Commerce and the Digital Supernation
On Wednesday 24. 2018 at the World Economic Forum in Davos, Varun Sharma from Estonia’s e-residency programme and Elizabeth Rossiello from Kenyan based BitPesa, participated in the panel discussion “Commerce and the Digital Supernation”.
With digital multinational companies becoming the new normal, the resources and infrastructures they need to succeed are fundamentally shifting. Varun Sharma of Estonia’s e-residency programme and Elizabeth Rossiello of BitPesa joined Gert Sylvest, Tradeshift co-founder and general manager for Frontiers, in the panel debate to discuss the emergence of global digital identities, networks and marketplaces, and what the future of global business looks like.
For Elizabeth Rossiello it is all about removing inefficiency. Digitalization means reducing inefficiency and cutting corners, “I see nothing but inefficiencies in the African banking infrastructure. The savings that can be made are enormous, at least 70% savings on cross border payments going from two weeks down to just an hour in process time. We are at the beginning of a revolution of what could really happen”.
Gert Sylvest points out that: “Trade fundamentals, such as access to finance, access to market and access to payment infrastructure are key barriers that will be shifting in the coming years”. Elizabeth Rossiello agrees to this: “With 14 days payment terms for smaller companies, that means that essentially 50% of the operating time the cashflow is tied up”.
Varun Sharma explains about Estonia e-residency: “The e-residency programme in Estonia that started 3 years ago is not really an innovation in its own, the real innovation actually comes from Estonias e-governance platform that is considered one of the most advanced e-governance platforms in the World — with over 5000 services you can register online. Estonia wanted to extend the business services part of the platform so that people can start, manage and grow their business 100% online. A big advantage is that Estonia is a member of the Euro zone and that can give people outside the European single market access via this platform.”
Mr. Sharma continues: “Another advantage is that you can have business partners and investors in other parts of the world, and you can still conduct board decisions and investment decisions and sign documents legally in Estonia digitally and which is valid across the EU. It solves the issue of being cost effective in terms of money and also in terms of time.”
On national states taking the lead in digitalization, Elizabeth Rossiello said: “It is exiting to see Estonia leads the way. Kenya is sending people to Estonia to learn more about this. Digitization of public services is happening in many African countries — parking tickets, taxes, postal services. Digitization of government services is mega.”
Gert Sylvest said: “What we see in many countries is that the state can spearhead the development of digitization — like we have seen it in Estonia.
However global infrastructures like Amazon and Alibaba are becoming more and more important all over the world as more and more of the global commerce is taking place on these platforms.”
Gert Sylvest continues: “There is a consolidation and centralization of these kind of marketplaces and we are at a stage now, where companies ask for infrastructures that do not monopolize the global ecommerce markets, and that leaves a place for the identities and the brands of the companies doing trade everywhere in the world to also be represented and to participate in trade on equal terms with other companies.”
Elizabeth Rossiello also advocates an open infrastructure on equal terms: “We cannot have silos being build up with each country building their own e-residency programmes with different programmes — we would be going back to the days where Credit Suisse and the UBS are on the opposite side of the street with totally different operating systems and that doesn’t make any sense.” Ms. Rossiello emphasizes: “I am a proponent of open source software and decentralized networks like Ethereum and the Bitcoin blockchain which you can have all sorts of programmes being build on and it is immediately interoperable.”
Gert Sylvest has an idea about where to start: “The digitization of the supply chain is the key, because you start getting an understanding of the relationships and the flows.
Some of the things you take for granted in the developed countries like trusted governments, trusted banking infrastructure and so on, is a very different scenario compared to third world countries. You have to build trust through your interactions — and that is exactly what you can do in the digital supply chain. And then the link to the cryptocurrencies is an obvious one, because you then have qualified transactions going on than you can directly translate into complementary trade currencies, where you have a lot more options than you do in the FIAT currencies.” Mr. Sylvest continues: “If finance is available in a digital form and available as digital assets and you can combine them with the settlement globally, I think that is a phenomenal potential that no policy maker can ignore.”
When talking about the challenges BitPesa has experienced in the field of cryptocurrencies, Ms. Rossiello explains: “The Biggest challenge on cryptocurrency going forward is education, it is about financial products mainly right now and it takes time for any financial product to be communicated. In the beginning some of the media struggled to communicate on what it was and we heard headlines like “world domination” and “Robot coins” and we need to get past these early headlines. There are 1000s of startups building amazing things on this and there is a global community around this which is very powerful. We are at a very beginning of an exciting time, and it has been great here at Davos to see all of the excitement and all of the progress between my friends and colleagues. So there is a lot more to learn than just the headlines.”
Gert Sylvest feels the biggest challenge is the companies lack of insight in their supply chains: “We are still in a place where 70% of the companies have either zero insight or only insight into the first tier of their supply chain. And this is an enormous challenge for companies that do have a complex supply chain today. One of the challenges is how you are going to invest back into the supply chain, so you can keep it up. You are less of a company and more of a supply chain and your success increasingly depends on how quickly this supply chain is able to adapt. And distributed ledgers or blockchains has a key role to play in terms of freeing up liquidity and creating different kind of incentives models. If you can offer financing options to your supply chain it means they can invest and grow.”
Asking the panelists if there is a a future where citizens can live in one nation and be virtual citizens for each other? Varun Sharma answers with a smile: “We are already doing it!” and he continues: “ Estonia started on it but there will other countries that will follow — and they will compete on the quality and the scope of digital services they provide everyone across the world. It is easy for large corporations to manage internationally — but it is hard for small companies and local employees — and we will solve the local problems.”
Elizabeth says: “I feel I already live like this, an American working across nations out of Africa…. But I am still sending notarized documents all over planet via DHL every single day, so we still have a way to go. The will is there; people are not going into traditional careers anymore, they will seek new types of nomadic jobs and see the world after coming out of business school. Still people say no to change — but you can’t stop change.”
About the future of virtual citizens Gert Sylvest thinks: “Trust is the real challenge in global trade. The infrastructure for trust is very different between countries and it doesn’t scale.
There is a huge potential in unlocking value for companies if just their goodwill or reputation could become liquid in some way and we are not seeing that yet, but we see that this is something that regulators like in Estonia are working on: Getting people under a well known regulatory framework and give them digital identities that are global and act as anchors for global trust.” Gert Sylvest finishes.
Access to e-residedency on the Tradeshift platform
To underline the potential of the new global digital identities, the Estonian e-Residency program and Tradeshift Frontiers have come together to create a representation of the e-residency on the Tradeshift platform, as an app.
Through this app on the Tradeshift platform, users can now apply for the Estonian e-Residency — the first step of a longer journey towards a wholly digital business presence.
https://go.tradeshift.com/#/apps/Tradeshift.AppStore/apps/TradeshiftFrontiers.EstonianEResidency
See the whole panel debate here:
About the Estonia e-residency programme
The Republic of Estonia is the first country to offer e-Residency, a government-issued digital identity that empowers entrepreneurs around the world to set-up and run a global business. So far, more than 30,000 people from 140+ countries around world have applied for e-Residency and set up over 3,000 companies in Estonia. E-residents can establish a company online, access business banking and payment service providers, and digitally sign documents 100% online. For more information, please visit:
e-resident.gov.ee.
About BitPesa
BitPesa was founded in November 2013 with headquarters in Nairobi, Kenya and offices and staff in Lagos, London, Luxembourg and Dakar.
By the end of May 2014, BitPesa launched its beta site with a service that allowed users to send money to any mobile money wallet in Kenya. At the end of December 2014, customers in Kenya could buy bitcoins on the platform. BitPesa launched in Tanzania in May 2015 allowing customers to send Tanzanian Shillings to three mobile networks in the country.
In November 2015, BitPesa launched in Nigeria and Uganda.
In November 2017, BitPesa serves both African and international businesses making payments to and from Africa in additional countries, including Senegal and the DRC.
About Tradeshift Frontiers
Frontiers is an innovation lab and incubator, owned by Tradeshift, directed at exploring and transforming business networks, supply chains, and global trade through the application of emerging technologies such as artificial intelligence, enterprise distributed ledgers (blockchains) and the Internet of things.
