The diagnostic assessment of trade efficiency was prepared by 90 G20 government ministries, IGOs/NGOs, academia and private sector experts. The results yielded: 90.4% of trade participants have no integrated system and 94.5% want the DEP.
Only Together We Can Change the Pattern
According to the media, our global leaders are facing further diminishing trust from the very citizens they represent.
The reality is the majority of our global leaders, actually do care about the well-being of our societies and are vigorously seeking sustainable economic solutions to make the world a better place. However, we must ask ourselves: why aren’t they more successful in meeting the economic ambitions of the world’s citizens and why is the gap between good intentions and reality continuously widening?
This is due to many factors including regenerated challenges, jurisdictional limitations and the political risks associated with their actions; above all, the issues faced by the world today are so great that they are almost unsolvable using the methods at hand today.
The reality is that ‘diminishing trust’ is not caused by one party or another; it is caused by all of us. Therefore, we are all part of the problem and our leaders need us all to be part of the solution. The public sector can point the way forward and can assist in providing the tools for promoting public goods. However, each citizen must also be part of the solution forming dynamic communities leading to global prosperity.
It is based on the above premise this report has been prepared to present the voice of the G20’s citizens on the ground level to their leaders as to what they need to do for a better job, thereby, setting the foundation for a prosperous tomorrow in our time and for generations to come.
This is not just another report. This is a call for action. This call is being made by all of us through the most comprehensive and exhaustive program that started more than 10 years ago towards implementing the required solution to achieve sustainable economic growth. This call is global in scope, founded on partnership and not competition, and can be deployed rapidly across the globe at no cost to businesses for promoting real economic growth.
FOREWORD BY THE CO-CHAIRMAN
The present economic unrest and the uncertainty of the future call on the world’s leaders to look beyond conventional solutions, learning from history while leveraging 21st century tools.
The Digital Economy has become more crucial than ever before led by the strong belief that in the current digital era, today’s information technology must be able to help achieve sustained economic growth. In fact, 2015 and 2016 were the first years that the Digital Economy was at the focal point of the G20 / B20 agenda and policy recommendations.
The common theme we are witnessing is that most global experts around the world have introduced their own products and services while attempting to define the Digital Economy. So in other words, providing digital products or services, generating revenue and creating jobs, although important, does not represent the full power of the Digital Economy. We must understand that the objective of the G20 / B20’s recommendations is not to construct the Digital Economy to be just another product or service in the marketplace; rather the objective is to deliver upon the economic recommendations of the B20 taskforces related to Employment, SMEs, Trade, Financing Growth and Infrastructure Investment by maximizing on what technology can make possible today and in the future.
In brief, the Digital Economy must assist in delivering the B20/G20’s recommendations, thus restoring the health of the Real Global Economy. By the Real Economy we mean those industries that produce and service the food we eat, the clothes that we wear and the materials to build our cities with emphasis on SMEs, who generate up to 80% of employment in many countries around the world.
Now that the Digital Economy has been recognized as the common theme for implementing global economic policies, it is incumbent upon us to ask the real economy participants at the ground level how the Digital Economy tools should look like so they can do a better job, thus creating productive communities today and in the future.
Based on the foregoing, GCEL announced the launch of the G20 Nations Case Study at the OECD-B20 joint taskforce sessions held June 2nd 2015 in Paris. The G20 Nations Case Study is an assessment of the entire real economy value stream across 19 industry clusters from shelf to shelf including; buyers, sellers, logistics service providers, governments, banks and insurance firms.
This is not just another assessment since we are entrusted to convey the voice of the G20 Citizens to their leaders; therefore, we have designed a new global standard to reflect the needs of the real economy participants on the ground.
The G20 Nations Case Study is now completed and it involved the collective contributions of more than 80 government ministries, industry associations, academic institutions, and private sector experts. We collected nearly 1.2 million data points through face-to-face interviews, ensuring accurate responses using animated show-cards in local language with multiple options, throughout all country economic zones covering the entire spectrum of large, medium and small enterprises.
The G20 citizens have committed to conduct their national assessments as a first step to empower the Digital Economy. The results have been staggering: about 90% of the real economy participants surveyed do not have an integrated system and over 94% have collectively agreed on a common description on what the Digital Economy tools should look like to reduce their costs, de-risk doing business, expand their market reach and ease their access to greater financing and insurance.
Diagnosis without providing the cure does not improve the condition, therefore it is of paramount importance to call upon the experts of the world to remedy the situation. In this case the doctors are the technology industry. The top 26 technology firms of the world have committed to participate in an equal opportunity process as a first step to be selected as a qualified trusted network to deliver what the real economy participants demand. The selection will be based on offsetting geopolitical, monopolistic and data privacy concerns while delivering the required tools at no cost to the end user.
The size and scope of the Digital Economy calls upon public and private organizations to work in concert by capitalizing on each organization’s capabilities and jurisdiction. Thus, introducing an independent global monitoring mechanism that will offset the above concerns and at the same time securing benefits to all. The foregoing will ensure rapid adoption of the Digital Economy Platform (DEP).
The Digital Economy is the tipping point to a new era of prosperity. Consider this; Our global business-to-business expenditures total USD 140 trillion according to the VISA Commercial Consumption Expenditure Index and is forecasted to reach USD 337 trillion by the year 2030. An Asia Development Bank survey in 2012 revealed that of USD 4.6 trillion in trade finance requests, more than USD 1.6 trillion was rejected. Think about this, just USD 3 trillion was approved representing less than 3% of the total business-to-business market. This is an enormous lost opportunity for the financial industry and similarly for the insurance and technology industries.
What we are witnessing today is the birth of a new major industry. Imagine this; today the world gold production engrosses USD 0.136 trillion, and the world oil production engrosses about USD 2.3 trillion; meanwhile the Digital Economy, as a new industry, is projected to reach USD 5.5 trillion per year by 2030.
Although fiscal, monetary and trade policies are important, we must focus our efforts to enlarge the global economic pie instead of competing on the same one. This report and for the first time ever presents the required target confirmed by the world’s citizens to increase the world’s GDP by 17% thus creating nearly 300 million new jobs by 2030. The roadmap to reach the defined target, the required tools needed, and the largest global consensus to secure its successful implementation in our time and for generations to come are ready; ready and available for all of us to be part of it.
Captain Samuel Salloum
— The Global Coalition for Efficient Logistics, January 2018
The objective of this report is to present the voice of the G20 citizens to their leaders when defining the required digital tools to do a better job on the ground level. The question remains, how can we maximize on the digital tools to achieve sustained economic growth. The starting point must highlight the powerful demographic trends that commend a new economic order. Consider this:
In the high-income countries where fifteen percent of the world’s population lives, birth rates are low; the population is aging and salaries remain high. This is an efficient and productive community challenged with low market demand.
Meanwhile in mid- and low-income countries, birth rates are high, the population is young and strong, but salaries are merely 20% of those in high-income countries. This is a highly populated community challenged with low buying power.
The high-income countries cannot clone people, and face challenges to open their borders wider. The only viable choice for these countries is to build the buying power of the mid- and low-income countries, thus creating a vast new market for their products and services.
The only survival choice for the mid- and low-income countries is to commit to business excellence, thus achieving efficient and transparent operations, thereby attracting national and international investment, resulting in increased buying power.
The Digital Economy is the tool to connect our economies more efficiently and DE-RISK Transactions Among Businesses and Nations in order to grow global trade, thereby rebalancing the world economy. This is how we can enlarge the global economic “pie” instead of competing on the same one that we have today. It is not just another global initiative; this is the NEXT BIG THING.
This is the foundation of the “Implementable Policy Formula” presented by GCEL to the G20 / B20, after more than 10 years of R&D. In fact GCEL, a Swiss based non-profit public private partnership, has already started the execution of the Implementable Policy Formula, which includes:
I – Focus on Common Denominator Among Policies
This is the most common and comprehensive denominator of those tangible and quantifiable policies that have a rapid and direct positive impact on the real economy.
2015 Turkey G20/B20: For the first time ever, the G20 adopted the Digital Economy as a policy initiative contributed by GCEL in 17 out of 25 key B20 2015 Turkey Taskforce recommendations.
2016 China G20/B20: The G20 adopted the Digital Economy Development and Cooperation Initiative as a policy directive.
2017 Germany B20: Established for the first time a “Digitalization Task Force” to focus on Digital Economy implementation.
Today, global leaders have embraced the Digital Economy as a common and comprehensive denominator for the implementation of policies.
II – Obtain Validation From The Ground Level
It is of paramount importance that the proposed policy benefits are validated by listening to the voice of the real economy participants impacted by these policies at the ground level.
This is the foundation of the G20 Nations Case Study in hand that presents the voice of the G20 citizens at the ground level through the highest world standard assessment involving more than 80 ministries, NGOs / IGOs, academia and private sector experts from the G20 countries. This Case Study will shape how the Digital Economy should look like to serve as the tool to implement the recommendations by the policy makers.
The results of this global study have been staggering:
90.4% do not have an integrated system and
94.5% want the Digital Economy Platform proposed by GCEL, in order to do a better job on the ground level.
III – Secure Industry Capability & Commitment
Once the policy’s benefits are validated at the ground level, we must secure the related industry resources for a rapid implementation.
We have obtained the commitment of the world’s top technology companies—servicing more than 60% of the world’s GDP and with more than 2.6 million experts to collectively deliver upon policy makers’ recommendations to meet the needs of the real economy participants, at no cost to the end-user.
Governments and leading international organizations have recognized the importance of domestic and international trade efficiency as the key to prosperity of people, nations, and the whole world. The inefficiency of global trade increases the cost of our food, clothing, and the materials we use to build our cities, ultimately compromising the well being of people worldwide. On the other hand, all of us stand to benefit from the gains in trade efficiency and security.
Trade is mostly founded upon four interdependent pillars: Commerce, Finance, Insurance and Logistics. The weakest link among the four industries is Logistics. Maximizing the efficiency of global logistics represents the solid foundation required to empower the other three industries, presenting a new era of trade efficiency to the world. By establishing an open-access digital logistics platform, we will also enhance digital commerce, digital finance, and digital insurance, ultimately empowering the Digital Economy.
In fact, when the marine container made logistics more efficient and secure, it was able to reduce the cost of trade exponentially, including cutting loading costs from USD 5.86 to USD 0.16 per ton. Today, with digital technology, we can do it again, thus providing the world with USD 3.7 trillion in yearly domestic and international trade cost savings. This sets the foundation for trade increase and job creation. The first step in reaching the level of digital technology utilization necessary for maximum trade efficiency is to determine the world’s current efficiency levels.
When assessing the level of modern digital technology utilization, efficiency measurements should not be based only upon the current best practices but also on a new standard in order to meet 21st century trade efficiency requirements. This standard is based upon what current technology makes possible when applied to the following six key areas: Integration, Processes, E-Documentation, Tracking & Visibility, Competence, and Cargo Security. These areas have been separately recognized by renowned international organizations – including the World Bank, UNCTAD, and APEC – as essential factors to trade efficiency, and are basic foundations of our 21st Century 6 Elements Trade Efficiency Indicators (21-6-ETEI) standard.
The G20 Nations Case Study begins by recognizing that trade is inherently a horizontal process, and that its efficiency is defined by the movement of a shipment through each segment of the trade pipeline. Thus, data was gathered along the full extent of this pipeline, sampling participants from businesses of all sizes and in all economic zones. By covering the entire shipment flow, the G20 Nations Case Study is able to highlight the strengths and weaknesses of G20 countries’ individual businesses, industry clusters and economic regions. Global experts have reached a consensus that this analysis demonstrates the new high standard of assessment by virtue of:
Scale/Scope: The Case Study covered all private and public participants in the flow of trade, including customs, logistics service providers, shippers, ports, carriers, financiers, and insurance providers.
Breadth of Sample: The study targeted industry participants from small, medium and large enterprises, as well as from the public sector throughout the supply chain pipeline.
Geographic Coverage: Respondents were surveyed in all key economic zones of the G20 countries.
Sample Size: Throughout each country, the survey included more than 10 times the number of respondents sampled in the existing world standard.
Direct Sampling: Assessments were conducted with trained examiners on a person-to-person basis, rather than via electronic or automated means.
Survey Methodology: Questions were illustrated in local language in order to visualize the subject of inquiry, thus ensuring ease of understanding, which results in optimum response accuracy.
Quality Assurance: The survey received world-class oversight and extensive quality control cross-checks to ensure data accuracy, including call backs to more than 50% of survey respondents to further validate data quality.
Several public data exchange platform initiatives introduced by various Single Windows of the G20 nations such as Automated Commercial Environment, National Transport and Logistics Public Information Platform, Customs Management Information System, and other customs management information systems all have been instrumental in advancing the G20’s digital trade capabilities with the goal of integrating trade-related systems, increasing trade, and enhancing cargo security.
However, the main obstacle facing all 19 clusters is that about 90.4% of the businesses surveyed in G20 countries do not have an integrated system and depend on third parties to process shipment information. Furthermore, about 94.9% of the data transmitted between trade participants is through manual methods of fax, phone and email. This number of companies with no integrated systems and which rely on manual data transmittal between trade participants is so large that it delays integration, both within G20 countries as well as with their trade partners. This restrains the G20 countries from achieving the trade efficiency required to maximize their potential and realize the economic ambitions of their citizens.
Based upon the survey results, the following chart illustrates where G20 countries stand today in relation to the 21-6-ETEI. For trade to reach its highest potential, all six areas must perform at peak efficiency. As the 21-6-ETEI chart indicates, there is an opportunity for optimization in each of the six areas where G20 countries are concerned. The values expressed for each country / area are presented on a scale of 0 to 5, with 5 representing peak performance within an optimal environment maximizing on what technology can make possible today. Peak performance relative to the individual areas is explained in detail within the body of this analysis.
The survey results clearly demonstrate that G20 countries have worked hard to create a favourable trade environment; however, substantial opportunities exist to achieve their full potential:
Under the 21-6-ETEI standard, G20 countries’ Integration scored 1.46. This signifies the importance of increasing the levels of horizontal integration across G20 countries’ 19 trade clusters; this will further leverage G20 countries’ significant investment in several initiatives such as the Advanced Commercial Environment, the National Transportation and Logistics Public Information Platform, the Customs Information System, and other customs management information systems, thereby improving collaboration between G20 countries’ trade pipeline participants and with their trade partners globally. This will also provide tremendous opportunity to achieve trade facilitation targets and enable more efficient data sharing in order to enhance supply chain security, and bring new efficiencies to governments and industries.
The E-Documentation score of 1.94 represents an opportunity to increase electronic transfer of shipment data between trade participants across the G20 countries. The number of days for customs clearance across G20 nations varies significantly between high income and medium income countries. By increasing the use of electronic documentation and leveraging on a Global Single Window (GSW++) across the G20 nations by connecting all the existing national single windows, trade participants will reduce the level of manual data entry throughout trade activities, thereby minimizing human error as well as the frequency of incomplete or missing documentation. This will facilitate advance customs clearance, thus reducing shipment delays.
The Processes score of 2.15 presents the opportunity for improvement to reach optimal 21-6-ETEI standards. G20 countries can further evolve to a model where productivity gains are generated through innovation. The use of technology to implement more efficient processes across all jurisdictions in G20 countries’ trade pipelines will contribute towards minimizing unnecessary shipment delays, lowering wait times at points of entry, and reducing excess domestic and international trade costs.
G20 countries’ Tracking & Visibility score of 1.88 reflects the level of real-time information concerning a shipment’s location and movements. The introduction of the transportation and Logistics Public Information Platform, Customs systems and e-Port systems in G20 countries coupled with improved shipment visibility through an integrated horizontal system within G20 countries’ trade pipelines and their trade partners can further enhance planning capabilities, improve predictability of shipment deliveries, decrease operational costs, and lower inventory levels.
The Competence score of 1.68 indicates that there are gains to be achieved in terms of participant performance. When properly trained using systems that dynamically monitor trade performance based on contractual obligations, G20 countries’ trade workforce can provide businesses a competitive advantage in both their national and global markets.
G20 countries’ Cargo Security score of 2.18 reflects the leadership role of G20 countries’ Customs to implement efficient practices through the use of technology to secure their countries’ borders and flow of commerce. However, the lack of integration across the 19 clusters inhibits G20 countries’ Customs from receiving real time and validated shipment information necessary to anticipate and stop security threats before they reach their countries’ borders.
Logistics cost as a percent of GDP varies across G20 countries. High Income economies in North America, Asia, and Europe incur logistics costs that run between 7.9% and 9.7% of GDP while in mid-income countries in South America, Asia-Pacific and the Middle East and Africa range is between 12% to 15%. In Indonesia, Russia and China the logistics cost as percent of GDP is over 18%. This variation by region and the overall high logistics cost in G20 countries is mostly due to the fragmented nature of the logistics sector. Carrying goods around the different countries can involve a mixture of foreign, state-owned and domestic private businesses. As efficiency gains are achieved in each area and region, and numeric scores are increased to within the range of 4.5 to 5.0, there are corresponding savings in international and domestic trade costs. This level of improved performance would result in yearly savings of nearly USD 3.7 trillion annually by 2030, providing the tools to expand G20 countries’ trade by USD 7.7 trillion annually, and lead to creation of nearly 300 million new jobs globally. Furthermore, new digital tools can help maximize capacity utilization of G20 countries’ present physical logistics infrastructure, while providing a real-time national trade dashboard that will help to secure and prioritize national and international physical infrastructure investments.
Just as G20 countries have taken an innovative role in trade efficiency by introducing single windows in different countries, their trade community has expressed broad interest in pioneering new initiatives for the Digital Economy, and utilizing them to integrate G20 countries’ SMEs, both within each G20 country and across the world. In fact, 94.5% of respondents expressed their desire for the Digital Economy Platform.
G20 countries would like a Digital Economy Platform that allows businesses to:
Promote their services and products nationally and internationally
Target qualified buyers – in need of their services and products – directly
Simplify decision making of potential buyers, and accelerate the sales cycle
Expedite and simplify trade finance
Decrease trade insurance premiums while enhancing the coverage
Ease integration into the global trade pipeline and
Post their products and services in the languages that potential customers prefer
G20 countries’ SMEs desire the required Digital Economy Platform environment to connect with their counterparts around the globe. The Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) and the former Secretariat of the World Federation of Development Financing Institutions (WFDFI), whose members serve the financial needs of more than 60% of world’s SMEs, have also confirmed the desirability of the following Digital Economy environment based upon their regular daily interactions within the current inefficient environment.
The Digital Economy In G20 countries
We have briefly presented the results of the G20 Nations Case Study with emphasis on the six key areas of trade efficiency in relation to the 21-6-ETEI standard, which will be explored more thoroughly later in this document. However, the end game is the empowerment of the four pillars of trade to establish the required Digital Economy Platform: A fully digital trade environment consisting of optimally-performing levels of E-Commerce, E-Finance, E-Insurance, and E-Logistics. As illustrated in the foregoing chart, the six key elements of trade efficiency – Integration, Processes, E-Documentation, Tracking & Visibility, Competence, and Cargo Security – are the necessary elements for an E-Logistics platform that is integrated with the other three trade pillars. Optimal performance in all of these six key areas is necessary to empower the four pillars, enabling them to deliver the efficiency and cost reductions required to drive trade growth, and thus propel economic prosperity for all nations for generations to come.
The 21st Century Digital Economy Environment Foundation
The 21st Century Digital Economy environment is an ecosystem that permits global integration of product and service offerings with the intelligent proficiency to match sellers to targeted buyers. This environment is based upon dynamic, validated real-time information accumulated and continuously updated through the normal course of trade activities around the world, rather than the unsubstantiated reviews presently in use.
The quality of data in the world of information can be divided into two extremes: The first extreme is the Non-Validated Data or NVD provided by a single source of data without validation.
The second extreme is the Ultimate Data Quality (UDQ) provided to initiate an action in the real word validated through multiple sources of data in the same pipeline. For example, when traveling we cannot enter the name of George and show-up at the airport with Robert’s passport. In order for Robert to travel he must enter the true data to initiate an action in the real world, then the multiple parties involved in Robert’s move from one part of the world to another will continuously update the data as a prerequisite to initiate the sequential events in a real action.
For this Digital Economy to succeed it must be dependent on real-time dynamic data validated by multiple sources. Simply said, the Digital Economy must be based on the UDQ.
The UDQ is initiated from the logistics industry. The logistics industry is the core of our real economy, the products we find on the shelves of our supermarkets or the materials with which we build our cities are available thanks to the logistics industry. To most people when we mention logistics the first thing that comes to their minds is a truck. The logistics industry has been underestimated for a long time and still is today. Yet it has enormous potential to empower our global economy.
The logistics pipeline is the core of our economies, while at the same time it represents the main source of the UDQ that we are in desperate need of, in order to reach the tipping point towards achieving the required 21st century prosperous economic era.
As previously mentioned, the B2B marketplace depends upon four interdependent industries: Commerce, Finance, Insurance, and Logistics. The weakest of these is logistics, which is highly fragmented. Issues facing logistics prevent the other three industries from performing at optimal levels. Enhancing the efficiency of the logistics will enable peak logistics performance and at the same time will generate the UDQ to boost the performance of the other three industries, thus empowering them to reach their full potential to a complete new level never possible before. This, in brief, is the main foundation of the Digital Economy.
In regards to the growing level of concern about data privacy and information security in the digital era, since trade data is of national security importance and such information is the currency of the future, it must be securely exchanged. Accordingly, the DEP must be delivered through the Global Data Security Standard (GDSS) consisting of the “Axioms of the 5Cs” shown below, thereby providing the multi-layered mechanism to safeguard the data privacy and information security of public and private organizations:
Consortium of Globally Balanced Ownership
Council of Worldwide Fiduciary Governance Board
Committee of Technology Governance Board Experts
Controlled Segregated Technology Development
Continuous and Comprehensive Audits
It is clear that data security requires a comprehensive and global solution, one that serves the needs of high, mid and low-income countries alike. It should allow the public and private sector to contribute to the development and the implementation of the standard in a geo-politically diverse and non-monopolistic manner, thereby garnering acceptance by all the regions of the world. It must also involve multiple layers of ownership and governance within a true Public-Private Partnership.
The Future of E-Logistics in G20 Countries
The main benefit of the ecosystem described above is that it allows the creation of the smart E-Logistics environment that will provide the ability to:
Minimize standardization requirements.
Create a point-to-world integration environment.
Transform Logistics Service Provider (LSP) contract obligations into electronic metrics, enabling real-time monitoring of contracted vs. forecasted vs. actual performance.
Create an optimum E-Documentation environment that minimizes keystrokes and errors by:
– Validating data from multiple sources within the same trade pipeline
– Auto populating the missing information dynamically to meet the evolving Buy, Sell, Country, Industry, Financial, and Insurance (BSCIFI) documentation requirements.
– Provide the required tools to plan and manage global trade lanes from shelf-to-shelf at no cost to end users.
Despite vertical efficiencies achieved by some LSPs, the G20 countries’ logistics industry suffer from the same problems facing the industry worldwide. It remains fragmented and unnecessarily costly, and the lack of technologically optimized systems and processes prevents it from achieving the highest 21-6-ETEI ratings.
The Future of E-Commerce in G20 Countries
The main benefit of the ecosystem described above is that it allows the creation of a smart E-Commerce matrix that provides the dynamic scoring level needed to:
Ensure quality of services and products based on sellers’ global activities.
Facilitate and expedite product and service finance.
Minimize insurance premiums and optimize coverage.
Ensure easy integration of sellers into the buyer supply chain.
Ensure the reliability and dependability of the logistics industry pipeline from seller to buyer.
Based on the UDQ, the aforementioned scoring system is presented at any time the buyer decides to evaluate a seller’s product or service, locally, regionally or globally. Such a system results in maximizing conversion ratios from seeing a desired product and service to acquisition.
Although it remains an ideal system that G20 countries, and the rest of the world, are striving to reach, this E-Commerce environment does not yet exist. However, as previously stated, 94.5% of G20 countries’ businesses have demanded the E-Commerce environment previously described.
The Future of E-Finance in G20 Countries
The main benefit of the ecosystem described above is that it allows the creation of the smart E-Finance matrix that will provide the dynamic scoring level needed for:
Trade Finance Risk Mitigation: Minimize underwriter risk based upon borrowers’ historic and future global trade finance activities.
Minimize Transaction Risk: Maximize lenders’ capability to electronically direct loan proceeds to the borrower’s preapproved sellers of products and services.
Asset Recovery Risk: Ensure the capability to seize assets in the trade pipeline for
rerouting or liquidation to minimize asset impairment loss.
All of the above will expedite trade finance, promote trade increases and thereby enable new global market expansion for large enterprises, as well as for the SMEs of the world who represent one of the main cornerstones of global economic growth.
Currently, the lack of access to the information described above limits E-Finance for trade in G20 countries. Although financial institutions have created efficient in-house vertical systems, banks have limited access to real-time shipment information and to timely data regarding buyers, sellers and the movement of goods. Banks’ 21-6-ETEI scores remain among the lowest of all clusters surveyed in the G20 countries.
The Future of E-Insurance in G20 Countries.
The main benefit of the ecosystem described above is that it allows the creation of the smart E-Insurance matrix that will provide the dynamic scoring level needed for:
Trade Insurance Risk Mitigation: Minimizing underwriter risk based upon all trade lane participants’ historic performance as well as specific trade pipeline routes and destinations, thus expediting insurance coverage.
Maximize Global Coverage: Provides the ability for firms’ seamless integration into the global trade insurance market, enabling them to provide door-to-door coverage with limited risk.
Expedite Claims Processes: Access to current and historic information gathered throughout the trade pipeline provides firms with needed data to process claims quickly and accurately.
In G20 countries today, E-Insurance for trade remains costly and difficult to obtain. The lack of trade integration and visibility to the state of shipments within the pipeline, as well as the continued reliance on paper documentation, holds insurance industry scores below optimal 21-6-ETEI levels.
The Future Trade Potential of G20 Countries
Currently, the G20 High Income Countries (HIC) trade approximately USD 1 trillion among themselves. Currently, HIC are experiencing slow economic growth due to excess production capacity accompanied by decelerating demand, a high debt burden, and an aging population. Nearly 35 years ago, the HIC used to be 22% of the world’s population. Due to low birth rates and an aging population, the HIC now represent 15% of the world’s population, and with the same trend this level is projected to reach 11% by 2050. Based on this declining population, experts estimate that the growth in trade within HIC will also decline in the future.
Hence, it is fundamental for G20 nations to minimize their trade dependence on HIC by investing in the economies of the middle income countries (MIC) and low income countries (LIC) towards building their purchasing power so that G20 countries can grow their exports to those countries in the near future. For every 1% increase in the purchasing power of MIC/LIC, G20 countries can increase their exports by USD 99 billion with a potential annual trade increase for G20 countries reaching up to USD 4.6 trillion by 2030.
The main challenge is to de-risk trade between countries which is made possible through the adoption of the DEP that will provide increased efficiency and transparency as well as assist to achieve business excellence in a relatively short time frame. This campaign has already been endorsed by the League of Arab States, the Organization of Islamic Cooperation, the African Union and the Organization of American States, among others, that have entered into strategic agreements to deploy the DEP. Accordingly, G20 countries will reduce domestic and international trade costs as well as de-risk operations with their trade partners, thereby attracting domestic and foreign direct investments, easing access to trade finance and insurance, and increasing their reach to global markets, all of which contribute towards building their purchasing power.
In addition to the above, through the digitization of trade activities, G20 countries can realize annual international and domestic trade cost savings of USD 2.9 trillion and create more than 152 million jobs.
To sum up, the digital tools for doing a better job on the ground level, which have been commonly defined in this report by 94.5% of the G20 countries trade community, will also serve to assist them towards achieving their national strategic economic objectives.
The G20 Nations Case Study is intended to provide guidance as to the current strengths and opportunities of G20 countries’ trade environment. Its existence is a testament both to G20 countries’ dedication to achieving trade excellence and GCEL’s commitment to providing support for the G20 countries and the world.
GCEL has already demonstrated its commitment to promoting prosperity through trade efficiency via its research and knowledge-sharing initiatives. We will continue to support G20 countries’ efforts to achieve optimal 21-6-ETEI performance levels by collaborating with G20 countries’ governments and businesses as we deploy the DEP. It is GCEL’s core foundation to offset the geopolitical, monopolistic, and data privacy concerns related to the DEP, and making it available without cost to every business around the world.
Once acted upon, the body of knowledge represented by this report will lay the foundation for revitalized trade and for unprecedented economic benefits to humanity. The remainder of this document provides an in-depth exploration of the G20 countries’ trade environment, as well as recommendations that will enable G20 countries to take a leading role in the 21st century Digital Economy.