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Last Updated: Thursday, 3 April, 2003, 09:43 GMT 10:43 UK
Internet power 'fails the poor'
Africans searching the web
A poor way to generate business?
The much-hyped advent of e-commerce in developing countries is not having the positive impact expected, new research suggests.

The power of the internet has been much vaunted as a way of enabling poorer countries to increase their share of trade with richer countries.

As such, many countries have adopted - or are in the process of adopting - expensive technology infrastructure to harness that power, often egged on by software firms.

But the reality of e-commerce is very different, according to a new report researched in Bangladesh, Kenya and South Africa and funded by the UK Department for International Development.

"We didn't find any big firms that are migrating to e-commerce in developing countries," John Humphrey from the Institute of Development Studies told BBC News Online.

"Over and over we are told that capitalising on personal contacts is the way to broaden business opportunities," said Robin Mansell, one of the report's authors.

Building trust

The problem, according to Ms Mansell, is that international trade rarely occurs between complete strangers.

The internet and e-mail alone are unlikely to generate the type of trust needed for US buyers to take the plunge and source their wares from Africa or other unfamiliar trading partners.

E-commerce should follow the business opportunities rather than trying to create them
Robin Mansell
Report author
After investigating 180 open e-marketplace websites and interviewing 74 managers of exporting firms, the report concluded that little business with new firms was being generated from business-to-business websites.

This situation is further hindered by the lack of suitable online payment methods or the legal acknowledgement of electronic signatures.

But even if these more advanced technologies were in place, the report still deemed it unlikely that big buyers would forge important business relationships without some sort of personal contact.

"People in international trade want ongoing relationships, the build-up of trust and quality," Mr Humphrey said, stressing that the idea of a mass-take up of e-commerce trading had been a misconception.

Niche success

There are, of course, some shiny examples of newfound trading partners that have met courtesy of the world wide web.

Developing countries are still susceptible to the hype although a degree of cynicism is beginning to creep in
Robin Mansell
A small trading company in Nairobi, for example, is selling macadamia nuts to Switzerland, carrots to Romania and oranges to Ukraine.

And an international avocado buyer in Chile has stumbled across a new supply source in South Africa, thanks to the power of the search engine.

But such success stories are likely to be confined to niche markets and remain small fry in terms of global trade, Mr Humphrey said.

Hard sell?

One worry is that software and telecoms suppliers are continuing to over-hype the power of the internet, encouraging developing countries to invest in fancy equipment they do not really need.

"There is still a big push from IT suppliers and telecoms companies to sell and developing countries are still susceptible to the hype, although a degree of cynicism is beginning to creep in," Ms Mansell said.

Improving e-commerce infrastructure in poor countries is still important, the report argues, but in order to maintain relationships rather than generate them.

That means that the more sophisticated technology needed to operate online trading platforms is often not necessary.

"E-commerce should follow the business opportunities rather than trying to create them," said Ms Mansell.

The most likely scenario for trading over the internet, she says, is not an open marketplace but a place where buyers invite offers from selected sellers.

"And that relies on personal contact and relationships having been established," she says.

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