The Banking Executive Magazine - February 2022

Is the Arab World really benefiting from E-Commerce? For centuries, the streets of Cairo have been festooned with traditional lanterns to celebrate the holy month of Ramadan. In recent decades, the domestically produced lanterns were replaced by cheaper ones made in China. Yet owing to the pandemic’s disruption of global supply chains, Egyptian-made lanterns made a comeback last year. But whether their revival will last remains to be seen. The Egyptian lantern story is just one pixel in a much larger picture. Across the Middle East and North Africa (MENA), new technologies are in- creasingly facilitating trade within the region and between local mar- kets and the rest of the world. Digital platforms like Alibaba, eBay, and Amazon have expanded the range of goods and services that can be ex- changed across borders. Digitaliza- tion has not only increased the scale, scope, and speed of commerce; it has also changed the way businesses trade across borders and allocate re- sources. Successful local e-commerce plat- forms are usually a source of pride. But, though digital platforms provide consumers with a greater variety of goods and services and allow busi- nesses to trade internationally with greater efficiency, they also subject local businesses to tough, and some- times unfair, competition. The MENA region’s experience shows that the introduction of digital trade and e-commerce can have complex implications for a develop- ing country’s economy. To benefit from greater exposure to interna- tional trade via digital platforms, a country still needs to have a compar- ative advantage in certain industrial sectors, as well as widespread access to advanced digital infrastructure. MENA countries lack one or both. Most Arab countries trade primarily in fossil fuels (accounting for 56% of the region’s total exports) and other natural and primary resources, which ISSUE 158 FEBRUARY 2022 the BANKING EXECUTIVE 21