E-Commerce in Developing Countries
Janet Toland (Victoria University of Wellington, New Zealand)
Copyright © 2008.
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Internet access in developing countries is growing rapidly. Developing countries accounted for one-third of Internet users worldwide by the end of 2003, and the catch up rate is getting faster. Between 2000 and 2003, developing countries increased their share of the Internet population of the world by nearly 50%. This has led some commentators, such as World Bank to claim that initiatives to close the digital divide are no longer relevant (Atkins, 2005). However, most residents of these countries still have no access to the Internet. For example, Internet access in Africa is less than two percent in a population of more than 900 million; the lowest rate of access in the world (Dunphy, 2000, UNCTAD 2004). E-commerce, e-government, and mobile commerce provide significant opportunities for developing countries, but their adoption will be slowed by technological, cultural, economic, political, and legal problems (Davis, 1999; Enns & Huff, 1999). Differences in e-readiness and related barriers to e-commerce will sustain substantial differences between regions of the world, between countries within regions, between urban and rural areas within countries, and between the genders and age groups. Different opinions exist as to what benefits the use of information and communication technologies (ICTs) can offer developing countries. Do they provide developing countries with the opportunity to “leapfrog” ahead, skipping over certain stages of infrastructure development? Or do ICTs simply widen the gulf between the developed and the developing world even further (Economist, 2005)? The World Summit on the Information Society (WSIS) views ICTs as enabling technologies that can improve the quality of life for citizens of developing countries. Whereas Bill Gates view is that ICTs can provide little benefit to developing countries until more basic needs like clean water, health, and education have been met. In spite of this lack of agreement the reality is that if a basic communications infrastructure is available, options do exist to utilize e-commerce in developing countries. This article explores the potential opportunities that these technologies offer, and considers the barriers to uptake. E-commerce involves buying and selling goods and services within an electronic marketplace, and also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization (Turban, McLean, & Wetherbe, 2004). E-commerce can take place between one business and another (Business-to-business), and between a business and its customers (business-to-consumer). E-government is the application of e-commerce technologies to the public sector. Developments in e-government have opened up the potential for governments worldwide to improve the services they offer to their citizens. A move towards e-government offers particular advantages to developing countries that may have difficulties interacting with their citizens through more traditional communication channels. E-government consists of two separate areas. First, it is concerned with changing internal government operations, inasmuch as information technology is used to support cooperation among government agencies (government-to-government). Second, it is used to support external government operations, in particular the interactions between citizens and companies, and the public sector, on a self-service basis (government-to-citizen) (Howle, 2003). Mobile commerce offers the potential to bypass inadequate landline telecommunications infrastructure. Growth in the number of mobile telephone users worldwide has expanded from 50 million in 1998 to over 1.3 billion by 2004 (Turban et al., 2004). Wireless technologies have taken off even in relatively low-income areas of the world, where prepaid cards allow access without having to pass a creditworthiness check. At the end of 2003, Africa had more than 50 million mobile device users, whilst the number of fixed line telephone subscribers stood at only 25.1 million (ITU, 2004). Similar trends have been observed in Latin America and Asia, where handheld devices enable users to overcome the difficulties caused by low fixed line penetrations.