12:33 GMT 25th January 2012
The report supports the view that effective use ofiCTs can significantly contribute to and accelerate progress in private sector development (PSD). However, a lot more still needs to be done.
'Although some countries are already taking advantage of the close links between ICTs and PSD, much more can be done to make ICTs a powerful force for improving the competitiveness of the private sector,' says UN Secretary General Ban Ki Moon in the report's foreword.
Africa is not being left behind in the global ICT revolution. Many countries have recognised the link between ICTs and PSD as demonstrated in their national strategy documents notably in National Information and Communication Infrastructure plans, whose main aim is to assist countries to exploit ICTs for development.
'In Ghana's Second Medium-Term Private Sector Development Strategy, the overriding focus is to develop a private sector that creates jobs and enhances livelihoods for all. To this end, the strategy envisages, among other things, that the Government and the public sector should focus on improving the quality ofiCT infrastructure,' the report says.
The same applies to Mali, where the Strategic Framework for Growth and Poverty Reduction 2007- 2011 identifies PSD through small- and medium-sized (SMEs) businesses as a priority and puts an emphasis on ICTs. ICT skills, universal access to information through computerisation, private investment in cybercentres and multi-purpose community centres, the provision and use of market information, and better telecommunications infrastructure are all taken into account.
Similarly, Nigeria's National Economic, Empowerment and Development Strategy stresses private sector growth to support the development agenda in all sectors, including ICTs; while the national ICT policy identifies programmes to enhance the role of the private sector in ICT development, including the establishment of the National ICT statistical information service; the development of e-banking, e-commerce, e-trade, and electronic financial services; of a local ICT industry; software and technology parks; programmes for the utilisation ofiCT in industry; and business process outsourcing services.
But it is Rwanda that has earned international recognition for embracing ICTs on a wider scale. In its second National Information and Communications Strategy (2006- 20 I 0), the government stated its intention to turn the country into an information and knowledge-based economy and society. This strategy identified activities involving all aspects ofthe ICT - PSD interface - the development of a national ICT infrastructure; the creation of an enabling environment to deploy and use ICTs; the development of a local ICT industry and of human resources; the development of ecommerce; and the development of standards, practices and guidelines to deploy ICTs and to contribute to the development of e-government.
The Unctad report adds that although most African countries make clear references to the role that ICTs can play in supporting PSD, there is little information about whether the many goals and activities that are mentioned in the strategy documents have actually been implemented.
What clearly stands out, though, is that mobile money transfer services have completely changed the way people do business in Africa, where people are slowly moving from bricks and mortar to mobile banking. A study of 18 mobile money services across 10 developing countries found that mobile-based transactions were on average 19 per cent cheaper than traditional bank services, and 38 per cent cheaper in the case of low-value transactions.
'Consequently, these new channels of transferring money are likely to be of particular relevance to SMEs in low-income countries, which have a frequent need for making low-value transactions,' the report says.
There is no denying that mobile money is important for small businesses as it facilitates payments, reduces transaction costs compared to traditional banks and improves security, as evidenced by a study conduct ed in Tanzania. SMEs are embracing mobile money since it saves time, which can instead be used to develop the business.
Secondly, it makes logistics more efficient. One company cited in the Tanzanian study had been able to reduce the time from order to delivery from four to two days, with less strain on liquidity as a result. Thirdly, it is possible to keep better records of payments made or received. Fourthly, safety increases as the need to carry cash was reduced.
Of all African countries, Kenya has been at the centre of the emergence of many new innovations in mobile banking and insurance schemes, and creating new job opportunities. One financial area with huge potential is micro-insurance, which is not available in many rural areas in developing nations. If risks can be reduced, rural farmers would be more willing to expand operations by investing in seeds, fertilisers and equipment. A case in point is Kilimo Salama, an index-based micro-insurance product offered to farmers in Kenya, which enables farmers protect their investments in improved seeds and farm inputs against drought and excess rain through their mobile handsets.
The project - a partnership between Syngenta Foundation for Sustainable Agriculture, UAP Insurance and Safaricom - was launched in March last year. By September the same year, the first payouts were issued through the M-Pesa system. Over 100 farmers in Embu then received insurance payouts via the service.
In Zambia, farmers are benefitting from mobile technology in a different way. The Zambia National Farmers Union (ZNFU) 4455 is a market information service that is open to all smallholder producers and traders. Launched in 2006 by the government, with assistance from the International Fund for Agricultural Development and in cooperation with ZNFU, the service provides accurate and up-to-date agricultural and market information reported by the buyers and covering the entire value chain.
This allows smallholder producers to make better-informed decisions about what to grow, the volumes required, storage, processing, marketing, and investment opportunities. To find the best available price, producers and traders send an SMS to 4455 containing the first four letters of the commodity and the relevant district or province. They immediately receive a text message with the best prices and with codes designating the potential buyers.
The report points out that affordability is a key demand side factor for mobile services. Indeed, in a study of African SMEs, the main obstacle to ICT use was cost-related.
But when all is said and done, a dynamic ICT sector contributes to making the private An lncian fanner checks for weather updales on her mollie, a facilty now being widely taken up in Africa sector more productive and competitive. It creates new jobs, spurs innovation, and - not least - supports sustained use of ICTs throughout the entire economy.
As recent studies confirm, even in lowincome countries, a thriving ICT sector can make a major contribution to economic growth. Kenya stands out as a case study in this context. Its ICT sector has been the main driver of economic growth over the past decade, riding on the back of its liberalisation. Since 2000, this sector has grown annually by more than 20 per cent, and it was responsible for a staggering 24 per cent of Kenya's GDP growth during that period. Moreover, thanks to technological change and the birth of new business models, many employment opportunities are emerging in the ICT sector in low-income countries.
'Partly thanks to a buoyant ICT sector, Kenya's GDP growth during the past decade surpassed its population growth. The Kenyan ICT sector has flourished since the liberalisation of the telecommunications sector, providing economic opportunities for large and small business alike, both in the formal and informal sectors. With a 23 per cent average annual growth rate since 2000, the ICT sector has outperformed the rest of the economy by far,' the report says.
According to the report, Egypt is also emerging as an economic powerhouse, thanks to various initiatives, often in partnership with the private sector. The Egyptian government has managed to increase the number of graduates with relevant skills for the ICT sector, from 27,000 in 2006 to 40,000 by May of this year.
The availability of trained technical staff graduating from Egyptian universities is expected to meet the demand of the market for several years to come. In the area of software development, the Software Engineering Competence Centre (SECC) has, since 2003, been delivering courses and offering advisory services to Egyptian companies to assess their maturity level. Over 30 companies have attended these courses and have achieved certification for Capability Maturity Model Integration maturity, levels 2- 5.
By meeting the requirements of the SECC, Egyptian companies can claim that they meet internationally acceptable criteria for software development, which helps them compete internationally.
Across the African continent, challenges still abound despite the fact that the private sector is seen as the most important agent of growth, and hence of poverty reduction. African firms face various external challenges in areas such as starting a business, getting the requisite licences, legal regimes for hiring and firing workers, registering property, obtaining credit, protecting investments and enforcing contracts. Corrupt and inefficient government bureaucrats are also a major hindrance.
'The cost of doing business still remains high in Africa. Notably, venture capital remains expensive while the government has not offered enough tax incentives for ICT entrepreneurs,' says Michael Micharia, founder and CEO, SevenSeas Technologies, a regional integrated ICT services provider.
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