January 20, 2022

Research

Influencing a post-COVID-19 e-commerce policy: lessons from Rwanda

Post-COVID-19, the Institute of Policy Analysis and Research (IPAR)-Rwanda is running a project to provide timely evidence and policy recommendations to support Rwanda’s socioeconomic recovery. 

Measures recommended by the project in a policy brief on e-commerce were picked up by the Central Bank in Rwanda and one of two major network providers: MTN Rwanda. This blog shares IPAR-Rwanda’s approach to creating evidence and dialogue to influence policy and, ultimately, impact the lives of citizens.

What did the project entail?

The project covers a wide range of issues, from the impact on poor households to COVID-19’s effect on large businesses. It is built around high-quality primary research conducted by IPAR-Rwanda, using three waves of a business and household survey to probe the impact of COVID-19. The research’s end goal is to influence policy. IPAR-Rwanda has maintained a strong focus on advocacy and policy-influencing activity throughout the project.

IPAR-Rwanda’s approach to policy influence 

Our experience highlights the benefits of engaging seriously with the challenges policymakers are facing. By taking the current policy landscape as the starting point and engaging with the practical difficulties that decision-makers worry about, policy development and recommendations can more easily ‘go with the grain’. As a result, research and advice are more likely to have an impact on policy. Below is an overview of the four steps we took to develop an e-commerce policy influencing plan:

  1. Issue selection: choose something that is, or could be, a government priority

We chose e-commerce as an area to focus on because it aligns well with existing government priorities. For example, the Government of Rwanda is committed to moving toward a cashless society through a world-class payment system. Also, it has already pioneered the use of electronic government services through its Irembo platform and has ambitions for cashless, innovation-friendly financial services.

  1. Recommendation development: combine evidence with the realities of the local context

To develop policy recommendations appropriate for the Rwandan economy, we combined the international evidence on policy best practice with primary data. We surveyed businesses across the country to examine the impact of COVID-19, as well as what businesses have done to adapt to the economic crisis. 

An emerging finding is that transaction fees are a significant barrier to e-commerce in Rwanda. Other countries demonstrated that low fees – particularly on small transactions – could be effective at stimulating e-commerce and economic activity more generally. There was evidence that this would be effective in Rwanda too. For example, to reduce the spread of COVID-19, the National Bank of Rwanda cut fees during lockdowns. This led to increases in the amount of money transferred through mobile financial transactions by 450%, while the number of people conducting transactions rose by 200%.

Lower transaction fees would have three benefits: (i) increasing e-commerce, (ii) increasing economic activity more generally, and (iii) delivering on the Government of Rwanda’s ambition of moving toward a cashless society.

  1. Feedback: pay attention to policy-makers’ perspectives and views and adapt recommendations based on feedback

With a set of recommendations based on robust evidence and tailored to the context, IPAR-Rwanda presented initial findings to key policymakers and policy stakeholders. By framing our recommendations as to potential options and welcoming feedback, we got excellent insights on how to refine the proposals further. One example was to link the study findings with government plans to increase online public services, which would be a good opportunity to improve digital literacy and trust in online systems, which in turn would indirectly boost e-commerce.

  1. Final recommendations: disseminate to key decision-makers

After adapting our recommendations to reflect practical challenges that policymakers faced, IPAR-Rwanda presented them to key government decision-makers, the private sector and other research organisations. 

Officials from the Ministry of Trade and Industry, who are responsible for the direct policy area and had been consulted throughout the policy development process were invited. Key decision-makers in central government institutions, including the Ministry of Finance and Economic Planning and the National Bank of Rwanda, were also invited. 

Engaging with these decision-makers was important as they contribute directly to the design and implementation of national strategies and budgeting processes. It also allowed us to demonstrate how these recommendations could have an impact beyond their individual policy area. For example, we explained how the recommendations could support the government’s wider strategy for economic growth and shift toward a cashless society.

Initial successes 

The recommendations have been well received. Fees on transactions under 4,000 Rwandan francs (Rwf), around 4 USD, have been removed. As a very basic illustration, this could mean an increase in income of around 16,000 Rwf (around 16 USD) a year for someone working as a moto driver in Kigali if they did 20 trips a day at an average of 1,000 Rwf per trip.

The Central Bank has also committed to undertake a study to determine appropriate charges for digital payments and has waived charges incurred when transferring funds from one’s bank account to their mobile money wallet and vice versa (push and pull charges). 

The Ministry of ICT and Innovation has begun another Connect Rwanda campaign to distribute smartphones. This is being conducted in partnership with industry and linked to demand services, particularly in the agriculture sector. 

Together, these are all positive steps for increasing e-commerce and supporting economic growth more generally. 

While approaches will need to be adapted for different contexts our experience highlights how think tanks can effectively influence policy development processes. By harnessing local knowledge and networks, combined with a rigorous approach to evidence, think tanks are uniquely placed to provide practical advice direct to decision-makers, which can influence policy that impacts the lives of citizens. 

This project is funded by the International Development Research Centre and implemented in partnership with Kivu International and the University of Aberdeen.

About the author:

Ismael Byaruhanga:  Ismael Byaruhanga is a Research Fellow at the Institute of Policy Analysis and Research-Rwanda, he holds a Master of Science degree in Banking and Investment from Makerere University, Uganda.

Read more from: Ismael Byaruhanga
Related topics: Research

Comments