Lessons from the Field: ICTs in Small and Medium Enterprise Development


The establishment of an active small- and medium-sized enterprise (SME) sector has been identified as crucial to attaining long-term and sustainable economic growth for developed and developing countries alike. In emerging economies, increasing the viability of SMEs is now central to many overall economic development strategies. Within the context of the global, knowledge-based economy, these countries are looking to use information and communications technologies (ICTs) to help initiate, support, and facilitate SME development. ICTs have proven to be vital in improving the efficiency and expanding the market reach of SMEs as well as in establishing new ways for SMEs to obtain and make the most effective use of business information.

Resource Portals
Improving the access to and quality of information available to SME owners and operators is a core purpose of many projects. Many have accomplished this through online portals that provide a variety of information and resources.

In Nepal, Thamel provides an online directory of Nepalese SMEs, sorted by industry, an e-commerce site, a chat room for local businesses, and information services such as business news and currency exchange rates. Another, the Online Business Information Service (OBIS) supports local enterprises in the Solomon Islands by sharing Internet-researched answers to business questions from entrepreneurs. The information OBIS collects regarding microfinance, equipment, raw materials, market opportunities and buyers, business ideas, and technical assistance supports the start-up and expansion of local ventures and promotes private sector investment in indigenous enterprises.

EnterpriseWorks has used information technology to create a powerful, first-of-its-kind, small enterprise and sustainable development search engine for the World Wide Web. It is designed to help developing world entrepreneurs and producer associations, development specialists, local and multinational businesses, and program funders easily locate information on enterprise development and related issues.

Agricultural entrepreneurs are also able to make us of information portals. The Agriculture Market Watch project in Mali aims to improve the access to agricultural information for the private sector in particular local farmers, herders and transporters of agricultural products. These types of projects enable local businesses to omit intermediaries and directly engage in market pricing, cost evaluation, and sales. The Business Information Services site performs a similar function in Tanzania, listing both local and global commodity prices. It has multiple locations and focuses on helping rural farmers obtain the most accurate and up-to-date information possible. Foodnet in Uganda and b2bpricenow.com in the Philippines are two other similar sites.


Assistance From Abroad
Developed countries have a wealth of intellectual and financial resources that can be employed to empower SMEs in developing countries. Several projects are attempting to link up those that can offer help to those that need it. The Sustainable Village, for example, connects Third World entrepreneurs with the resources they need to establish micro enterprise solutions for global problems. The Sustainable Village Web site networks these micro enterprises with like-minded organizations, providing the capital, know-how, technology, and renewable resource equipment developing countries' entrepreneurs need.

The Digital Diaspora Network Latin America and Caribbean is using ICTs to help achieve the Millennium Development Goals "through mobilizing the technological, entrepreneurial and professional expertise and resources of the region's Diaspora communities in North America and Europe."

Another project, MicroAid, allows funding agencies, local community organizations, and poor families to work together to eradicate poverty through the direct online funding of family home enterprises. Through its portal, MicroAid allows anyone to send micro-aid funds directly to poor families seeking to achieve sustainable livelihoods through a simple home enterprise learning process.


E-Commerce
The use of e-commerce to expand the reach of SMEs is well showcased in developing countries. The July 2003 Digital Dividend analysis, Lessons From the Field: ICTs and Handicrafts documented many such micro enterprise-oriented projects that are taking advantage of the Internet to showcase and sell the work of local artisans. These projects include Keralcraft in India and African Craft, showcasing artistry of Western Africa.

E-Connexions is trying to help entrepreneurs and small businesses in Peru use ICTs to build markets in the US and other parts of the world. They accomplish this by connecting businesses from the North to businesses on the South, and by providing reliable e-commerce solutions within Latin America.

E-commerce "clusters" are effective beyond the handicrafts sector too. For example, CatGen is an e-commerce resource site providing an online catalogue of SMEs for the exchange and promotion of global B2B and B2C opportunities. CatGen was developed by PeopLink, an organization intended to help SMEs all over the world to participate in e-commerce.


Local ICT Support
Several projects have been set up to provide ICT resources and training directly to locally-based developing country entrepreneurs who are attempting to start or expand a business of their own. Busyinternet in Ghana, for instance, provides local businesses with a central location for information and ICT-related services. These services include ICT enabled office space, conference facilities, a cyber cafe, digital copy center, and wireless capability. They also work as an advocate for ICT-related entrepreneurial activities and in promoting the use of ICT in business endeavors. Also in Ghana, the solar-powered Asante Akim Multipurpose Community Telecenter (AAMCT), provides secure "e-commerce/digital culture solutions" for local businesses and additional services to support "outsourcing; small business support; self-employment; and entrepreneurship.

Located in ASAFE's Resource Center in Cameroon, the ASAFE Cyber Boutique began operating in at the end of 2000. Through the boutique, ASAFE provides its membership of 3,000 entrepreneurs with information and communication technology access and training. The center works closely with ASAFE's other entrepreneurial activities which focus primarily on women and the development of e-commerce ventures. Similarly, The IT Center in Macedonia provides a network of ICT enabled centers that provide ICT training for local SMEs, NGOs and individuals. It serves as an example of local community centers that have helped support SMEs.


Business Incubators
Though the use of ICTs in improving business services looks to be well established in and represented in the landscape of development, the creation of SMEs with ICT related products or services at the core are more difficult to establish. This difficulty seems to stem from some developing countries' inability to foster the right kind of environment in which ICT-enabled businesses succeed. For example, there are continued difficulties securing stable electricity and dispersed and affordable telecommunications infrastructure in many developing countries.

However, the opportunity for entrepreneurial business activity around ICT -related products and services remains high especially as countries resolve the initial barriers. Businesses providing training and education offer promising business opportunities. The Kudumbashree State Poverty Eradication Mission of the Government of Kerala in India, for example, has begun several ICT micro-enterprise efforts. Notable of these is the collection of Kudumbashree IT Units that has employed over 600 women across the state as IT entrepreneurs providing data entry, desktop publishing, and IT training through sustainable IT centers. After initial training, the women compete with other businesses for local contracts and offer similar training services to what they have received. The project has become increasingly sustainable through fees collected for training and the other services.

The Bandwidth Barn is a South African ICT business incubator. Due to its design and mission, the Barn is able to remove entry barriers that many entrepreneurs face when getting their businesses started. In addition to high-speed Internet connections, phone services, conference rooms, and office space, the Bandwidth Barn offers tenants the unique opportunity to interact with and engage fellow ICT entrepreneurs. Also in South Africa, the Innovation Hub provides entrepreneurs from previously disadvantaged communities and groups with the empowerment tools they need to turn their business ideas into viable business propositions.

The Mozambique-based MICTI Business Incubator provides services such as mentoring, training, an Internet connection, PCs, and access to a wireless network. It also supports tenants through the provision of advice on business planning, marketing and strategy, financial planning, and other services.

Finally, the Yangling Business Information Center (YBIC), established in 1998, incubates technology-based projects and supports IT entrepreneurs in China. With its support, projects in a variety of fields have been launched, including bio-engineering, irrigation, fertilizer, and other general agricultural sub-fields.


Moving Ahead
For countries still struggling to establish ICT-friendly environments, stable electric and telecommunications infrastructure and supportive ICT policy measures are crucial. In countries where an adequate ICT environment has been established, SMEs continue to require an awareness of the benefits and possibilities of using ICTs for business administration and operation improvements. More ICT education and training as well as general business management skill building will help SMEs to assess the proper levels and methods for integrating new or upgrading existing ICTs into their businesses. Education and training will have limited impact however if improved access to capital for SMEs is not also provided. Finally, there is evidence that SME development models that begin with initial government investment can be successfully transitioned to self sustaining businesses.


More Resources
The projects highlighted in this article represent only a portion of what is available in the Digital Dividend Project Clearinghouse. You can Search the Clearinghouse for more than 70 projects that have 'Business Services' as an activity type.

The Digital Dividend Resource Marketplace contains several links and tools aimed at helping SMEs in developing countries.

The IFC/World Bank has developed an SME Toolkit designed to help SMEs in emerging markets succeed. The portal contains a variety of tools, resources and how-to articles.

The International Network for SMEs (INSME) is an international association with a mission to stimulate transnational cooperation and public and private partnership in the field of innovation and technology transfer to SMEs.