Information and Communication Technologies (ICTs) and Small Enterprise in Africa

Executive Summary

The project reported here investigates what role new information and communication technologies (ICTs) may play in small enterprise development in Africa. Drawing on field research in Botswana, the project analyses the information and communication needs of these enterprises and assesses opportunities for ICT application.

Fundamental Principles

The findings are underpinned by two fundamental principles. First, that this topic can only be understood by taking a systemic approach that consists of two parts:

• An integrated approach: this sees ICTs as one means to serve information and enterprise needs, not as an end in themselves. It sees other information-handling technologies as equally important: intermediate (radio, TV, telephone); literate (newspapers, books); and organic (human-based).
• A holistic approach: this recognises the presence of an information chain that requires a whole series of resources – tangible, intangible and embedded – not merely for accessing data but also for assessing, applying and acting upon that data.

Second, that one size does not fit all. The term 'small enterprise' covers a vast array of different activities and needs. It is especially important to differentiate:

• Survivalists and trundlers, which typically have need of welfare interventions and for which ICTs have only limited value.
• Flyers and potential flyers, which typically have need of business interventions and which should form the priority focus for ICT interventions.

Recognising that different enterprises have different information needs means that particular IT production capacities must be built up within African nations in order to allow information systems to be customised to specific, differing requirements.

Findings

Information gaps (the difference between the information an enterprise needs and its capacity to provide that information) exist for all types of small enterprise, especially in relation to markets, to finance, and to skills. These gaps harm enterprise by reducing incomes and increasing costs, and they must be addressed.Small enterprises rely primarily on informal information. This is essential to sales and is appropriate to small enterprise conditions. However, it is often of poor quality and is restrictive in its range. Enterprise information systems must therefore be improved:

• Informational networks must be developed, through business linkages more than social or institutional linkages.
• A much greater emphasis must be put on demand-related information: it is mostly supply-related information that is provided at present.
• As well as supporting informal information systems, there is a need to help larger enterprises through the transition point to greater use of formal information and greater use of ICTs.

ICTs have brought demonstrable benefits but they remain out of reach for the majority of small enterprises. This will remain true for the foreseeable future – most African small enterprises will neither own ICTs nor access and use ICT-based data. However, the benefits of ICTs can be extended to more enterprises via ICT intermediaries. Such an effort, though, must consider three key issues:

• Who are the intermediaries? In general, they should be commercial organisations and/or those which can add value to ICT-based data by providing other information chain resources.
• How will other information chain resources be provided? To make effective use of ICT-based data, small enterprises require considerable infusions of embedded resources like knowledge, motivation and power, and considerable infusions of action resources like finance, skills and transport. Without these, information-related interventions will be a waste of time.
• Will ICTs be given their proper (limited) priority? In the short-term, at least for survivalists and trundlers, greater priority should be given to telephones first, and then to other information-handling technologies like radio, TV, and newspapers.

Recommendations for Enterprise Categories

The findings were used to develop an ICT-related categorisation of enterprise, which recommends different priorities for different enterprises:

• Non-ICT users: those who do not use ICTs or telephones. For them, the priority is to build informal information networks; to develop community telecommunications and radio/TV/newspaper-based channels first and foremost; and to use ICT intermediaries only as a secondary priority.
• Non-IT users: those who use telephone/fax but not computers. For them, the priority is to gain access to ICT intermediaries and also to improve capacities for information capture, processing and dissemination.
• Non-networked ICT users: those who have stand-alone computers. For them, the priority is to build basic management and information capacities and to help make more/better use of the computers they already have. This group is a clear reminder that access to ICTs and effective use of ICTs are two quite different things.
• Networked/intensive ICT users: those making significant use of networked computers. For them, the priority is to adopt a more integrated and strategic approach to ICTs that applies the technology to key business goals. ICT initiatives for enterprise should focus on this group.

Other Recommendations

Other recommendations include:

• Be needs-driven not agency - or entrepreneur-driven in the planning of interventions. The latter two approaches have, in the past, presented a skewed picture of enterprise needs.
• Place greater emphasis on demand, and less on supply. This particularly applies in getting enterprises to use formal information and to use ICTs. Agencies and policies need to think far more about the drivers/pull factors that make enterprises want to use these, and to place less emphasis on the enablers/push factors that allow enterprises to use these.
• Focus more on macro-level policy interventions and less on micro-level individual enterprise interventions. The latter have a history of being costly and ineffective whereas policy provides a better return on investment. Policies are required both on the supply side to create an information infrastructure and on the demand side to stimulate markets for small enterprise outputs.

Finally, a caveat is issued. Small enterprise interventions frequently seem to have less to do with economic rationality (the basis for the recommendations above) and more to do with politics. If decisions about small enterprise interventions are dominated by politics, that would lead to a very different set of priorities in which ICTs and non-commercial support institutions and supply-side interventions take centre stage.