DAVOS: Technology is paving the way for small businesses to participate in global trade at a much faster pace as the world strives to overcome trade barriers through multilateral cooperation, experts gathered at the World Economic Forum in Davos.
Speaking at a panel discussion titled “Tradetech Meets Fintech”, Peggy Alford, Executive Vice President of PayPal, said “regulatory and capital requirements, as well as infrastructure needs” in the past made it very difficult participation of small businesses.
“Through technology, SMEs can work with banks, service providers and fintech companies to be truly included in this economy of selling to the world,” she said.
World Trade Organization Director-General Ngozi Okonjo-Iweala agreed that digital tools enable greater inclusion, “because they allow SMEs, women and anyone who can connect to be part of the chains of regional, national and global value”.
Stressing that a set of global rules is needed for the burgeoning e-commerce section, she revealed that the WTO is working on an e-commerce agreement which is currently under negotiation.
Even as small and medium-sized businesses try to adopt new technological tools to improve their operations, Alford noted that small businesses face a lack of funding.
She stressed the need for multilateral cooperation, adding that countries should work together to eliminate barriers in the trade sector.
The WTO Director-General agreed that sufficient support and funding should be provided to SMEs in developing countries to bridge the digitalization gap.
Okonjo-Iweala further pointed out that some of the global regulatory standards make it difficult for developing countries to access finance for SMEs.
Thani Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, agreed that technology will play a major role in improving the way businesses are operated in the emirate.
“Trade barriers can only be overcome by using technology. In the United Arab Emirates, technology is led by the private sector, and this is still the case globally as well. Technologies are usually initiated by the private sector,” he added.
The Minister further underlined that the private sector has a huge role to play as the world embraces a technological transition.
Emphasizing that the implementation of technology in businesses will not reduce the number of jobs, he said it will create more opportunities in trade, both regionally and internationally.
“Technology will bring more businesses. We are not here to make anyone lose their job. More volume means more and more jobs will be added,” said Al Zeyoudi.
The UAE minister pointed out that governments are still operating with the same revenue models for 20 years, and now it’s time to overhaul.
“We should not be afraid to take risks and apply technology because we will create more revenue and ensure that we really improve our countries’ trade and economies,” Al Zeyoudi said.
The WTO Director-General said future trade should be “digital, inclusive and sustainable”, and added that digital trade is growing at an accelerating pace, especially in cross-border data flow.
“In 2005, digitally traded services were approximately $1.6 trillion and growing at approximately 7% per year. In 2021 we have about $3.7 trillion, and during the pandemic, due to demand, it’s increased by 14% per year. So it’s very clear that digital is the future,” she concluded.