A Fairer World: How can small businesses in some of the world’s poorest countries get a chance to grow through global trade?
To improve the lives of their citizens, developing countries need to be able to trade globally. Unfortunately, that’s sometimes easier said than done. Now, a new initiative has been launched by the Deutsche Post DHL Group (DPDHL) to drive positive change and make it easier for small businesses in developing nations to thrive through trade.
Global trade is, literally, a lifesaver. It has lifted millions out of poverty, created new jobs and reduced prices for consumers. Indeed, the World Bank notes that, for the extremely poor, global trade isn’t just beneficial, it’s absolutely essential. “Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people,” the World Bank reports.
The problem is that developing countries often struggle to access global markets. For example, they can be disadvantaged by the anti-competitive business practices of major players, or hampered by unfavorable regulatory environments. As a result, they miss important trading opportunities, the effects of which are often felt by their poorest citizens. That is a human tragedy, according to pro-globalists who believe that, in the long run, business and trade will help improve lives in developing and least developed countries (LDCs) more efficiently than development aid ever can.
This is why DPDHL has launched a new initiative called GoTrade.
The company already runs sustainability programs called GoTeach, GoHelp and GoGreen that are committed to making the world a better place through social and environmental action. Now, with GoTrade, a fourth pillar has been added to the “Go” family.
“With GoTrade, we want to help small businesses in developing countries thrive through trade,” says Steven Pope, Head of GoTrade. In a two-pronged approach, the program will focus on small- to medium-sized enterprises, or SMEs, with e-commerce as a key driver of trade. At the same time, the Group will work with governments on legislative reforms to make doing business in these countries easier. “With this program we can use our global footprint and scale to influence the trading environment – to drive positive change,” explains Pope.
Evolving into GoTrade
Bringing significant expertise to the table, Pope previously championed a DHL Express program called Power Up Your Potential to aid SMEs in developing countries in increasing exports, thereby bringing hard currency into the economy. He also joined forces with the German Federal Ministry for Economic Cooperation and Development (BMZ) on an initiative aimed at reforming customs legislation to encourage trade in LDCs.
It is these separate but related projects that eventually evolved into GoTrade. “The trade facilitation work I was doing just kept growing,” says Pope. “It became so big, I felt we needed a Group-wide program to look after it.”
Launched in October 2020 with a Memorandum of Understanding (MOU) between DPDHL and Germany’s BMZ, the program cemented the company’s position as a major partner in the German government’s work to facilitate business and trade in developing countries across the globe, with the goal of sustained economic growth. The BMZ and DPDHL have committed to a partnership, with DPDHL supplementing the BMZ’s investment via an “in kind” contribution comprising expertise in e-commerce, trade legislation, and customs and border processes.
Battling red tape
Customs and border issues – red tape, inefficiency and corruption – are some of the biggest barriers to the smooth movement of goods across borders in many parts of the world.
“In some countries, shipments take 21 days to clear customs,” says Pope. “Others can clear a shipment of goods in a day or less. We have a key indicator known as ‘Cleared on Arrival’ – the percentage of goods cleared into a country within one hour of arrival. We are looking to push that percentage higher around the world.”
Fighting inefficient practices is challenging, but far from impossible, Pope believes. In fact, a formula for effective trade facilitation already exists: The Trade Facilitation Agreement, or TFA, agreed by the World Trade Organization in Bali in December 2013, which entered into force in February 2017.
“The TFA is like an instruction manual on how to create economic growth via trade,” says Pope. “The more measures countries implement, the more these countries will create an environment that allows businesses to thrive.”
Support for SMEs
Through GoTrade, countries will be encouraged to implement the TFA and move higher up the World Bank’s Ease of Doing Business Index, which ranks countries according to the conduciveness of their respective environments to doing business. The work involves everything from advising on legislation reform and training customs officers to facilitating discussions on best practices with a country that has already improved its status.
But GoTrade doesn’t only focus on policy and governance; the business aspect, with its focus on SMEs, is also absolutely key to the program’s success. The method: Identify and aid individual SMEs to navigate the world of exports and e-commerce.
“We’ll find SMEs with a good product that they may not be exporting, and show them the benefits of exporting it,” Pope says. “We help them market it and find suitable platforms for export. For example, we teach them search engine optimization to increase their chances of being found online, how to photograph their goods and the rules they need to follow.”
From market stall to internet platform
The internet can be a game-changer for businesses in developing countries, expanding their reach exponentially, Pope says. “For businesses in many of these countries, it’s still the case that their product is only seen by people who walk past their shop window – or even their market stall,” he explains. “Now the whole world can see your goods. And you can ship to the whole world, too.”
One place where the initiative has already made an impact is Rwanda, where DHL has been cooperating with German development agency GIZ and the non-profit International Trade Center (ITC) to enhance cross-border trade for SMEs. Since 2017, when the project began, 150 SMEs have been trained in logistics and e-commerce, and workshops have been conducted to teach on-the-ground coaches various logistics modules – including security, customs and regulations, and dangerous goods. Work has also begun on the development of an e-commerce services center in Kigali.
More recently, the Group joined the German government’s Pan-African E-Commerce Initiative, which is being implemented in Rwanda, Kenya and Tanzania. It’s a perfect fit, as the initiative aims to improve the framework conditions for companies to participate in cross-border e-commerce through digitalizing trade.
Globalization for the win
When all is said and done, GoTrade is really about enabling globalization in the best possible way: one in which everyone wins. “Everywhere around the world you’ll hear globalization being attacked,” Pope says ruefully. “Everyone is talking about onshoring. But at the end of the day, the real driver for growth is globalization.”
Ultimately, the goal of the new initiative is to create a better world, which is why Pope hopes that GoTrade will become a key element of the Group’s business strategy. “We have a sense of corporate responsibility as a global citizen and a large multinational company,” he says. “This is about us using our scale, our local knowledge and our global footprint to positively drive change and be a champion for global trade.” — Jennifer Abramsohn
Steven Pope spent 26 years in various public sector positions, including at Her Majesty’s Customs & Excise, her Majesty’s Treasury and a stint at the International Monetary Fund, working on trade compliance, taxation policy and trade reform. Pope joined DHL Express in 2011, where he was VP, Customs and Regulatory Affairs, Europe. In 2019 he was named Head of GoTrade.
Published: December 2020
Images: Getty Images; Malaville; Joseph Okanga/Reuters; DHL