Global Fund for Ecommerce: The Vehicle to Enable Entrepreneurs in Developing Countries to Sell More Online

Transcription

1 Global Fund for Ecommerce: The Vehicle to Enable Entrepreneurs in Developing Countries to Sell More Online Dr. Kati Suominen, Founder and CEO, Nextrade Group; Founder, TradeUp Capital Fund

2 Problem: Risk of Underfunded, Low ROI SME Ecommerce Capacity-Building Governments want to build SME capacity for ecommerce Aim: high impact at scale But risks: ROI not clear Lack of learning across projects no common metrics or impact assessments Projects underfunded

3 Solution: Global Fund for Ecommerce Development Design high ROI at scale Measure continuous improvement Fund scalability, sustainability

4 Possible Mechanics Export promotion agency issues call for SMEs, setting criteria (Ecommerce-ready, cash-flowing, committed, clear goals) Each SME applicant submits 5-6 data points, pays a small fee SMEs screened, entrants grouped by sector, readiness, etc. Trainers certified by ecommerce platforms, teach the platform 200 hours of training at scale, 50% of which online 10 hours of 1-on-1 by training Continued measurement

5 Design for ROI Criteria SMEs: Ecommerce-ready, cash-flowing, committed, clear goals Projects: segmented to SMEs at similar sectors, readiness levels, etc. Goals Each SME sets measurable goals; revisits during program Each program aims at capacity-building of 10,000 SMEs >50% at least double ecommerce exports within 2 years >50% at least double jobs related to ecommerce Commitment Each SME pays a fee to apply and to enter the program Each platform foots 10% of training, reinvests small share Competition Best-performing SMEs and trainers rewarded

6 Uniform measurement of outcomes before, midpoint, 2 years after 1. Total ecommerce sales and purchases 2. Ecommerce sales of all sales and purchases of all purchases 3. Ecommerce exports and imports 4. Ecommerce exports of total exports and imports of total imports 5. Names of ecommerce export markets, by share of total exports 6. Names of ecommerce import markets, by share of total imports 7. Margins in ecommerce sales and ecommerce exports 8. ROI from investments in ecommerce sales 9. ROI from investments in cross-border ecommerce sales 10. Intensity of use of online payments in all sales and purchases 11. Intensity of use of online payments in all exports and imports 12. Number of employees, contractors and vendors, by skill levels and gender 13. Number of employees, contractors directly associated with ecommerce, by gender 14. Main obstacles to increasing ecommerce sales (dropdown of options) 15. Perceived impact of training on ecommerce sales (dropdown 1-10) Can use data for learning, better selection, predictive analytics

7 Consistent Funding PPP Fund: donor cash and platforms in-kind contribution, small revenue share with platform Syndicate of private funds; small revenue share with platforms Social Impact Fund

8 SIB Model Private / Impact investor Execution - platform Donor Yield Buy project Risk-free impact

9 SIB Impact Pros: triple bottom line, high urgency to perform, speed to market, risk-free for risk-averse donors Con: first investors risk-averse

10 Thank You

11 Finding $1.6 Trillion: New SME Trade Finance Guarantee Facility Dr. Kati Suominen, Founder and CEO, Nextrade Group; Founder, TradeUp Capital Fund

12 Problem: Vast and growing trade finance gap $1.6 Trillion in 2016 In bank-issued LOCs, supply chain finance, working capital Hits Asian SMEs hardest, esp. micro and small Due to KYC/AML; counterparty risk; Basel

13 Meanwhile, Rise of 6,000 Fintechs Capitalize underserved companies in underserved areas Fast: great for short-term working capital, incl. for export Good credit-scoring methods low default rates SMEs increasingly aware

14 Con: Costlier than bank loans

15 Old Model: ECAs Part of the Problem Banks ECA Guarantees 80-95% of loan SMEs ECAs fail to serve Slow Not that interested Slow, manual underwriting Hostage to banks in ability to play Fail to bridge market failure Struggle to meet SME lending targets Miss export opportunities Misallocate capital Won t create jobs

16 New Model: ECAs Part of the Solution P2P Platforms ECA Guarantees 80-95% of loan SMEs ECAs serve More business Less risk Fast, cheap, scalable underwriting Lower default rates New credit scoring Vaster portfolio diversification Increase of SME portfolio Lower cost of credit Faster credit

17 SME Trade Finance Guarantee Facility: Next Steps Assess P2P lending and Fintech models, services, performance in Asia Operational plan: criteria for P2P platform partners; underwriting criteria, automation (perhaps delegation) Pilot for 18 months in partnership with platforms Assess

18 Thank You