are “born digital,” already selling on online marketplaces or through their own online stores. The expansion of ecommerce comes with its challenges, including the need to maintain online stores, lack of access to certain online marketplaces, limited capacity in online marketing, costly international logistics, and access to talent. Panelists echoed these findings, noting that given their superior access to the internet, businesses in urban and rich areas of the country tend to use ecommerce, and earn three times the profit than non-digitized businesses. However, many SMEs have yet to take advantage of ecommerce, due to limited access to quality internet and lack of digital skills. 

In response to a mismatch in digital skills, Google's Grasshopper tool teaches SMEs to code, while Google's Grow with Google  is filled with great learning tools for entrepreneurs to take their online business to the next level. 

Panelists noted that 40% of online buyers in Colombia did their first online purchase during the pandemic due to mobility restrictions, convenience, and ease of payment. Of these 40% new online buyers, 84% had a good online buying experience, while 86% will continue to buy online and plan to expand their categories of purchase, including new brands. These data suggest that the spike in ecommerce is likely to be a new normal and continue after the pandemic crisis subsides. The panel stressed that MSMEs’ growth in ecommerce requires workforce reskilling, better delivery logistics, and more broad based ecommerce expertise among businesses. It is also essential to “go rural” and reduce regional disparities between urban and rural regions in ecommerce use. 

 

Panel 1: Secure digital cross-border payments and access to finance for MSMEs in ecommerce

 

Panelists discussed how digitization has increased financial inclusion, resulting in greater ease in facilitating online transactions and an increase in online sales. Overall, the online market has expanded dramatically: there are new players, business models, technologies, and greater efficiencies. However, there remains a need to formalize small purchases and to make transactions more secure.

 

Colombia was highlighted as leading the charge to use improved technologies for pre-payment information which will streamline secure transactions and improve competition. However, there can be  tradeoffs between an improved user experience and user’s security – these calls for world-class secure transactions and payment platforms. Panelists also stressed the need for improving consumer safety and confidence to enable online transactions. 

 

Decree 1692 was discussed, as a new law enacted by the Colombian government to transform payment processes for low-value transactions and broaden payments options. The law has three possible impacts from improved payment options: it can open the door to new players who bring unique business models and lower costs; and in general be a step toward adoption of best global practices. However, there remains a challenge with trust within the digital payment system; the panel highlighted fraud control as an essential priority.

 

Panel 2: Cross-border Ecommerce and Trade Facilitation

  • María Luisa Boyce, Vice President, Public Policy, UPS  ; 

  • Allan Cornejo, Country Manager, Colombia, DHL ; 

  • Alisa DiCaprio, Head of Trade and Supply Chain, R3 ; 

  • Jacqueline Rajuai, Program Manager, Google Plus Codes

  • Moderator: Kati Suominen, Founder and CEO, Nextrade Group and Technical Director of eTrade Alliance

In this panel, it was noted that more than 90% of buyers have changed their purchasing behaviors, with consumers rather than businesses becoming importers and exporters, opening up new considerations for import/export policies, particularly for low-value shipments. The panel in general supported higher de minimis thresholds as a means to enable small business ecommerce, and models like Canada’s to simplify imports of low-value items above de minimis thresholds. 

 

Panelists focused on last mile delivery, discussing Google's groundbreaking open source digital addressing solution Google Plus Codes that is already being piloted in numerous parts of the world such as slums in India, rural areas of Brazil, Navajo Nation in the United States, and counties in Kenya to enable accurate addresses and reduce ecommerce delivery times – and also enable people to access financial and public services for the first time.   

 

The panel also discussed the role of blockchain in trade facilitation, trade finance, traceability, quality control, and ESG certifications. Blockchain can also improve transparency, providing the ability for buyers to track their purchases from start to end in the supply chain – Haiti for example has been successful at using blockchain particularly in the agriculture sector to track products from Haiti to the US. While there are many pilots introducing blockchain to customs procedures, the uptake has been limited given the behavior changes needed among businesses and government bodies alike. The panel suggested that the U.S.-Colombia Free Trade Agreement be updated with a digital trade chapter. Another recommendation was for the Colombian government to create pilot initiatives with the private sector to enable ecommerce through technologies such as blockchain, update laws to enable digital business models, and create an official position or ministry charged with fostering digital transformation.

 

Panel 3: MSME ecommerce capacity building and export promotion: emerging best practices, especially for promoting women-led firms in ecommerce

 

Panelists:

  • Juliana Villegas Restrepo, Vice President of Exports, ProColombia

  • Carlos Corominas, Director of Social Impact for Latin America and the Caribbean, Visa

  • Gheidy Gallo, High Advisor for Women's Equity, Office of the President

  • Moderator: Diana Perez Forero, Legal Manager, Andean Marketplace, Mercado Libre 

 

In Panel 3, panelists underscored the need for more capacity-building for women-led firms. UPS’s Women Exporters Program has found that 40% of SMEs are founded by women, indicating a great need for capacity building and training for women entrepreneurs to manage their customers and vendors. Further demonstrating the inequities between women and men entrepreneurs, the World Economic Forum indicates women are particularly encumbered when it comes to the adoption of ecommerce, estimating it will take about 270 years to close the digital gap between men and women. 

 

The panel noted that women often establish home-based businesses in response to unemployment, but they have scant formal training in running a business. To increase the number of Colombian women-led SMEs that sell to international markets, women need to be incentivized to choose occupations in demand in the digital economy, such as IT services, a traditionally male profession. Recognizing this competency gap, the Ministry of Science, Technology, and Innovation sponsors the program called +Science, +Women, +Equity, in which some 15,000 women have participated. This program has also built a guide for women to incorporate digital platforms into their businesses, educating over 10,000 women in science and business fields. 

 

Panelists discussed ProColombia’s work supporting Colombian businesses to enter global marketplaces through the Colombia A Un Clic project by developing visibility strategies that work with the private sector to eliminate barriers to ecommerce. Further, ProColombia is collaborating with the government of Colombia to create avenues for rural women to export their agricultural goods, helping the country become an agricultural power in the region. 

 

Finally, panelists agreed that with the government of Colombia’s support, and the work by ProColombia, Mercado Libre, and other institutions, Colombia has not only recognized the crucial need to better integrate women-led MSMEs, but has also taken concrete steps to ameliorate the gap between men and women entrepreneurs.

SME Ecommerce Success Stories

 

Silvana Gónzález, the CEO of Café La Divisa, discussed the challenges of growing her company into an online seller and exporter, and the successes of the coffee company’s mission to be humane and sustainable, while empowering women in the coffee growing industry. Located in the fertile land of Nevado del Ruiz, Cafe la Divisa distributes specialty coffee throughout Colombia and globally.

The Dialogue also learned from the many market access and logistics challenges as well as the many accomplishments of Omar Huertas’s Valtik Foods - a food and beverage company based in Bogota filling the demand for nutrition designed to support athletic performance.

Finally, Andrea Góez, the Institutional Alliances Leader of Corporación Interactuar, presented their great achievements in fostering entrepreneurship. With 39 offices throughout Colombia, Interactuar tackles unemployment by providing entrepreneurs with access to financial services and vocational training.

Presentation of sectoral initiatives that promote and accelerate the inclusive development of digital commerce for MSMEs

This panel focused on new initiatives to support ecommerce in Colombia. Bancamia works to reduce poverty by focusing on supporting entrepreneurs in the most disadvantaged communities by providing savings and credit services, including mobile banking. Bancamia’s EMPROPAZ program focuses on rural micro-entrepeneurs and works in collaboration with the United States Agency for International Development (USAID), the World Corporation for Women in Colombia and the World Corporation for Women in Medellin. Ecommerce Institute discussed its many capacity-building programs for MSMEs in ecommerce and its new initiative eCommerce Mind that is aimed to cultivate new talent for the Latin America ecommerce sector. Colombia Chamber for Electronic Ecommerce discussed its platform "Ya Estoy Online" learning platform for Colombian entrepreneurs learn about various aspects of doing ecommerce.