How digital signatures improve the lives of microbusiness operators in developing countries
Microbusinesses have been around since the first caveman traded a hunk of meat for a spot at the fire, but these small businesses are now growing more rapidly than ever before. In fact, microbusiness is now the fastest-growing business segment in emerging and developed markets, with businesses employing fewer than 10 people making up 95% of all enterprises globally, generating 60 to 70 percent of all jobs, and contributing 52 percent of all gross income around the world. There’s big money in microbusiness, to the tune of 10 trillion dollars per annum.
There are a lot of factors driving this economic engine, but the most impactful one is mobile technology. Across much of the world, people have one computing device, and it’s a smartphone. People who cannot afford a personal computer, have no secure place to store one, and cannot afford to power one can obtain an energy-efficient smartphone that is secured in a pocket. As of 2015, 43 percent of the population in developing countries owned smartphones, and some of those owners are using their devices to feed their families, improve their communities, and contribute to the global economy.
The hardware is in people’s hands, but hardware isn’t all that’s needed to start a business. Business-enablement tools have to be in place as well.
Trust Locally, Sign Globally
Every transaction is based on trust. If Jane agrees to give Joe a product, she has to be certain he’ll live up to his terms. When all business was local, a handshake was good enough; if Joe reneged, his reputation—and therefore his social standing and ability to conduct transactions with other people—would be damaged.
In a global economy, we need more than a handshake; we need proof that terms were agreed upon by both parties. Most of the time, this means we need a signature.
Until recently, the ability to execute highly secure signatures has been a hurdle for microbusiness operators who wanted to participate in global markets. Every electronic transaction entered into by an entrepreneur in a developing country carried great risk unless digital signatures could be secured. Without a legally valid signing technology, the balance of power will never be in the microbusiness owner’s favor. For instance, if the owner of a small mining operation in Zambia was reneged upon by a large international corporation, he had no recourse to be made whole.
Of course, a signature is not a guarantee that both parties will fulfill their agreement, so the question remains whether the Zambian miner, who likely has no in-house legal department, will be able to carry the day in a tussle with a multinational corporation. Zambia has good electronic signature laws, but they emphasize consumer protection over the protection of B2B transactions¾the miner may still be in the hole, so to speak.
A Developing Situation
The laws in many developing countries are still catching up with electronic signature technology advancements. Some countries are stuck in the chicken-egg conundrum—what comes first, the widespread adoption of signature technology or the laws that support the widespread adoption of signature technology?
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Other developing countries are responding to the signing needs of their microbusiness operators by enacting laws to validate them. South America, notably, has several countries (including Argentina, Brazil, Chile, and Colombia) that have enacted digital signature laws that are strong enough to provide trading partners in the US, EU, and other regions with assurance.
Of the countries with laws around electronic signatures, many specify strong legal protections only for advanced digital signatures. This type of electronic signature requires a person to be vetted in person by a certificate authority, which is an independent organization that avers you are who you say you are. This may not be practical for people like the Zambian miner, who may have to travel to acquire a digital certificate.
In addition, for the Zambian miner to use that digital certificate, he would have to get to his computer, plug the card reader into the computer, enter a pin, and insert a card into the reader. That’s a lot of steps and, worse, a lot of expense, and that’s why advanced digital signatures have not been feasible for microbusiness operators in developing countries. But that’s changing now.
The Signature as Equalizer
Vendors of electronic signature vendors are solving this problem by making it possible for anyone with a smartphone to execute a highly secure electronic signature. Business owners no longer need to show up in person at a certificate authority or purchase a computer, card reader, and token to enter into agreements with assurance. They can just press a few buttons on their smartphones and all of the de-encryption and verification happens in the cloud.
There is no need for additional hardware or an in-person visit to a certificate authority, and none of the associated expense. Now a smartphone is the great equalizer, and a microbusiness owner can execute a signature with the same ease as a global enterprise.
A Real Difference for Real People
Smartphones provide the means for anyone to participate in the digital economy. That’s more than lip service – it’s how lives are changed. In rural Peru, extreme poverty went down by 5.4 percent in the five years after smartphones arrived on the scene. In Ghana, small farmers who participated in a government program that issued price alerts via SMS saw their profits go up by 9 percent.
Likewise, as more people conduct business on their phones, the ability to enter into agreements with confidence will help microbusinesses expand their markets across oceans. Is this happening today? Not quite, but mobile digital signatures are in use in the developed world and we’ve already seen that emerging markets are eager adopters of useful mobile tools. It won’t be long until microbusiness owners in settlements across Mongolia, Malaysia, and Mali are executing agreements as easily as their big customers in the US, EU, and China. Mobile commerce is the convenience with the power to make people’s lives better.
