Topic Brief

E-BUSINESS IN LATIN AMERICA & THE CARIBBEAN

Small businesses in Latin America play an important role both in generating income and employment.  Their development is crucial for socio-economic development in the region.  e-Business can function as a strategic, value-adding tool, that can improve small businesses’ competitiveness in a relatively short time.

E-business can be defined as the progressive process of:

1)       investing in information and communications technologies (ICT);

2)       using ICT to transform business processes such as market research, production, finance, and management;

3)       improving companies’ managerial and technical skills; and

4)       carrying out business with other firms, governments, and households via online networks.

CHALLENGES OF IMPLEMENTING E-BUSINESS

Telecommunications services in Latin America are improving and average Internet connectivity rates in the continent’s more advanced countries are now comparable to OECD country averages.  Nevertheless, pronounced gaps remain in web site usage, e-Business integration, and usage of specialized software applications for data and business management, particularly among MSBs.

Internal constraints to e-Business development by MSBs include:

• Absence of awareness of e-Business benefits, business models and success cases
• Lack of the know-how and technical support needed to integrate and manage e-Business systems
• Shortage of finance for e-Business innovation

External constraints to e-Business development include:

• Costly and/or unreliable network infrastructure services
• Insufficient security for electronic transactions
• The complexity of mainstream ICT systems and applications
• Lack of investment incentives

WORLD BANK SUPPORT TO E-BUSINESS IN LATIN AMERICA & THE CARIBBEAN

In 2004, the World Bank launched the e-Business for Small Business Competitiveness Initiative aimed at helping public and private organizations in Latin America accelerate the rate of e-Business adoption among MSBs.

The initiative supports the following activities:

1. Research and identify successful e-Business experiences and best practices from Latin America and the Caribbean and other regions.  This includes:

• Tracking e-Business developments and events within and outside the World Bank
• Obtaining case studies of successful e-Business experiences by MSBs in Latin America
• Closer working associations with specialized institutions, associations and MSBs.

2. Promote and increase awareness of the importance of e-Business within the World Bank and among Latin American governments, business associations, and MSBs themselves.   This involves:

• Dialogues on key e-Business themes requested by MSBs, governments and business associations, taking advantage of the Global Distance Learning Network (GDLN).
• Disseminating the results of these dialogues and additional background information through publications such as “En Breve” and the e-Business website.

3. Encourage integration and implementation of e-Business in World Bank projects and programs.   This means:

• Identifying key staff at World Bank headquarters and in country offices, and supporting their efforts to implement e-Business components by providing knowledge and funding.

4. Build regional cooperation and partnerships on e-Business.  The medium to long-term goal is creating a Latin American institution or network – to be launched by national, regional or local authorities – to promote the adoption of ICT and e-Business among MSBs.  This entails:

• Liaising with national eDevelopment institutions, government officials, and potential partners such as the International Council for Information Technology in Government Administration (ICA), the Inter-American Development Bank (IADB), the Organization of American States (OAS), the European e-Business Support Network (E-BSN), and others.
• Encouraging and facilitating innovation in e-Business, sharing experiences and good practices, and establishing an online dispute resolution system.
• Fostering public-private partnerships for the development of services, interoperable applications and content.

E-BUSINESS PROJECTS IN LATIN AMERICA & THE CARIBBEAN

Ecuador - Power and Communications Sectors Modernization and Rural Services Project (PROMEC)

This project aims to deepen reforms in Ecuador’s telecommunications and electricity sectors. Key activities include strengthening regulatory institutions, improving environmental management, fostering competition and increasing private participation, and promoting efficient use of energy.

The project also supports MicroNet, a new and experimental network of business development service centers that provides ICT support services to MSBs.  MicroNet’s purpose is to help small business entrepreneurs train for business, solve current business problems, and do business.

Honduras and Nicaragua - Bank Netherlands Partnership Program (BNPP)

Building Capacity of Small Business in Central America

This project aims to stimulate small business development in Honduras and Nicaragua and enable MSBs in these countries to thrive under CAFTA.  It takes a two-pronged approach:   identifying investment climate reforms and other measures that can strengthen MSBs’ capacity to forge linkages to larger and exporting firms; and building the capacity of government and key intermediaries to promote e-Business adoption among small firms.