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Inclusion and the digital economy

Globalization is not fading, as some would like to think. On the contrary, it is actually entering a new, wider space—the digital space—where national borders are extremely difficult to close or restrict, as China has found in its efforts to regulate its people’s access to online content from abroad. Even so, the Chinese have now become among the foremost champions of tapping the digital space to uplift the lives of people from all walks of life—thanks to Alibaba founder Jack Ma.

The Go Negosyo “Mentoring the Mentors” conference held early this week included a panel discussion on “Offline and Online Convergence of the Digital Economy,” featuring prominent exponents of both the
offline and online economies. The more senior members of the panel complemented the younger ones, all “techies” who shared how their online-based business platforms Shopee, Zalora and Zennya open opportunities to a wide group of small and budding entrepreneurs. The challenge is to bridge the traditional offline and new online economies, to help uplift the lives of countless small entrepreneurs who have been the focus of Go Negosyo’s work over the years.

The new era of digital globalization can indeed be a great equalizer and enabler to benefit micro, small and medium enterprises (MSMEs) relative to their large counterparts. I particularly like how it virtually eliminated the advantage enjoyed by large multinational companies possessing elaborate cross-border marketing networks over small ordinary businesses. Anyone with online access, even just via a smartphone, can now do business with buyers across the globe from her own bedroom, or wherever, for that matter. My daughter used to earn additional pocket money by selling clothes she no longer wanted via social media, and they sold almost as fast as she could post photos of them online. The same gadget she took photos of the items with was the same gadget with which she reached her buyers. Through an inexpensive logistics provider, she could have the items with the buyer in a matter of days. For those who want to go into serious business, it need not take much more than that.

The other important difference the digital marketplace has made is how it has permitted cutting through the chain of middlemen, who in the traditional economy are seen to reap the greatest benefits in the supply chains of the products they deal with. This is particularly true in the agriculture sector, where small farmers have remained struggling in poverty while traders and processors have been the richest players in the system. Economists used to defend the despised role of the middlemen as a necessary (though often exploitative) function in the traditional system that distanced primary producers from their final consumers. But the digital marketplace has changed all that, and “cutting through the middlemen” is a goal now more widely supported, and enabled, by the ease by which producers can link directly with final buyers via the internet.

But the digital platform is doing far more than that. Many worry about how young people are shunning the farm sector in favor of more lucrative occupations away from the farm. The average age of the Filipino farmer was last reported to be 57 years. That was several years ago, and it’s probably at least 60 now. But growing application of digital technology in the farm and agribusiness system is reportedly attracting many young people back to agriculture, providing some relief on an otherwise alarming trend. It’s well-known how Uber has made it so much easier for people to hail a ride, Lazada, Shoppee and Zalora to buy a wide range of goods, Zennya to get a massage and similar services at home, and Airbnb to book rooms as comfortable as in hotels, but cheaper. They have likewise made it so much easier for the small producers of goods and services to sell their wares. In the same way, agriculture is being made more exciting and productive by digital platforms that can connect farmers via smartphones with scientists, input suppliers and buyers, cutting costs and raising incomes.

Now if only we could get reliability and accessibility of our internet services up to par…

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