 | Issue: | Africa and the Middle East I 2003 |
| Article no.: | 4 | |
| Topic: | The Impact upon Local Development of Digital Inclusion for Small and Medium Business | |
| Author: | Prof. Jophus Anamuah – Mensah | |
| Title: | Vice-Chancellor | |
| Organisation: | University College of Education of Winneba, Ghana | |
| PDF size: | 84KB |
About author
Prof. Jophus Anamuah – Mensah is the Vice-Chancellor of the University College of Education of Winneba, Ghana. During his distinguished career, Prof. Jophus Anamuah – Mensah has served as Head of the Department of Science Education, Dean of Education of the Faculty of Education, Pro- Vice Chancellor of the University of Cape Coast and is now occupying the position as Principal of the University College of Education of Winneba. Professor Jophus has earned many awards for his activities from the Government of Ghana; UNESCO; Grant University of British Columbia; University of Leeds; Fulbright Senior Scholar Award at Arizona State University West; the Ghana Association of Science Teachers; the New York Academy of Sciences; and the University of Cape Coast. He has 43 published and 11 unpublished works to his credit. The Professor has served as Chairman of the President’s Commission for the Review of Education in Ghana; Chairman of the Board of Directors, GRATIS Foundation; Member of the President’s Special Initiative on Distance Learning, and as a Member of the Working Group on the Management of Science and Technology in Ghana, among many others. He is currently, an elected member of the Governing Council of the Association of Commonwealth Universities. Prof. Jophus Anamuah – Mensah’s academic degrees include: BSc (Ed), 1971; BSc (Chem), 1972; MSc (Chem), 1974, UCC; MA (Science Ed), 1978 UBC; EdD, 1981, UBC; FGAST. He is married and has four children.
Article abstract
In this paper we shall discuss the types and characteristics of third world SMEs, their modes of operations, expected impact of the infusion of ICTs on the performances of these SMEs and the appropriate type of ICTs to be deployed in such businesses. The paper also looks at the constraints facing medium and small businesses in the adoption of suitable ICT applications and suggests possible solutions to these problems.
Full Article
Introduction The digital divide is not merely a divide between developed and developing countries. The prevalence of ICTs in urban communities also divides developing countries within themselves into those communities having access to information and those without such access. This phenomenon is aptly called intra-national division. Small and Medium Enterprises (SMEs) dominate the informal sector of third world economies. They therefore help in no small way to solve the unemployment problems of developing economies, besides generating the bulk of national wealth. Most SMEs in the developing countries are sited at villages and sub-urban communities, where access to ICT facilities is severely limited. Information Technology and Internet applications are fast becoming the vehicles for offering and supplying a growing range of services to individuals and businesses. E-commerce, e-business and other e-words, collectively referred to as e-services, enhance the performances of businesses in a manner that has revolutionised business management and transactions. E-services have made business management and transactions faster, more convenient and more cost-effective in many ways. The use of ICT in business has traditionally been focused on data processing, records keeping and management (inventory, storage and retrieval of data/information), access to useful information from remote sources through the World Wide Web and other Internet services, scheduling business operations, communications between clients and customers, advertisement and market surveys of services and products, automation of business transactions and operations and decision-support systems. But these benefits have mainly been enjoyed by large businesses, with medium businesses deploring a minimal share of the services. Most small businesses in the developing countries are yet to come on board the vehicle of e-commerce and e-business. We note that the Internet does not satisfy all the communications needs of the business community due mainly to accessibility constraints and cost as well as the nature of some SMEs’ operations. Local Area Networks, Wide Area Networks, telephone (both static and mobile), facsimile (FAX), private internal networks including Intranets are other important channels of communications, which medium and small businesses could exploit to their benefit. These communication media must be reliable, have high capacity and speed to meet the needs of these businesses. User-friendliness of such interventions cannot be over emphasised, if they are to impact positively on such businesses, particularly for populations that are predominantly ICT-illiterate. We in the developing economies are in a sort of nightmare scenario: literacy or the lack of it and technology! Which way first? What is important, however, is that we have a unique opportunity to leapfrog in our development efforts through the adoption of appropriate technology offered by the information revolution. SMEs therefore should be encouraged to use new technologies appropriate to their needs. The Types and Characteristics of SMEs in Developing Countries SMEs in the developing countries such as Ghana may be classified according to their operational objectives, ownerships, sises and management structures. Businesses may therefore be classified into four major sectors, namely primary, secondary, tertiary and quaternary sectors. By primary business concerns we mean the category of businesses that engage in acquiring and trading in unprocessed natural resources such as farming, forestry, mineral extraction and fishing products. The secondary sector involves businesses that engage in adding value to natural resources such as manufacturing industry. The tertiary “SMEs in the developing countries such as Ghana may be classified according to their operational objectives such as ownerships, sise of the enterprise and management structures. Businesses may therefore be classified into four major sectors, namely primary, secondary, tertiary and quaternary sectors.” sector includes businesses that deal with services (education and health, distribution and retail trade, banking and financial services, hospitality services and transport services, etc). Most SMEs in the developing world fall under one or the other of these three categories. The quaternary sector is now only being introduced to most developing countries, and only very few of them at that. These are information-based services such as the Internet, mobile phone networks, satellite communications systems and space travel. In Ghana and in most other African countries, the SMEs in these sectors are dominated by people who are not highly educated or who are computer-illiterate. We find such businesses in farming, small scale mining industry or ‘galamsey’, small scale manufacturing industry and artisans, service providers such as legal services, entertainment industry, hospitality and tourism industry, education, retail and petty trading businesses and construction industry. The sises of such businesses range from sole proprietorships to medium-sized limited liability companies. Most of these businesses operate in non-electronic environments, where laborious manual methods are employed. Record keeping and data processing in such environment certainly are inefficient and less effective, making the running of such businesses less cost-effective. Activities such as operational management, client-customer communications/transactions, product packaging, advertisement, delivery and product improvement suffer from such deficiencies, since marketing, inventory, management and financial controls, administration, planning and budgeting, and accounting systems may not be properly organised. Organisational structures of such third world SMEs are generally flat, as there are very few levels of management hierarchy. SMEs are mostly financed through resources of their owners, in a few cases through bank loans and in rare situations shareholders’ funds or a combination of these sources. Given these features of third world SMEs, how does local development of digital inclusion impact on their operations? What type of ICTs should we adopt for such businesses? How could the deployment of such ICTs be sustained? These are important questions that designers of ICT-mediated systems for SMEs must address, if we are to meet the demands and needs of such businesses. We shall look at how ICT can help SMEs in the primary, secondary, tertiary and quaternary sectors become cost-effective, given the peculiar situation of developing economies. How then do we in the developing economies make these e-services accessible to our SMEs at an affordable cost? How, for instance, do we make computer graphics design tools user-friendly to local dressmakers? What sort of computer system could be suitable to medium commercial farmer and retail departmental store manager in the accounting, marketing, budgeting and investment decision tasks? How do we help the market trader to keep records of business transactions? Retailers, rural banks, local contractors, estate developers, transport owners, service providers (legal firms, private educational and health institutions, consultancy companies, etc), fuel dealers, and NGOs all fall under the medium business category. All such businesses require e-services to modernise their operational, management and marketing tasks. General Benefits of ICT Services to SMEs The overriding goal of the infusion of ICTs into any business is to enhance productivity and cost-effectiveness. Any serious business concern, large, medium or small, would like to deploy technologies whose benefits outweigh their cost (See Table1). Most business activities centre on operations, marketing, sales, finance, administration and market/product research. The deployment of ICTs could therefore have the following general benefits for each of these activities, though in varying degrees: Improvement in efficiency in terms of speed, accuracy and reliability of operational activities and data/information management Improvement in client-customer services that would not only lead to better understanding of transactions but also increased productivities and cost-effectiveness Improvement in processing of customer requests that would lead to faster responses to such requests Improvement on the availability of relevant information for management and proper financial control Availability of innovative customer services that enable businesses to stay competitive in an information-based economy Up-to-date sources of information that would enhance improved product design and marketing Enhanced working environment that would help in the recruitment and retention of needed staff Advertising services and goods on the broadband computer network could lead to gains in sales that come with business expansion, since a wider market could thus be reached. As we noted earlier, most third world SMEs have missed out on these benefits of ICTs, because they neither have the expertise nor the means to acquire and deploy new technologies in their operations. How then can we package the relevant ICTs to make their applications user-friendly, accessible, reliable, appropriate and less expensive? Business Computer Systems and Applications Business computer systems are often deployed in the areas of transaction processing, management information and decision support. “For us in Africa, the main tasks of SMEs include proper records keeping, financial controls and management, client-customer transactions records, inventory management, very attractive packaging, marketing and advertisement of services and goods and routine office management. The very small retail business would need computer systems for daily transactions records, client-customer correspondences, inventory management and financial and budgetary controls and analysis.” For SMEs computer applications may find use in accounting and finance, sales and marketing, and manufacturing. There already exist exotic business computer systems but these have mainly been patronised by large businesses, because these systems are expensive and their use requires special expertise. We therefore need to modify such systems with the view to making them less expensive and more user-friendly. Rendering such systems multimedia would make them more appealing to SMEs. In designing such systems we should bear in mind that each business may require specific type(s) of computer system depending on its objectives, mode of operations, sise and organisational structure. Even within a business entity, the various categories of employees may need different types of computer applications. One fact is, however, clear; computing is essential in every business field. Companies with inadequate computer systems risk the possibility of losing their customers to competitors that are better disposed to use the e-services. For us in Africa, the main tasks of SMEs include proper records keeping, financial controls and management, client-customer transactions, inventory management, attractive packaging, marketing and advertisement of services and goods, and routine office management. The very small retail business would need computer systems for daily transactions records, client-customer correspondences, inventory management and financial and budgetary controls and analysis. Most of these businesses, however, neither have the expertise nor the means to deploy the exotic computer systems. Such businesses would therefore need inexpensive user-friendly systems that would assist them in these tasks. Such systems must necessarily be devoid of technical details but address the real needs of these companies. Conversational programmeming and multimedia techniques could be employed to render such systems very interactive and easy to understand. Consideration for the Development of Digital Inclusion for SMEs A digital development strategy should not only seek information access for SMEs but also the strategy must aim at empowering SMEs to automate their operational and managerial activities. This, however, presents major technological challenges, given the existing conditions and pricing structures of the telecommunications sectors in developing countries, and the scarcity of trained technicians to maintain ICT equipment at affordable prices. The key concerns in this respect are: the weak telecommunications infrastructure and regulatory environment; the capacity and costs of local Internet Service Provision; the availability and costs of local computer equipment (purchase and maintenance); required infrastructure at the individual business enterprise level. We therefore need to empower these disadvantaged SMEs to have access to optional scalable and customised platforms to support the e-business applications that are critical to development and enable e-inclusion. In this respect we must create an integrated network for SMEs and portal services, such as voice over high speed Internet, video on demand services, and multi-media services. Some of the common communications problems facing the SMEs include high tariff rates, long waiting periods for phone lines and low speeds of these lines. The tariff rates are used to determine the dial-up costs for participating sites. Governments of developing countries should consider a national policy on the reduction of these tariffs for business purposes. Other forms of communications should also be exploited for SMEs, if this suggestion does not meet the approval of policy makers. For instance, the deployment of Very Small Aperture Terminals (VSAT), a satellite-based technology which can extend Internet connectivity to remote areas, is one way of bypassing existing fixed-line communications infrastructure. The operational procedures of VSAT application are simple and straightforward. Land-based wireless transfer of data via radio linkage offers another conduit for Internet use without relying on the existing telecommunications infrastructure. The broadband computer network allows and encourages e-commerce; e.g. a dial-up-and-deliver service over the Internet. Broadband computer networks should provide the following services for businesses: IP telephony, application services and ISP services such as e-mail, and voice mail, which SMEs could exploit to their advantage. SMEs’ access to this network definitely has some positive impact on business operations. This would require a two-prong attack: embarking on ICT awareness drive and designing appropriate computer systems to meet the needs of these SMEs. The ICT awareness drive should be the first step towards helping SMEs in this crusade. Digital technology, as a tool, works best with specific skill development. We suggest policy makers take the following measures so e-services could make the desired impact on SMEs in the developing world: Infusion of ICT education into the functional/informal programmemes, where these programmemes exist. Direct seminars and workshops for groups of related businesses on the use of ICT applications in business could also help push the initiative forward. By so doing, the awareness level of stakeholders and agreement on what the objectives of the intervening system are could be addressed The deployment of a Community-based information technology services websites that would offer assistance to less privileged businesses. Value-added services could be provided through such sites for the community Assist SMEs to establish feature-rich sites that include multimedia interactive exploration chats and links to clients and customers. Information about development of value-added products and services could be hosted on such sites having the benefit of the market place Development of national policy for managing the use of computer-mediated communication in the workplaces and businesses. This would create the necessary ICT culture for business operations and encourage entrepreneurship development and training programmemes for SMEs Uploading a quick response website, a sort of an interactive business learning environment that would address urgent business issues within a locality or cluster of communities Development of application programmes in local languages, though not an easy task as at now in most African countries, is desirable. Multimedia tools should be able to assist in the design of such tools Governments should subsidise telecommunication services for SMEs as a way to motivate users to deploy the necessary computer-based interventions, given the pivotal roles that such SMEs play in the national economies Governments of developing countries need to infuse ICTs into the school curriculum at all levels of the educational ladder Create telecentres as the hub with Internet access (Internet Business Solutions) Development and implementation of a programme of information transfer from telecentres to and from the SMEs sites. This medium could offer outsourcing training, appropriate applications software, and system integration for SMEs of similar operational character On a larger scale, sub-regional economic groupings such as ECOWAS could setup regional fibre networks. National fibre networks could subscribe to the regional networks. Surrounding communities, remote urban communities, and villages could then connect to the national networks. Ultimately, the various sub-regional networks should be integrated to form regional networks. The pooling of resources in this manner could go a long way to reduce the current prohibitive cost of telecommunications services Legislation on e-crime should be made to deal with fraudulent persons. These are some of the necessary considerations for turning our SMEs into ICT-based entities. E-Services for SMEs The designing of the appropriate computer programmes for SMEs should focus on acquiring custom-tailored and altered programmes, but the former must be emphasised. Such programmes are usually designed to process such items as payroll, invoices to customers, cheques to suppliers, warehouse inventory, and production scheduling. These are routine computer applications for office administration, which medium-sized enterprises and well-endowed small businesses could infuse into their activities. The deployment of ICT in the banking industry has brought us closer to a situation where physical cash would cease to be a major medium of exchange. Department stores, petrol stations, travel agencies, hotels and restaurants now accept a variety of credit cards or debit card in the so-called developed economies. A single plastic identification card called a debit card would replace a purse or wallet full of physical money. This technology eases business transactions in terms of time and convenience. The overall gain is efficiency in commerce. Electronic cash registers may also act as computer terminals. This combination enables service businesses such as banks, stores, restaurants, airlines, freight companies, hotels and travel agencies to provide point-of-sale business transactions. Designers of these computer systems should now focus on making these systems simple, easy-to-understand, less expensive and more reliable so that SMEs could benefit directly from their use. For illiterate or semi-illiterate users, graphical or pictorial and multimedia interactivity approaches should be a necessity. Strategy for Developing Local Digital Inclusion for SMEs Assess the SME entity in terms of its objectives, ownership, sise, organisational structure and information needs Survey available computer systems for business Select suitable systems that could meet the local SME’s or sponsor’s needs Consult management of SME or sponsor on the choice of systems with respect to cost, suitability, facilities required and other external factors Modify selected system or design a custom-based programme for the SME or sponsor Test run the systems to ascertain their suitability and relative advantages Discuss with SME or sponsor the details to deploy the new system in respect of staff training In order to insulate users of e-services online, application developers should factor in the need to protect data/information within the corporate environment and trans-corporate data flow channels. This would require security measures that define access rights and privileges Design the implementation and maintenance regimes in consultation with SME’s staff or sponsor’s representative Upload the programme on the network, fine-tune the system and handover to SME or sponsor of the system Further fine-tune the application before upload to website that hosts such computer systems for SMEs Funding to build and maintain required infrastructure for SMEs The global investment community, particularly national development partners Central Government Interventions Special taxes on SMEs and corporate bodies Individual or group-SMEs’ own effort or in partnership with telecommunications service providers Other users’ subscriptions. Conclusion Impact of ICTs on businesses of all categories is phenomenal. Access to useful information at the appropriate time and place is now so vital to the success of any business enterprise that Governments all over the world see the development of telecommunications infrastructure as a priority. Reliable, cheap and relevant ICT infrastructure is now a priority concern to us in the developing countries. This need is more acute for SMEs, because of the high cost of access to appropriate technology and low ICT literacy levels of stakeholders. “SMEs in this part of the world still conduct their transactions and operation in a predominantly non-electronic environment.” Small and Medium Enterprises play an important role in national development by employing most people in the informal sector. Unfortunately, however, the SMEs in the developing countries have not received the desired attention by policy makers. ICT is now being given the go-ahead by African governments but attention appears to still tilt in favour of large businesses which have the capacity to acquire these new technologies. SMEs in this part of the world still conduct their transactions and operation in a predominantly non-electronic environment. It is therefore time we took realistic measures to address the technologically innovative needs of these categories of business. The task is not easy, given the generally poor infrastructural setup of most developing countries, but by designing local ICT interventions for these businesses a lot could be achieved. SMEs should therefore be encouraged to adopt cost-effective methods of conducting their businesses. The advent of the Internet technology should give impetus to the development of portable e-packages for these SMEs. These e-services need to be re-packaged in a way that would not only make them inexpensive and affordable, but also user-friendly. In this direction, a multimedia approach to reaching out to these businesses will go a long way to get them on board the ICT wagon of progress and prosperity. References 1. Alastair de Watteville and Lester Gilbert (2000): Information and Communication Technology, Heinemann educational publishers 2. Brian K. Williams, et al (1995): Using Information Technology, IRWIN 3. David M. Kroenke (1984): Business Computer Systems (Second Edition), Mitchell Publishing, INC 4. Rob Kelley (1982): The World of Computers and Information Processing, John Wiley & Sons
