ICT Usage and Its Impact on Profitability of SMEs in 13 African Countries

Steve Esselaar, Christoph Stork, Ali Ndiwalana and Mariama Deen-Swarray
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Steve Esselaar: Independent Communications, Authority of South Africa, Sandton, South Africa
Christoph Stork: LINK Centre/Research ICT Africa (RIA), PO Box 601, WITS, 2050, Wits University, Johannesburg, South Africa, +2711717 3914,
Ali Ndiwalana: Makerere University, Kampala, Uganda
Mariama Deen-Swarray: Namibian Economic Policy, Windhoek, Namibia

Information Technologies and International Development, 2007, vol. 4, issue 1, 87-100

Abstract: This article reports on a small and medium enterprise (SME) survey carried out by the ResearchICTAfrica (RIA) in 14 African countries. It argues that the negative return on investment reported in the literature can be attributed to the failure to distinguish between the formal and informal sectors. This article demonstrates that informal SMEs have a higher profitability than formal ones. It further shows that ICTs are productive input factors and that their use increases labor productivity for informal as well as formal SMEs. The article further argues that there is still demand for fixed-line phones among SMEs but that mobile phones have become the default communications tool because fixed lines are either too expensive or not available. The primary policy recommendation arising out of this is that applications for SMEs need to be developed using mobile phones. (c) 2007 by The Massachusetts Institute of Technology.

Date: 2007
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