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Estonia's digital revolution: a global model of efficiency
In a recent GZERO livestream event presented by Visa, Carmen Raal, a digital transformation advisor and expert from e-Estonia, shared some remarkable insights into the nation's digital transformation. Estonia, often hailed as a digital pioneer, has undergone a profound digitalization process that sets it apart on the global stage. Carmen explained that 99.99% of Estonia’s public services are accessible online, which includes a strong collaboration between the nations’ public and private sectors. Raal points out how this unique partnership has created solutions that are versatile and user-friendly. One example is Estonia's electronic identity and signature system which isn't limited to government use; it extends to online banking across all banks in Estonia.
The emphasis on simplicity has been key to encouraging widespread adoption of digital solutions. This also includes the process of setting up a company in Estonia. Raal highlights that it takes less than three hours to establish a company online, and the world record is a just a hair over 15 minutes. According to Raal, this efficiency, especially for small and medium-sized enterprises, has positioned Estonia as an administrative haven, attracting entrepreneurs from around the world under the concept of e-residency, which allows individuals worldwide to obtain a digital identity card, granting them the ability to run an Estonian company without physical presence in the country. This offers access to the European single market, showcasing Estonia's commitment to fostering a global digital community. Raal highlights how Estonia's digital journey underscores the transformative potential of embracing technology, not only for enhancing efficiency but also for fueling economic growth and innovation.
To hear more about the challenges and opportunities that nation-states face when it comes to digitization, and how it could shape a more inclusive and resilient future, watch the full livestream conversation:
What Ukraine's digital revolution teaches the world
Lowering costs of poverty with digital & economic access
By the end of the decade, 70% of all new value in the global economy will come from digitally enabled businesses. The pandemic accelerated a push toward digitalization, especially in developing nations, yet nearly 4 billion people are still offline, and 1.4 billion don't have a bank account.
Expanding access to digital tools for individuals and small businesses is a no-brainer, but easier said than done. So, what can we do to expand digital trade further, come up with fairer and safer remittances and digital payments, and push to include everyone in tomorrow's digital-first economy?
To get some answers, GZERO hosted in partnership with Visa the livestream conversation "Closing the Gap: Digital Tools for Economic Empowerment," moderated by JJ Ramberg, co-founder of Goodpods and former host of MSNBC's Your Business.
Rubén Salazar, global head of Visa Direct, underscored how digital decency has become more acute in the post-pandemic world, yet many systems — for instance, payroll — remain analog. He also explained why unbanked people live in a vicious cycle of hardship because they can only operate in cash and lamented why cash-only networks make remittance fees so high — even as the UN goal wants to set a global 3% limit by 2030.
Ali Wyne, senior analyst for global macro-geopolitics at Eurasia Group, discussed how the discrepancy of having 1.7 billion people now cut off from the direction of travel of the global economy creates both an urgent imperative to go digital and an opportunity to narrow the gap. The likely geopolitical fallout from all of this happening after COVID and the food and energy crisis made worse by the war in Ukraine? Waves of political unrest that'll topple governments.
Dilip Ratha, head of KNOMAD and lead economist at the World Bank, shared his personal story of sending remittances to his family when he was still a student in the US. That's how he learned why it's so hard for migrants to send money back home — a lifeline for their families and remittance-dependent economies around the world.
Kati Suominen, founder and CEO of digital tech firm Nextrade Group, extolled the virtuous cycle of digital payments and access, which helps everyone the same way lack of it holds up all of us. She singled out paperless customs and logistics tech improvements as a major COVID silver lining for digital trade and offered her take on why — when they go digital — women-led small businesses often perform those led by men.
Usman Ahmed, head of global public affairs and strategic research at PayPal, offered some striking figures on what happens to small businesses when they embrace digital: sales triple by selling online, and quadruple by selling across borders. Does he see any downsides to a cashless economy? Nope, especially when it comes to the digital services created around it, but Ahmed recognized that unbanked people face tough challenges to ditch cash.
How can we get unbanked people to go digital?
Sending remittances can be prohibitively expensive. How come?
It costs a lot to manage cash in a secure way for unbanked people, Rubén Salazar, global head of Visa Direct, says during a livestream conversation on closing the global digital gap hosted by GZERO in partnership with Visa.
But some players are making progress in reducing costs, which the UN wants to cap at 3% by the end of the decade.
For Salazar, we need to tackle the problem holistically. That's why Visa has just inked a deal with Singaporean B2B payments platform Thunes to integrate digital wallets for unbanked people with Visa's digital payments network.
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Watch live October 19: Can access to digital tools transform the world's economy?
Is digitization crucial to economic growth? GZERO Media is partnering with Visa to explore what it means when 70% of the global economy’s growth in the next decade is projected to come from digitally-enabled businesses – yet 3.7 billion people lack internet access. What are the tools and initiatives needed to bring more people into the digital economy?
Live on Wednesday, October 19, our expert panel will explore the impact of digitization on empowering consumers and small businesses. Please register to attend.
Participants:
- JJ Ramberg, Co-Founder, Goodpods, and former host of MSNBC's Your Business (moderator)
- Usman Ahmed, Head of Global Public Affairs and Strategic Research at PayPal Inc.
- Dilip Ratha, Head of KNOMAD and Lead Economist at the World Bank
- Ruben Salazar, Global Head of Visa Direct
- Kati Suominen, Founder and CEO, Nextrade Group
- Ali Wyne, Senior Analyst, Global Macro-Geopolitics, Eurasia Group
How can small businesses thrive after COVID?
Two years ago, life as we knew it came to a halt. COVID-induced lockdowns and quarantines hit businesses hard, shuttering stores and restaurants on main streets around the globe.
Now, COVID restrictions have been lifted throughout much of the West. While many businesses that survived (or launched amid) the pandemic are equipped with the creative, innovative spirit that helped them weather 2020-2021, challenges remain.
GZERO Media, in partnership with Visa, hosted a livestream discussion with business experts to examine the consequences and possibilities emerging from COVID, and how micro, small, and medium-sized businesses can thrive. Participants included GZERO President Ian Bremmer, Visa’s Global SVP Merchant Sales & Acquiring Jeni Mundy, US Chamber of Commerce’s Tom Sullivan, Kiva CEO Chris Tsakalakis, and SMEunited’s Veronique Willems. JJ Ramberg, the co-founder of Goodpods and former host of MSNBC’s Your Business, moderated.
So, where do things really stand with the global economy? Moderator JJ Ramberg asked GZERO Media President Ian Bremmer to share his thoughts.
“The biggest change we’ve seen from the pandemic has been a growth of inequality,” Bremmer said, referring to massive debt among poor countries and their subsequent debt burden. “As interest rates get higher, it’s going to be harder for them.” And while the big economic story of the last 50 years has been about the rising middle class globally, that’s being slowed now thanks to COVID. Increasing poverty and hunger — both exacerbated by rising prices and supply chain shortages — are to blame.
Turning to consumer confidence in the West, Ramberg referred to an online poll by GZERO Media in which 44% said they believed their economy was worse now than before the pandemic. Such skepticism, Bremmer said, likely stems from the fact that wage hikes have not matched price hikes. “We haven’t this level of inflation in 40 years in the United States,” he said. Business owners, however, have a reason for hope, owing to the changes in flexible working arrangements and small business support available today.
Indeed, small business owners in much of the West are optimistic, said Visa’s Jeni Mundy. Having changed their business models during COVID to survive, she says, they’re now able to use their new e-commerce solutions to get ahead.
Visa surveys show that 90% of small businesses in nine different markets are optimistic about the future, which is an “incredibly high number,” Mundi said. That’s up from 75% at the beginning of the pandemic. In Visa’s economic empowerment study, businesses reflected a desire for tools to help them operate in the digital age, and even in developing markets, entrepreneurs are asking less for government support and more for better connectivity and digital solutions.
Tom Sullivan, VP of Small Business Policy at the US Chamber of Commerce, agreed that there’s a “tremendous amount of optimism” in the US, thanks to massive stimulus programs and the lifting of restrictions. But that optimism, he warns, “is under a very heavy wet blanket of inflation.”
Still, the bipartisan US legislation dedicated to small businesses in recent years has been impressive, Sullivan added, referring to PPP and SBA Economic Injury Disaster Loans. “I’ve heard reference from small businesses all across the country using words like ‘lifesaver,’” he said, referring to the relief packages.
But entrepreneurial optimism isn’t universal. In fact, in Europe, many small business owners are very concerned about their prospects, especially as they look east to Ukraine and the impacts of Russia’s aggression on the global economy.
SMEunited’s Veronique Willems is worried about the European business outlook. She said a recent SMEunited survey showed that while business confidence was up last spring, new COVID variants and increased protocols in the autumn had caused renewed concern. On top of that is inflation and the knock-on effects of war in Ukraine, all of which are making entrepreneurs nervous.
“The sentiment, let’s say, is big uncertainty at the moment,” she said.
Meanwhile, labor shortages are front of mind for business owners the world over.
Finding skilled staff was an issue before COVID, Willems said, and it’s even worse today, especially in sectors that have been shut down throughout the pandemic.
Supply chain issues are another global problem. Small business owners are loathed to raise prices (fearing a loss of customers), according to Sullivan, which is why 61% of them in the US have been working to “rejigger their supply chain.”
Yet, despite all these seemingly daunting obstacles to succeeding in business, there’s been a higher launch rate for startups throughout the pandemic. Some 58% of new business owners Visa surveyed in the US said they created their businesses during COVID because they lacked other options, and 42% did so because they saw a business opportunity.
“COVID has almost ushered in a new business boom,” Mundy said, referring to this high launch rate, which was as much as 40% higher than in 2019 in the US. The two main drivers? One, the need for flexibility amid COVID and, two, the desire to fill a gap or niche. These new startups also notably showed higher numbers of female leadership. “It’s great to see so many female CEOs now emerging,” Mundy said.
So what will these small businesses need moving forward to survive in a post-pandemic world?
Sullivan isn’t too worried because “small businesses are problem-solvers.” Just as they swooped in amid the pandemic with unique solutions and services, they will continue to adjust to meet the challenges of the future. But to keep startups on an upward trajectory, governments need to be enablers, not inhibitors, and private industries need to help.
Chris Tsakalakis, CEO of Kiva, is one of those enablers. Kiva is a crowdfunding-based lender to entrepreneurs worldwide. Tsakalakis said he saw growth in both borrowers and lenders over the past year following a drop the year before.
Most of the small companies Kiva works with are small, often solo entrepreneurs, in need of basic business training. They need to understand pricing, business planning, marketing – the fundamentals, he said. Kiva works with partners to get this know-how to these customers, and partners like Visa help pay for that training. Digital and technology training, he said, is the next level.
Small business owners are passionate about their product and business, but not necessarily technology. Yet technology is key to success — covering everything from inventory to accounts receivable and payable — as is cyber security. All of these matters are front of mind for many entrepreneurs, said Mundy.
Luckily, “technology is increasingly coming to the fore to be able to solve all these problems,” she said, noting that some services and aggregators solve for several of them at once. So small businesses, she advised, should look around for these helpful players and partners.
Digital connectivity and know-how is, of course, uneven worldwide, but that’s an area where the pandemic has helped. “One of the major silver linings of the pandemic,” said Bremmer, “is the fact that tech companies and investment in infrastructure did move basically 10 years over the course of just 18 months.” This also meant that places that weren’t as digitized, such as sub-Saharan Africa and parts of Asia, got people connected much more quickly.
Greater digital inclusivity will continue helping small businesses around the world thrive.
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