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

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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)

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.

Suggested Citation

  • Steve Esselaar & Christoph Stork & Ali Ndiwalana & Mariama Deen-Swarray, 2007. "ICT Usage and Its Impact on Profitability of SMEs in 13 African Countries," Information Technologies and International Development, MIT Press, vol. 4(1), pages 87-100, October.
  • Handle: RePEc:tpr:itintd:v:4:y:2007:i:1:p:87-100
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    Cited by:

    1. Paunov, Caroline & Rollo, Valentina, 2016. "Has the Internet Fostered Inclusive Innovation in the Developing World?," World Development, Elsevier, vol. 78(C), pages 587-609.
    2. Mohamed Kossaï & Patrick Piget, 2012. "Utilisation des technologies de l'information et des communications (TIC) et performance économique des PME Tunisiennes :une étude économétrique," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(3), pages 305-328.
    3. Vigneswara Ilavarasan & Mark R Levy, 2010. "ICTs and Urban Microenterprises: Identifying and Maximizing Opportunities for Economic Development," Working Papers id:2819, eSocialSciences.
    4. Jonathan Donner & Marcela X. Escobari, 2010. "A review of evidence on mobile use by micro and small enterprises in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(5), pages 641-658.
    5. Richard Heeks, 2010. "Do information and communication technologies (ICTs) contribute to development?," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(5), pages 625-640.
    6. Navyashree G. R. & Savita Bhat, 2016. "ICT Investments and Growth of Small and Medium Firms: A Study of Food Processing Industry in India," Working Papers id:11306, eSocialSciences.

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