• home
  •  

    A Grassroots View: Helping Small Firms Put the "E" in Trade

     

     
     
    © International Trade Centre, International Trade Forum - Issue 3/2003

    National strategies need to concentrate on real e-issues facing small firms, so that they can benefit from information and communications technologies.

    We need more awareness of the benefits and efficiencies that information and communications technologies can bring to developing countries. This is especially true for economic development and growth of small and medium sized enterprises (SMEs) - the drivers for growth in developing countries. Stimulating the SME sector is a smart strategy for governments striving to bring economic opportunity to the most needy, especially in light of growing evidence linking entrepreneurship to economic growth and poverty reduction.

    SMEs are often the backbone of the private sector in the developing world, creating jobs and providing a tax base for local government, which in turn, provides revenue for things like improving basic infrastructure, schools and hospitals. Frequently, SMEs offer the only employment available to millions of poor people throughout the world.

    E-trade promises

    While information and communications technologies (ICTs) may not seem like a central concern when small businesses need good business plans and seed funding more than computers, today's information society requires that most SMEs have some level of ICT use integrated into their business. Entrepreneurs who use ICTs appropriately can run a more efficient business and reach markets that were previously unimaginable.

    Many developing countries fail to create and maintain an environment fostering SME development and ICT use. Lack of basic infrastructure - from roads and electricity to telephones and Internet connectivity - is an obvious, often insurmountable barrier. Likewise, a country's legal and regulatory framework helps or hinders small businesses and ICT deployment.

    One example is how business relies on technology or infrastructure that is limited by current laws or regulations, such as laws that control or ban the use of satellite, wireless, or voice over Internet protocol (VoIP) technologies. Another example is ICT-based businesses that are hindered by fiscal or customs policies limiting cross-border trade in computing technologies or ICT-based services.

    In sectors where current laws or regulations do not cover ICT use, businesses face grey areas instead of reliable and transparent rules. In healthcare, for example, firms using ICT need appropriate privacy and data protection laws to govern the handling of electronic health data.

    Making access a reality

    For SMEs to realize the promise of e-trade, national ICT and e-development strategies must cover a range of issues, and implement them effectively over the long term. We at Bridges.org call this real access to ICTs.

    • Infrastructure. E-trade will only be a reality when there is physical access to ICT that is appropriate to the needs of the business and the local conditions in which it works.
    • Affordability. Technology must be affordable to own and/or to use by SMEs, and business must be able to sustain its ICT use within local economic conditions.
    • Training. People in SMEs must be able to explore possibilities to use ICT to improve business, and they must be trained to use it effectively.
    • Relevance. There must be applications, content, and services available to SMEs that are relevant to their business, especially in terms of language.
    • Integration. Technology use must be integrated into the business so that it makes it faster, easier, or cheaper to do something they need to do instead of loading additional burdens on doing business.
    • Security. SMEs must understand threats they face in doing business in an electronic environment and their responsibilities with respect to privacy and data protection, and they should feel confident in the use of security technologies.
    • Legal framework. Governments must embrace macroeconomic policies and implement a legal and regulatory framework that enables ICT use in the SME context.
    • Culture. There cannot be socio-cultural factors that inhibit ICT use within SMEs, such as when people are discouraged from using ICT or doing business on the basis of gender, age or other diversity factors.


    Cross-border trade is only one issue within the broader context outlined above. Most SMEs in developing countries face many hurdles and they are not geared up for international trade. Many are struggling with the basic use of ICT, let alone e-commerce opportunities. A focus on the use of ICT in domestic trade would be a useful first step to help develop internal markets and create local critical mass for the use of ICT in business.

    Trust is essential

    Gaining confidence with international markets is one of the biggest challenges - since business partners and clients in other countries need to trust the SMEs they do business with and the transaction systems in place. Strong government commitment may be needed to ensure this. One solution might be the creation of trusted intermediaries to act as facilitators, go-betweens and guarantors. They could also advise and support local SMEs. These intermediaries could be drawn from the ranks of existing businesses with established credentials and a proven financial track record, local and national chambers of commerce or government development schemes.

    Success indicators

    Measuring success in e-trade is important, not only to demonstrate the concept's viability, but also to encourage commitment from governments and SMEs. Indicators include growth in the number of SMEs involved in e-trade, the number of trusted intermediaries, and the establishment of bilateral and multilateral e-trade agreements between developed and developing countries.

    Building awareness

    Participation of developing countries in business-to-business marketplaces will never be a reality until businessmen and women in these countries understand all that ICT and e-trade have to offer.

    Policy and strategy-makers need to be educated about the unique challenges and problems faced by SMEs in developing countries. They need documentation in local languages. The issue of gender needs to be addressed. In many developing countries, women are emerging as local champions of ICT, and interventions and awareness campaigns should take this into account. A holistic approach will also take local business customs and etiquette into account.

    In sum, while ICTs give SMEs the potential to compete globally, lack of infrastructure and unfavourable policy regimes hinder progress. Building awareness will help foster strategies effectively targeting e-trade in a way that addresses problems facing SMEs.





    Teresa Peters is Executive Director of Bridges.org, an international non-profit organization based in Cape Town, South Africa. Its mission is to promote the effective use of ICT in developing countries to improve people's lives. Bridges.org works at the policy level, by promoting policies and laws that foster widespread ICT use. It works at the grassroots level, to help people understand ICT and its practical utility. For more information, contact her at tmpeters@bridges.org or check the web site (http://www.bridges.org).