Digital trade offers Lebanon a lifeline
Lebanon’s economy has imploded after decades of government mismanagement. Its currency has lost more than 90% of its value against the US dollar since 2019, and the banking sector is in shambles. When foreign capital dried up, the government enacted strict capital controls preventing Lebanese from withdrawing their dollar savings. This led to mass protests and even fake bank robberies – the desperate offers of some to get their hands on their own money. The International Monetary Fund has asked Beirut to reform its zombie banking sector in order to unlock bailout funds – but to no avail. As a result, many have turned to digital payments. Digital wallets like Purple and peer-to-peer money transfer apps allowing users to pay businesses directly have become a lifeline for the country’s 6.7 million people, many of whom depend on the 15 million strong Lebanese diaspora. people to stay afloat. Dima Assad, manager at Nada Debs, a Beirut-based interior design firm, said its business had to switch to a payment gateway called PayTabs, based in the United Arab Emirates, when US dollar credit card payments were blocked. Additionally, fintech offerings have been a game-changer for the 55% of Lebanese who do not have access to bank accounts. Unbanked people lined up at Western Union — and paid high fees — to send and receive money, but now they can use smartphones or laptops (78% have internet access) to access funds while incurring lower transaction fees. The economic situation in Lebanon remains dire, but digital trade offers a lifeline.
How COVID has impacted digital commerce
When the sudden onset of a deadly new coronavirus in early 2020 began to force political leaders to restrict the movement of unprecedented numbers of people, it didn’t take much foresight to predict a rise of e-commerce. The move towards greater volumes of digital commerce has accelerated for years, primarily for economic and financial reasons, but the inability of businesses to onboard customers or meet the needs of other businesses has driven this trend. history at overdrive. It’s a phenomenon that billions of people have experienced first-hand over the past 32 months as their work and shopping habits have changed. In this sense, COVID has raised expectations of long-term economic gains as pandemic-related necessities have become mothers of invention.
But there are disadvantages that we must consider. This acceleration ensures that the “creative destruction” that fuels all major macroeconomic gains – the collapse of some industries and businesses as more efficient and profitable others take their place – has disrupted lives and livelihoods. sustenance of many more people in a shorter period of time than any other economic phenomenon of the recent past.
And the Numeric fraction, both within and between countries, may well have widened as those with access and expertise in digital trade move into the future much more quickly and easily than those without. The pandemic is not over, especially for China, which has been the main driver of global growth for many years. We need a lot more data to understand the positive and negative impacts of COVID on digital commerce and its global impact. But these are topics that will deserve careful study in the years to come, as life and commerce settle into a new normal.
E-commerce at war
Doing business in a war zone presents, shall we say, additional challenges. Mobilizations draw workers to the front lines, battle lines cross sea routes, and general uncertainty hampers both investment and trade. Ukraine’s agricultural exports – its the biggest export sector – in the 2022-2023 season (until August 19) were down 51.6% from the previous year, and the World Bank now predicted that its GDP will contract by 35% in 2022 (compared to a 4.5% decline for Russia’s GDP). But e-commerce platforms can provide a new way to help local businesses reach global audiences even as conflict rages on. Last month, for example, the Ukrainian government spear an online marketplace called Made with Bravery that allows Ukrainian artisans to sell their products around the world. The platform is only available to businesses based in Ukraine, and it donates 5% of all revenue to a foundation that helps rebuild parts of the country hard hit by fighting. (Full disclosure: Made with Bravery was launched in partnership with our sponsor, Visa.
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