Small Enterprise as Users and Suppliers of Information on ... · SMMEs as users and suppliers of...

SMMEs as users and suppliers of information on ICT sector

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Corporation no. 2002/047290/23

4th Floor Campus Building

999 Hilda Street

Hatfield 0082

www.FeedbackRA.co.za

Small Enterprise as Users and Suppliers of Information on the ICT

Sector.

Submitted to

SEDA

Project Management Contact Details

Feedback Research and Analytics

Feedback Research and Analytics

999 Hilda Street, Hatfield 0083

Tel: +27 12 430-2009. Fax: +2712 3420931


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Table of contents

1. List of Abbreviations ............................................................................................. 5

2. Introduction ........................................................................................................... 8

2.1. Brief ............................................................................................................... 10

2.2. Purpose and objectives .................................................................................. 11

2.3. ICT SMME: A definitions............................................................................. 11

3. Methodology........................................................................................................ 12

3.1. Approach ....................................................................................................... 12

3.2. Ways in which sources were elicited............................................................. 13

4. ICT technologies used by small businesses......................................................... 14

4.1. Social and economic benefits of ICT ............................................................ 14

4.2. ICT and productivity ..................................................................................... 15

5. The Benefits of ICT to SMME’s ...................................................................... 16

6. Barriers and issues related to the use of ICT ............................................... 29

7. Defining the ICT Value Chain ............................................................................ 36

7.1. Primary Groups ............................................................................................. 37

7.2. Networked Interaction ................................................................................... 37

8. Activity & Opportunity within the ICT sector .................................................... 39

8.1. Performance Trends within the ICT Sector................................................... 39

8.2. SWOT analysis .............................................................................................. 45

8.2.1.1.1. Strengths .................................................................................. 46

8.3. ICT Spend in BRICS Countries 2000 – 05 ................................................... 48

9. NGOs and ICT for Development......................................................................... 49

10. Demographic of the sector................................................................................... 49

11. Future growth prospect of SMMEs within the ICT sector .................................. 49


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11.1. Policy environment................................................................................ 49

11.1.1. Provincial ICT Development planning.............................................. 49

11.2. Funding environment............................................................................. 50

11.3. Unexploited markets and under serviced areas ..................................... 50

12. Opportunities and challenges .............................................................................. 50

12.1. Opportunities ......................................................................................... 50

12.2. Challenges ............................................................................................. 51

13. Issues for Possible Further Exploration............................................................... 53

13.1. Trends Impacting the ICT Sector .......................................................... 53

14. Recommendations ............................................................................................... 53

14.1. Recommendations: ICT developments to benefit SMMEs ................... 53

14.2. Challenges and corrective measures...................................................... 56

14.2.1. Leveraging ICT enabling from business use ..................................... 56

14.2.2. Promoting the use of ICT to enable exports across all SMMEs........ 57

14.3. Potential support mechanisms that could be applied............................. 58

14.3.1. Enhancing `ICT enabling' through skills development ..................... 58

14.3.2. Liaison with industry ......................................................................... 59

14.3.3. Enhancing local ICT import competing firms ................................... 59

14.4. Opportunities and how they can be explored ........................................ 59

14.5. Specific interventions or quick gain strategies for SEDA..................... 61

15. Bibliography ........................................................................................................ 64

16. Annexure A: Annotated bibliography ................................................................. 68


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Executive Summary


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1. List of Abbreviations

ADSL Asymmetrical Digital Subscriber Line. ADSL is a form of DSL, a

data communications technology, that enables faster data

transmission over copper telephone lines than a conventional

modem can provide.

B/OSS Business Support Systems. The complementary term for “OSS”,

BSS is a newer term and typically refers to "business systems"

dealing with customers, supporting processes such as taking

orders, processing bills, and collecting payments. The two

systems together are often abbreviated BSS/OSS or simply

B/OSS.i

DSL Digital Subscriber Line. Generic name covering several different

technologies for data transmission over fixed phone lines.

EDI Electronic Data Interchange. A system for exchanging trading

information in standard form by computer systems through the

use of electronic messaging systems – for instance, examination

entries, personnel records and transactions between trading

partners.

EFT Electronic Funds Transfer. An electronic-based transactions for

instance Internet Banking transactions.

I/O Input/Ouput

ISD Internet Service Developer

ISP Internet Service Provider. An Internet service provider is a

business or organisation that sells to consumers or business

access to the internet and related services. -


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LAN Local Area Network. A communications system linking

computers within a restricted geographical area such as a

building or campus. This also allows computers to share

information from a central source.

OSS Operations Support Systems. The network systems" dealing

with the telecom network itself, supporting processes such as

maintaining network inventory, provisioning services, configuring

network components, and managing faults.

PC Personal Computer

PSTN The Public Switched Telephone Network (PSTN) is the

concentration of the world's public circuit-switched telephone

networks, in much the same way that the Internet is the

concentration of the world's public IP-based packet-switched

networks. Originally a network of fixed-line analog telephone

systems, the PSTN is now almost entirely digital, and now

includes mobile as well as fixed telephones.

SVC Scalable Video Coding. The objective of SVC is to offer content

in a "scalable" way; i.e. content can be coded once, and can then

offer streams of various quality.ii

TV Television

VAN Value Added Network Services. A term used to refer to other

alternative, telecommunications service providers, generally

known as VANS licensees, that provide telephony services to the

telecommunications market.

VPN Virtual Private Network. A service that links a company's local

and telecom networks with the computers and phones of

employees who work remotely, forming a telecom or data


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communications network that looks to users like a single

business network.

WAN Wide Area Network. In contrast to a local area network, which

links computers at the same site, a network which links

computers over a large geographical area, including

telecommunication links such as satellites.

iii


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2. Introduction

The African business graveyard is littered with corpses of small and medium scale businesses that would have survived if anyone took notice. Governments, bankers, policy makers, even the World Bank institutions all agree that small businesses are the engine of growth in any economy. The key to unlock this vast potential wealth of Africa and create sustainable prosperity is however missing. BusinessinAfrica, 1 March 2004 1

Small Micro and Medium Enterprises (SMMEs) are the backbone of a growing

economy. In the South African context, SMMEs operating in the Information and

Communication Technology sector are more than an engine for economic growth.

They are creators of jobs and play a key role in opening access to mainstream

economy by the marginalized parts of the population.

The Government of the Republic of South Africa, in recognition of the key role

played by SMMEs in the ICT sector in its broad development and poverty alleviation

strategy has sought to give these organizations a priority attention. It is cause for

concern that sector is far less than expected considering substantial amounts of

resources that have been invested in this sector in the last few years.

The South African SMME sector is, nonetheless, not as productive and as

competitive as it should be. For the most part, this is due to the fact SMMEs still use

old-fashioned technologies and most of them have no access to facilities for the

testing and promotion of innovative ideas. There is also very poor or no technology

support for SMMEs. As a result, there are very low entry rates of SMMEs into the

productive "value added" sectors and this leads to the high failure rate among start-

up SMMEs. As a result, there has been a focus and drive by government and other

stakeholders on Information and Communication Technologies (ICT) and the

creation of Small Medium and Macro Enterprises (SMMEs) to address the critical

1 http://www.businessinafrica.net/opinion/editorials/315011.htm


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underdevelopment. Consequently, there is an urgent to need to support SMMEs

through technology transfer and technology diffusion programmes.

ICTs revolutionalised the way in which societies interact, conduct business and

compete in the international market. Its potential impacts on the productivity and

competitiveness through cost and turnover reduction, increase in profitability and

ability to establish, advance customer relations, enhancing knowledge and

facilitating innovation of products and services, to name but a few, makes ICT

important to all types of enterprises including SMME’s (Wakelin & Schadrach, ed).

The differentiation of Duncombe and Heeks (2001, p.9) is applicable to the South

African micro and small business enterprises. The authors differentiate between

survivalist, thunddlers and flyer enterprises. Survivalist enterprises were pushed into

starting a business for the sake of obtaining an income to support a family – they

have no other source of income, although the income generated from the enterprise is

still typically below the poverty line. Thundlers typically have a static turnover and

have no motivation to expand or grow. The income provided by the enterprise is

sufficient to meet basic needs. Flyers are market driven enterprises focussed on

growth. The income generated by flyers meets more than basic needs.

The SMME sector in South Africa makes up 99,3% of all private enterprise in the

country (Coetzee, Denner, Eksteen, Eloff, Govender, Hirsch, Morwala and Van der

Merwe, ed). There are about 3 million micro enterprises in South Africa and more

than half of the employed are employed in some micro or small business in the

private sector (Dahl & Normark, 2004, p. 5). ICT holds numerous benefits for

SMMEs and more specifically SMME’s in developing and African countries such as

South Africa. Since the benefits may enable enterprise development and growth it

becomes especially important to explore its use in SMMEs in South Africa, where a

lot of development and investment have taken place in ICT infrastructure over the

past decade without congruent growth in SMMEs (Ndiwalana & Tusufira, 2006).

An estimated 20% of the countries total domestic income is derived from the


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informal sector (Dahl & Nordmark, 2001). 50% of small enterprise consists of

survivalist enterprises (Jackson, 2004).

Flyers generally have better access to and resources to make use of ICTs. As such,

they are in the position to reap more benefits from the investment of ICTs

(Duncombe & Heeks, 2001, p. 9). Flyers will potentially also use more advanced

ICTs such as Internet and e-mail and can more easily overcome user requirements

such as training and high entry and maintenance costs. However, given a survivalist

can gain access to ICT and gain the needed training to use it effectively, growth and

development of the enterprise is a given consequence.

2.1. Brief

In March 2007, Feedback Research and Analytics (Feedback) was commissioned by

the Small Enterprise Development Agency (SEDA) to conduct a desktop research

into “Small Enterprises as Users and Suppliers of Information on the Information

and Communication Technology (ICT). Sector.”

The research is undertaken in pursuance of SEDA’s mandate as prescribed in

Sections 9A and 10 (1) [a-d] of SEDA’s enabling legislation –National Small

Business Amendment Act no. 29 of 2004, whose objectives and functions are to:

(a) design and implement development support programmes (b) promote a service delivery network that increases the contribution

of small enterprises to the South African economy, and promotes economic growth, job creation and equity; and

(c) Generally, strengthen the capacity of: (i) service providers to support small enterprises and (ii) small enterprises to compete successfully domestically and internationally.


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2.2. Purpose and objectives

The overall purpose of the study is to assist SEDA to identify opportunities and

challenges of small businesses operating in the ICT sector in order that it can

develop appropriate support mechanism. The objectives of the study are:

♣ to identify current ICT technologies used by small business

♣ to identify future growth prospects of SMMEs within the ICT sector

♣ to identify capacity building needs of SMMEs within the ICT sector

♣ to increase the quantity, quality and accessibility of information on

currently active SMMEs operating in the sector

♣ to identify opportunities and challenges faced by SMMEs within the ICT

sector by province

2.3. ICT SMME: A definitions

Both terms – ICT and SMMEs are not easy to define, mostly due to lack of

consensus on any one definition. The Western Cape Provincial Government defines

ICT as “The industries that provide goods and services that support the electronic

Display, processing, storage and transmission of information.”2

In defining an ICT company, we have adopted the definitions developed by the

Organization for Economic Cooperation and Development (OECD) and Price

Waterhouse Coopers (PWC) as described in the Terms of Reference document. Key

words in the OECD definition are ‘processing, transmission and display’ of

information by electronic means. PWC goes further to develop a list of core

2 Naidoo, R. et al. 2004. . INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) FIRST PAPER:Research to inform Strategic Policy and Initiatives for the Information and Communication Technology Sector in the Western Cape. Cape Town South AFrica


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activities of an ICT company grouped in four categories -- bandwidth, hardware,

applications and enterprise management.

With regard to the definition of small, micro and medium –size enterprise, we are

fully cognizant of controversies and lack of consensus on definitions that are based

on number of employees, or total business assets. We have adopted SEDA’s own

definition as found on its website, to mean a ‘firm with up to 200 employees’. This

definition will be further defined in consultation with SEDA to take into account

firms that have less than 200 employees that are obviously not SMMEs, a

phenomenon that is not uncommon in the ICT sector where you find multi-billion

rand companies that were definitely not intended to fall within SEDA’s mandate.

3. Methodology

3.1. Approach

The methodology for this literature survey evolved in the following manner: The

first step was to pull together a four person team of consultants. Three senior

researchers and one junior researcher.

• Initial Brainstorming to decide on possible issues to discuss

o Current ICT technologies used by small businesses

o Identify Future growth prospect of SMMEs within the sector

o Capacity building Needs of SMMEs within the sector

o Ways to increase the quantity, quality and accessibility of information

on currently active SMMEs operating with the ICT sector

o Opportunities and challenges faced by SMMEs within the ICT sector

per province,.

• Initial Search for Sources,

• Development of detailed research questions


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• Develop Report Outline

• Literature review and analysis

• Additional Search for Sources

• Write up of Literature Review.

3.2. Ways in which sources were elicited

Sources were elicited by:

• Internet search using Google Scholar with the following key words

o SMME ICT

o “ICT Barriers” SMME Development”

o ICT SMME Development

• Calling well-known authors on the topic of ICT and SMMEs

Name Organization

David Barnard Sangonet

Racuni Naidoo Matchbozology Creative Incubator

Chalwyn Vorster Sustainable Development consulting

Seana Nkhahle South African Cities Network

Ceri Oliver-Evans Graduate School of Business, UCT

• Journal Articles

o Identified through the abovementioned internet search

o UP library search with keywords

o St. Augustine College library

o Wits Library


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• Books

o UP library search with keywords

o St. Augustine College library

o Wits Library

All relevant sources published in the past 7 years were included, and although the

focus was on research conducted in or about South Africa, a limited number of

significantly relevant international publications were also included in order to

provide a perspective on the lessons learnt in other developing and developed

countries around the world.

4. ICT technologies used by small businesses

4.1. Social and economic benefits of ICT

♣ Industry is the engine of growth, because its ability to extend markets,

increase productivity and generate technological innovation

♣ It is an instrument of social cohesion and inclusion as it connects people

over distances.

♣ It finds application in all the sectors of the economy. For example, the

following sectors of economy depend of ICT.3

Banking and insurance Manufacturing

Health care Other Financial services and real estate

Energy and utilities Retail and wholesale Trade

Agriculture, Forestry and Fishing Construction

3 Western Australia Information and Communications Technology Industry Development Forum.

2006. Enabling Growth: The contribution of ICT to West Australian Economy. Perth, Australia.


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Mining Education

Government – administration and service

delivery

Professional and other services

IT: Internet Transport

Telecommunications Broadcasting

Social enterprise and non-profit work

4.2. ICT and productivity

It common knowledge that there is a direct link between the ICT and improved

productivity. ICT is a great enabler of productivity. Studies undertaken in Australia4

provide abundant proof of this point.

Use of IT provides companies with an opportunity to:

♣ “undertake existing tasks more quickly, cheaply and effectively by substituting ICT for other inputs, especially labour; and

♣ to improve multifactor productivity (the efficiency and effectiveness of input use) by using ICT as a means to innovate - to develop and introduce new value-adding and efficiency-enhancing products, processes and organisational structures”5

Further the above-mentioned Australian study shows that investment in ICT can

affect labour productivity growth in two main ways.

• A capital deepening effect - (increasing the capital to labour ratio) raises labour productivity because on average, each unit of labour has more capital to work with in order to produce more output; and

4 Productivity Commission 2004, ICT Use and Productivity: A Synthesis from Studies of Australian Firms, Commission Research Paper, Canberra. p. 8. 55 Western Australia Information and Communications Technology Industry Development Forum. 2006. Enabling Growth: The contribution of ICT to West Australian Economy. Perth, Australia.


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• A multifactor productivity (MFP) effect - MFP growth reflects the combination of inputs so that more output is produced for any given quantity of input.

How ICT affects firm performance

Key area of impact Nature of impact

Labour Enhancement of human capital. Staff reduction in some instances, but not all.

Facilities and outsourcing Reduction of some facilities and outsourcing of certain functions, sometimes overseas.

Production and distribution processes

Greater consistency of product quality as well as quality enhancement. Process change across the spectrum from little change to major re-engineering of entire process.

Management practices More timely and accurate management of information. Greater centralisation of decision-making. Improved communications and reporting systems. Improved inventory control.

Product characteristics and mix

Development of customised products and services (for example, in banking and mining services).

Relationship with customers and suppliers

Better and more frequent communication with customers and suppliers. Greater responsiveness to customer needs and more certainty in new product design.

Source: Productivity Commission 2004, ICT Use and Productivity: A Synthesis from Studies of Australian Firms, Commission Research Paper, And Canberra. p. 4.

5. The Benefits of ICT to SMME’s

There are numerous specific benefits that SMMEs can reap from the use of ICTs that

can potentially increase enterprise competitiveness, productivity and management.

The specific benefits highlighted in literature include:

• Better marketing efforts

• Better internal and external communication


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• Better access to and use of more accurate information

• Better facilitation of administration

• Improved business processes

• Improved services

• Increased innovation

• Reduction of costs

• Positive impact on turnover

• Increased profitability

• Increased client growth

• Increased customer relationship

• Time efficiency

• Increased sales

• Potential to build human resources capital with less loss in productivity

In turn, the effects of these specific benefits, feed into increased competitiveness,

productivity and better management of SMMEs.

When ICT is used as a secondary processing technology in SMMEs it will benefit

them if it is used as a business communication tool. ICT can facilitate and enable

communication. In Uganda and Kenya, community organisations use ICT to

facilitate communications, especially if combining for example e-mail with

traditional community communication systems. ICT could also be used to establish

networks between community members and with the outside world (Dahl &

Nordmark, 2004). According to Dahl and Nordmark (2004) it is very important for

people in rural areas and in townships to be able to communicate with people outside

their own environment as it will possibly increase the accuracy of information.

The use of ICT as a method of internal and external communication is not limited to

flyers only, but includes survivalists as well (Duncombe & Heeks, 2001). In South


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Africa mostly all enterprise owners have access to mobile phones. It is used very

effectively for marketing and communication.

There is a great risk that information to poor entrepreneurs in informal settlements

and rural areas are inaccurate information as they rely mostly on informal

information systems from those around them and like them (Duncombe & Heeks,

2001). While it is essential to sales and appropriate to small enterprises to establish

such informal information systems, it is often of poor quality and is restrictive in its

range. In such instances, ICT can be a valuable tool for business communication.

In South African Townships, the most used informal system of information transfer

is the mouth to mouth method. Although this is a reliable way of information

exchange, the accuracy of the information may diminish as the transfer takes place

between more than two people that do not share the same location.

ICT is also a time efficient method of information transfer. To travel to the

source of information to obtain more accurate information may be quote expensive

and less time efficient. By implementing ICT, this problem of information accuracy,

time and costs can be reduced.

Fast effective communication via ICT, especially telephone, has become an essential

commodity to many informal SMEs in South Africa (Dahl & Nordmark, 2004).

Text messaging is for instance used as communication tool by street vendors as a

low cost communication tool. Other common ICT tools used for business

communication purposes in developing countries includes, landline telephones,

payphones and fax facilities are commonly used.

With ICT, marketing efforts can also be improved through the dissemination that

travels quicker and reaches more customers and potential customers. Marketing via


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ICT increase the potential client base of as it reaches more potential clients through

marketing efforts (Dahl & Nordmark, 2004).

By using ICT to market SMMEs customers can be made more aware of the channels

to do business. Price of services and important information can easily be

communicated to clients and potential clients in remote areas. Web-enabled online

activities allow local business enterprises to market their goods and services globally

and to generate interstate and international sales without incurring ‘brick and mortar’

expenses. This will increase also the global competitiveness of South African

SMME’s.

Tanburn and Singh (2001) mentions that the mobile phone has some many benefits

to SMEs in developing countries that even informal sector owners can use it to find

customers. She mentions the uptake of informal-sector owners in Asia that use it. It

is also used by SMEs in the informal sector in South Africa. Text messaging is for

instance a cost effective manner of marketing.

According to Dahl and Nordmark (2004) ICT is very useful to women entrepreneurs

in South African Townships since they want to market to potential customers outside

the Townships. Women entrepreneurs with small and micro enterprises have a need

to draw foreign customers, in which case ICT, specifically the Internet can be of use.

ICT can enable better and more frequent communication with customers and

suppliers. As such it also enables the development of closer customer relations. If

more frequent and quicker communication with clients can be established, the match

between demand and supply can be better which provides improved services to

customers.


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Enterprises function on the basis of four tangible resources, namely money, people,

materials and technology, and one intangible resource - information (Wakelin &

Schadrach, 2nd). Information with regard to supply, demand, the operating

environment and internal processes is crucial to the effective management of any

enterprise, for without quality information if it is properly interpreted and applied as

knowledge is a principal source of power within communities (Ndiwalana &

Tusubira, 2006, p. 1).

The lack of information is one of the non-financial aspects that constrain small

enterprise development (Jackson, 2004). Information poverty in small enterprises

results in wrong decisions as well as an inability to learn from such erroneous

decisions. This in turn results in the loss of valuable resources such as money, time,

income and business relationships (Wakelin & Schadrach, nd). Better informed

SMME’s will generally have enhanced prospects for emerging opportunities.

It is especially informal small and micro enterprises that stand a chance of being

effected by inaccurate information since they rely mostly on informal information

systems. As such, the risk exists that accurate information from outside the local

context may not reach them.

Rathgeber and Adera Ofwona (Dahl & Nordmark, 2004) cited that information is

known as the most important thing for a sustainable and equitable development.

Poor access to information and access to poor information by SME may lead to

incorrect strategic or tactical decisions, loss of potential income, and failure to learn

from past mistakes (Ndiwalana & Tusubira, 2006, p. 2).

Small enterprises in Africa are subjected to increased competition, as well as to

increased demands for quality of products and services. Surviving in this

competitive environment will require raising the overall productivity of small


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enterprises, which in turn will require higher levels of management capacity. In this

regard the ability to acquire, process and effectively use business information tools

becomes central (Duncombe & Heeks, 2001).

ICT can enable SMME’s to gain access to timely and quality information, and thus

empower them to take informed decisions in their business (Dahl & Nordmark,

2004; Wakelin & Schadrach, Ed). Where access to information is limited for many

people, as is the case for SMME’s in rural areas in Africa, ICTs such as the Internet

can facilitate access to information. For instance, Dahl and Nordmark (2004) found

that women entrepreneurs in townships in the Western Cape can benefit from the use

of Internet when searching for information. Market research can also be conducted

with more ease and efficiency through the use of ICT. As consequence, SMMEs that

use ICT for such purposes will have more comprehensive knowledge of their market.

Evidence suggests that business information is a critical demand for SMEs. Most

demanded information include those related to assistance with training and skills

development; sources of financial assistance; technology; and business support

services (such as registration, technology and book keeping) (Duncobe, 2006). ICT

is a driving force for enterprises’ capacities to access, adapt and apply information

and knowledge in their production and marketing, ICTs offer enormous

opportunities for transfer and acquisition of skills, technical knowledge and

business-related information (Wakelin & Schadrach, Ed).

Information with regard to customers and markets is another important benefit that

the ICT holds when it is used as a secondary processing technology. The internet

shows to have the greatest impact for accessing market information amongst flyers in

developing countries. Access of market information via the Internet is mostly used

by exporter/importers (including the tourist sector) (Duncombe & Heeks, 2001).


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Flyers usually have greater access to internet, fax and telecommunications

technology for information access than survivalists and thudllers (Duncombe &

Heeks, 2001). This can be an entry point for ICT development as well as an

opportunity for SMMEs in South Africa to provide such as service.

The use of ICT directly impacts SMMEs by improving the efficiency of business

processes and services (Duncombe & Heeks, 2001, p. 8). In a study conducted in

Western Australia (Western Australian ICT Industry Development Forum, 2006) it

was found that a lot of companies use ICT to improve customer services, offer

innovative products and to improve internal and external communication with

customers. In terms of increased innovation, ICT has the potential to enable SMEs

to develop new products and services, thereby establishing new business

opportunities and markets (Duncombe & Heeks, 2001, p. 6). In South Africa,

specifically in the Townships, ICT can be of great benefit to innovative services in

the tourism sector as Tourism is rapidly increasing in South Africa (Dahl &

Nordmark, 2004).

Overall the effective use of ICTs can facilitate better business administration. ICT

provide a data processing tool to SMME’s. Internal data processing, including

business accounts, payroll, invoicing and so forth is an important area for all SMEs,

particularly with regard to controlling enterprise finances and cash flow (Dahl &

Nordmark, 2004). The use of ICT can structure and organise business process better.

For instance, better operational and financial records improve business processes

(Ndiwalana & Tusubira, 2001). A lack of financial records is for instance cited by

Jackson (2004) as one of the weaknesses in SMME’s in both developing and

developed countries.

Using ICT for better business administration do not necessarily imply the use of the

Internet, but rather the use of a stand-alone computer. It is thus less expensive and


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this enable more SMME’s to reap this benefit of ICT. Still some computer

knowledge is necessary, which may still be a barrier for most SMME’s – not always

in terms of cost but also in terms of time. Dahl and Nordmark (2004) mentions an

alternative for survivalists and thudllers would be to share ICT, such as a computer,

for business administration. A possible alternative could be that two or a few more

businesses could share one computer, but this is only possible if they are located

close to each other.

Administrative processes that need connectivity include booking confirmations and

invoices. Although e-mail and internet will be the most cost effective solution

especially if international customer must be reached, Dahl and Nordmark (2004)

found that fax facilities are still the most economical for SMME’s in rural areas.

ICT also improves production control through better administration. There is

however a need to develop tailor made software products for SMME’s since off the

shelf product for administration is often inappropriate and expensive (Duncombe &

Heeks, 2001).

ICT reduces cost to company and therefore increase organisational efficiency and

financial control. In the 2003, the SME Survey indicated 59% of the SMEs indicated

past positive impact of ICT on cost reduction. 69% expected a positive impact on

cost reduction in the future (Goldstuck, 2003).

Because of its cost reduction qualities, ICT is usually adopted in developing

countries (Tanburn & Singh, 2001). Take for instance the difference in cost between

an international telephone call and sending an e-mail. In South Africa the use of

internet through dial-up connections (narrow band) is still very prevalent for SMEs.

By implication, an international e-mail will cost the same as a local telephone call. It

is however still much more affordable than an international land line phone call.


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The impact of cost reduction seems to increase with company size. In 2003

(Goldstuck, 2003) micro enterprises in South Africa reported a 50% positive impact

on cost reduction while in companies sized 101 – 150 and 151 – 200 the positive

impact increased to 70%. This is similar to trends in Africa (Dahl & Normark, 2004)

as well internationally. In Western Australia for instance, a main motivator for

industries to use ICT products and services is to cut costs.

The cost efficiency of ICT use goes hand in hand with the time savings associated

with it since time is money. The impact of ICT on cost reduction may not be shared

by SME’s in all sectors however. The engineering sector and construction sector in

South Africa share a lower positive impact on cost reduction (although the impact is

still generally positive), while the IT Software and Services sector have much higher

positive impact rating (Goldstuck, 2003).

ICT have a positive impact on turnover also. In the 2003 the SME Survey in South

Africa, reported that an overall of 46% SME’s reported positive past impact on

turnover with 52% expecting a positive impact in future (Goldstuck, 2003). SMEs

in construction and Engineering did not report the same high positive impact (35%

and 33.81% respectively) while the IT software and services sector reported the

highest impact with 76%.

The use of ICT can increase SMME’s ability to retain existing clients and win new

clients. Consequently market share growth potential may also increase (Goldstuck,

2003). In 2003, 55% SME in the SME Survey in South Africa indicated that ICT

had a positive impact on retaining and winning clients during the past, with 64%

indicating that they expect a positive impact in future (Goldstuck, 2003). Although

still relatively high ratings existed, SME’s in the engineering and construction did

not share the high positive impact of ICT on winning new clients and retaining

existing clients (43.32% - 45.8%). IT Software and Services on the other hand had


Page 25 of 105

the highest positive impact rating of 76% and financial services followed them

closely with 65.67%.

The proportion of companies reporting positive impact of IT on winning new clients

and retaining existing clients in the past rises in direct relationship to the size of the

company. Micro enterprises reported 46% positive impact and companies with 81 –

90 employees reported 67% positive impact in the 2003 SME Survey. Companies

with more than 100 employees indicated 67% positive impact (Goldstuck, 2003).

The increase of product use and sales is another consequence ICT as marketing with

ICT can increase client base, as well as the method of doing business with clients.

Internet technology specifically enables SMME’s to sell products and services

online. Poor access to markets for output is one of the weaknesses mentioned by

Jackson (2004). ICT can increase market access (Ndiwalana & Tusubira, 2001).

ICT use has a positive impact as well on SME profitability. In 2003, 57% SME’s in

the SME Survey indicated that ICT had a positive impact on profitability in the past.

66% expected a positive impact in future. The impact seemed to less for companies

with fewer then 20 employees (49 – 52% positive impact) and 31 – 40 employees

(57% positive impact). As company size increased, positive future expectations

seemed to increase with 10% with each band of company size.

SME’s in the engineering, construction, Health Services and Utilities had the lowest

positive rating of the positive impact (ranging from 49% - 50.6%) on profitability,

with IT Software and Services (74.53%) and financial services (63.91%) sectors

reported the highest positive impact on profitability.


Page 26 of 105

ICT can reduce time needed for transactions. Especially for SMME’s owned by

women in Townships, saving time by using ICT is an advantage. “In South Africa,

as in many other African countries, women are responsible for both raising children

and for their home. By using ICTs in their businesses women entrepreneurs could

support their families and also spend more time with their children and take care of

their homes.” (Dahl & Nordmark, 2004:, p. 51).

Training opportunities world wide is moving towards more flexible training

solutions which include web-based training. SMME’s see the profit of developing in

human resources development, but struggles to balance workload of employees,

costs of training and time lost on training to name but a few considerations. More

flexible options such as online training programmes may be a viable alternative to

train employees without having to loose human resources capacity as well as spend

money on travel and stay (Goolnik, 2002; Brink, Munro & Osborne, 2002).

The ICT industry also creates allot of opportunities for growth of SMMEs. That is

when ICT is used as an enterprise output of SMME’s through manufacturing for

instance, computer hardware and telecommunications products and the production of

software. Although hardware is manufactured on a large scale by mostly macro

enterprises on a large scale, there is an opportunity for SMMEs to create tailor made

hardware and software specifically for their local market (Duncombe & Heeks,

2001). In other developing countries, small scale software producers have succeeded

by focussing on the local market (Duncombe & Heeks, 2001, p. 11). When ICT is

used as a primary processing technology by SMMEs there are a lot of benefits in the

production of tailor made digital products and software customisation. An SMME

may also choose to build information systems themselves and customise software

internally to the needs of the business. Evidence shows that enterprises that tend to

be more successful (Duncombe & Heeks, 2001).

SMMEs can also benefit from providing ICT based services to other enterprises and

individuals. Services can include data entry, Internet service provision, web design


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and other services which are growing rapidly in developing countries such as South

Africa. Services need not be IT based, but can include secretarial and word-

processing services, printing and design services. In other African counties as well

as in Townships in South Africa the use of personal telephones as payphone services

is an example of this as it is used by mostly survivalists.

ICT related support activities that SMMEs can be involved in include also training

and consultancy to other SMMEs (Duncombe & Heeks, 2001). In-house training in

basic application of ICT and tailor made training services are for instance examples

of SMME needs (Goolnik, 2002; Brink, Munro & Osborne, 2002).

SMME’s may use ICT for e-commerce as well. This is true for especially exporters.

This reduces cost and time of transactions and improves transaction certainty and

record keeping (Duncombe & Heeks, 2001). E-commerce may have further benefits

for enterprises in developing countries: it will make it easier for local SMEs to

access the world markets, stimulate global markets and allow SMEs to tap into the

global supply chain. It will also encourage small scale service sector providers to

link more effectively into world markets (Duncombe & Heeks, 2001).

The reduction of costs, increase in client growth, and increase in profitability and

decrease in turnover are key factors and advantages of investment in ICT that

increase the competitiveness of SME’s. In a Western Australian survey in 2006,

findings indicated that ICT provides businesses with a competitive advantage

including the enablement of:

• Better customer relationships

• More effective marketing efforts

• Better communications with staff and suppliers

• Improved knowledge of the market and facilitation of information gathering

• Cost efficiencies and time savings


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In the same study, companies that did not perceive ICT use as increasing their

competitive advantage it was very clear that ICT was a vital part of their business

operations and that they perceived that their competitors would be using similar ICT.

The UK government also place emphasis on the role of ICT in contributing the

competitive gains by SME’s (Brink, Munro & Osborne, 2002). The competitive

advantage brought about by ICT is however not only limited to develop countries.

In Uganda women entrepreneurs in believe that ICT could give them access to

information that would help them improve their financial position of their business

(Dahl & Nordmark, 2004). Various developing countries in search of economic

competitiveness in the global economy have linked the diffusion and adoption of

ICT with competitive gains for both SME and their economies (Ndiwalana &

Tusubira, 2006, p. 2).

The impact of ICT on competitiveness does however seem to vary according to

company size. In the 2003 SME survey, company size seemed to be major factor in

impacting the competitiveness of SME’s as positive impact increase with company

size in terms of all measures of competitiveness (Goldstuck, 2003).

ICT may further lead to an increase of productivity in companies through its ability

to decrease the time spent on tasks, decrease the costs involved in tasks and increase

efficiency of task completion by substituting ICT for other resources, such as labour.

It may also reduce the need for facilities and outsourcing of certain function.

Ndiwalana and Tusubira (2006) mentions that ICT can potentially transform the

productivity of SME’s in two ways:

1. Using ICT as direct input with in the production process. E.g. village phones

owned by rural women and used to provide payphone services to

neighbouring rural communities.

2. Using ICT as tools to help streamline underlying business processes of an

SME. For instance computerising inventory control or accounting.


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From the previous discussions on the benefit of ICT on SMME’s it is evident that

ICT investment can lead to better enterprise management. Since more timely and

accurate of information can be provided by ICTs, there can be greater centralisation

of decision-making, improved communications and reporting systems and improved

inventory control which are all aspects that can lead to improved management.

Besides the availability and quick dissemination of information internally and

externally, software programmes tailored for planning and management is available.

Bosscha, Coetzee, Tereblanche, Gazendam and Isaac (2006) indicates however that

there are high costs associated with such systems which put them beyond the reach

of small manufacturing companies that employ less than 100 people.

Even though less expensive and simpler systems are available, they are not useful to

small companies but rather cater for medium sized manufacturing enterprises. For

small manufacturing companies that cannot afford advanced management systems

poor product quality and inefficiency can be the consequence. This is due to for

instance, a delay in problem identification and intervention, poor job scheduling,

poor inventory management of both raw materials and manufacturing products. A

solution proposed by Bosscha et al (2006) is the use of open source software. The

idea of using open sources software works well in theory, but needs a lot of

development and research to reach full potential in practice. This may be an

opportunity for output of SMME’s in South Africa.

6. Barriers and issues related to the use of ICT

The benefits of ICT may vary according to various sectors. Although all SMMEs

will benefit, research by Duncombe and Heeks (2001) showed that service based

enterprises (i.e. business, financial and technical) and importers/exporters (tourist


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industry, manufacturing and services) will reap the most benefit from ICTs and will

be in better position to transmit benefits to the wider community.

Constrains to increase ICT use is considerable in developing countries such as South

Africa. This is because:

• There is a lack of physical resources and infrastructure (Duncombe, 2006).

• Access to ICT is expensive.

• Technology education and extension institutions are weak.

• The local supply chain capabilities and access to international know-how are

restricted

• Domestic demands are low due to underdeveloped public sector services and

lack of medium-scale and large-scale firms driving ICT innovation.

All these constraints, and more, mean that ICT diffusion into the SME sector is low

(Duncombe & Heeks, 2001, p. 8).

South Africa has a relatively large and growing population that has access to ICT.

Although the concentration of accessibility and fastest growth areas are in urban

areas of some provinces. There is however still many issues that hinder further

growth of ICT. These include access to townships residents, rural areas and poor

provinces. The digital divide in the country is large even though the

telecommunication infrastructure and ICT access is better in South Africa than in the

rest of the continent. Similarly, access to Internet is growing rapidly and is far ahead

of the rest of Africa, but still lags behind developed countries (Dahl & Nordmark,

2004, 17 - 18). Coetzee, et al. (ed) mentions that the high cost and availability of

telecommunications infrastructure is seen as a major cause of competitive

disadvantage in a globalising world that affects SMMEs and rural communities the

most.

ICT ownership is also very expensive. Duncombe and Heeks (2001) cite that ICT

ownership does not only relate to overt costs such as hardware and software, but


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includes also ongoing and hidden costs which includes operational costs, training

costs, upgrading costs, and so forth. Hidden costs is said to make up more than 60-

70 % of the ownership costs. The cost of ownership of ICT in South Africa creates

on opportunity for the development of product and financing innovations that are

more suitable to the needs of South African companies – more specifically more

affordable solutions to ICT.

Using ICT as facilitator of information is an entry point for the development of

SMME’s through ICT (Ndiwalana & Tusubira, 2001). In South Africa a lot of

SMME’s rely on informal systems of obtaining information. Besides the threat of

receiving inaccurate information it may also not be time efficient. SMME’s owner’s

reliance on informal sources of information leads in part to a scarcity of information,

which may have negative effects on the business enterprises. ICT can supplement or

replace informal information resources by providing access to timely and high

quality information.

Computer technology can be used by SMME’s for various tasks. They include

payroll and accounting purposes, email and internet access, stock management and

production control, data storage and retrieval, research and development, and human

resources related tasks. Land-line telephone, cellular phones and fax technology is

however mostly used, especially by SMME in Townships and rural areas in South

Africa. The entry and maintenance of acquiring IT ICT, as well as training

requirements which is also expensive, makes the probable use of computer

technology in South African micro and small enterprises unlikely.

Despite efforts to use ICT for advancement of SMME’s in terms of infrastructure

development in South Africa, growth in small business performance has not grown.

Ndiwalana and Tusufira (2006) cite four reasons for this:

• Service costs of ICE remains high in South Africa


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• Users exploit ICT or entertainment and other social aspects rather than

economic benefits.

• Access to information and data sources has not increased in proportion to the

increase in access to telecommunications, primarily due to a lack of

appropriate applications and services to leverage the existing infrastructure

• There is limited awareness of potential benefits, compounded by lack of basic

ICT and computer literacy among the majority of the population.

Survivalists form the majority of micro enterprises in developing countries

(Cuncombe, 2006). Few survivalist enterprises6 have direct access to digital ICT

and indirect or intermediated access to ICTs will be the norm (Wakelin & Schadrach,

ed). Since ICT can allow a reduction in transactions costs, improved

communications with markets and in the supply chain and improved information

about new opportunities it should be in some way promoted in these enterprises also.

The most common way to promote ICT access, and more specifically digital ICT

access, to survivalist enterprises is through telecentres. These facilities may include

telephone, fax, documentation searches, video libraries for entertainment and

education, health and nutrition training, government services, market process and

more (Wakelin & Schadrach, ed, p. 34).

The successful adoption of ICT by either flyers or survivalist is crucially dependent

on the environment in which they are operating. An institutional and policy

framework is required for the successful adoption of ICTs. The e-readiness of

different countries, regions and even enterprises depend not only on the ICT capacity

6 Livelihood enterprises are micro and small enterprises which contribute to family

income, enabling the purchase of essential goods and services. Survivalist

enterprises are those who are typically income generating. Survivalists are pushed

into enterprises by the lack of other income generating activities. The enterprise will

usually be located at the home and is typically unlicensed and unregistered. They

are commonly founded upon direct sales, trading or processing of natural resources.


Page 33 of 105

of the enterprise but on the readiness of the wider business community and the

institutional and political environment (Wakelin & Schadrach, Ed, p.36). Wakelin

and Schadrach (nd, p.36) highlight four aspects of the external environment that

requires attention:

• the policy and regulatory framework,

• the telecommunication (and other infrastructure),

• the ICT sector itself, and

• the promotion and awareness of ICTs and e-commerce.

Full participation in e-commerce and the widespread adoption of ICTs for enterprise

operations will require expansion of the ICT infrastructure and other essential

services (such as electronic banking), the development of a strong user base to make

it easier for enterprises to enter into e-commerce, and support services for SMME’s

such as public access facilities (telecentres) should be established (Wakelin &

Schadrach, ed, p. 36). The benefits brought about by ICT will remain out of the

reach for the majority of small enterprises. Most small African enterprises will

neither own ICTs not access nor use ICT-based data. The benefits of ICTs can be

extended to more enterprises via ICT intermediaries (Duncombe & Heeks, 2001).

In a Western Australian study it would seem as though ICT is not only beneficial to

business success, but rather to a larger extent vital to business. However, as in South

Africa, the full potential of ICT is not accessed and used. For instance in South

Africa, fixed line telephone, mobile phones and fax technology is widely used by

SMME’s. The use of e-mail, Internet and computer technologies could enhance

business enterprises even more, but its use in small and micro enterprises in

especially the informal sector is very limited. Micro and small enterprises in

Western Australia use ICT mostly for accounting purposes. The barriers to using

ICT to its full potential include the:

• Shortage of skilled people


Page 34 of 105

• Security issues

• Privacy concerns

• High staff training costs

• High ongoing costs

In Western Australia, the most prominent barrier to the use of ICT was the lack of

skilled people. Besides the costs involved in constant training costs to keep people

up to date, even ICT trained people are not necessarily trained in the application of

ICT skills to business in different organisations. In South Africa, a lack of expertise

through training is also a problem, but seemed to be overshadowed by the high costs

involved in access to ICTs – especially for survivalist enterprises.

A problem associated with training and skills development for ICT in both

developed and developing countries are the lack of communication between the

market and what is supplied by service providers. This leads to an oversupply in

certain skills (e.g. A+ and MCSE) (YDT, 2003). The cost and location of training is

also a limitation to ICT training. ICT training may be very limited in rural areas.

Since the ICT is such and important developmental need in South Africa and a lot of

emphasis is placed on skills development in this area, there are also a lot of ‘fly by

night’ operators that target vulnerable people in rural areas where information is

limited (YDT, 2003).

Coetzee et al. (ed) mentions the need for increased government involvement in either

subsidizing training, promoting training more explicitly, or motivating the Sector

Education and Training Authorities to provide more ICT training.

Although the problem of the digital divide in South Africa is often perceived as a

problem with access, access is only one of the first barriers. Even if access to ICT is

gained, it will have little benefit if those that gained access do not have the

knowledge and skill to use it properly and effectively (YDT, 2003). As mentioned


Page 35 of 105

by Dahl & Nordmark (2004) it is not enough to have ICT; knowledge and skill to use

and implement it effectively in Business enterprises is vital.

Knowledge is a condition for the benefits of ICTs for SMME’s in Townships in

South Africa (Dahl & Nordmark, 2004). This is especially true for computer

technology and Internet use. To get the most out of computers it is important to learn

how to use them properly other wise they can be a rather big obstacle. Without

proper knowledge it would take a much longer time to do the work on a computer

than in a traditional way. As consequence, it would also be more expensive as time

is money.

In South Africa, affordability and accessibility to specifically the Internet and

computer technologies are two factors that present barriers to the implementation

and use of ICT in SMME’s (Bauer, 2001). For instance, micro enterprises in

townships in South Africa do not currently use the Internet unless they travel to the

nearest town to use and internet café. This is rather expensive.

In developing countries, such as South Africa, the implementation of mobile phones

rather than Internet may be more advantageous to overcome training obstacles and

high costs associated with for instance computer technology. Tanburn and Singh

(2001) mention however those mobile phones do not even require language skills

and payment can be made in smaller installments the makes it more affordable for

most SMMEs.

Tanburn and Singh (2001) mention another issue: perceptions of ICT. These include

the perception that ICT is cater only for the elite, even though some ICT applications

are relatively easily accessible and affordable. As such, there is a need for raising

awareness of the benefits of ICT for SMMEs (Coetzee, et al., Ed).


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7. Defining the ICT Value Chain

In order to uncover the value of ICT to SMEs, it is essential to define what is meant

by ICT. ICT can be defined as the provision of infrastructure, services, and content

that will enable and streamline communication. According to the OECDiv, ICT

activities are those that “process, deliver and display information electronically”7.

The current state of technology has led to a networked environment operating around

an interconnected array of telecoms, broadcasting services, the internet, carrier and

transmission devices and end point technologyv.

Laying out a value chain that will align this interrelationship between participants is

by no means a simple task due to the complexity within and elastic parameters of the

industry’s operation. In fact, due to the advancement and convergence of

technologies the industry has evolved from vertically integrated silos to a ubiquitous

network. Services are applied within technologies and technologies within services,

doing away with a predictably flow of consecutive operations between defined

activities. For this reason the ICT sector might be better termed a cluster rather than

a value chain.

Due to uptake of ICT-related services across the majority of local industries, full-

time staff that develop and maintain ICT-related services and equipment are now

commonplace in business. For the purposes of this study however, the ICT value

chain has been limited to businesses with sales being primarily generated through

ICT-related services or products, rather than businesses with ICT support divisions

7 For manufacturing industries, the products of an ICT participant must be

intended to fulfil the function of information processing and communication

including transmission and display, or must use electronic processing to detect,

measure and/or record physical phenomena or to control a physical process. For

services industries, the products of a participant must be intended to enable the

function of information processing and communication by electronic means.


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or making use of ICT. Therefore suppliers that enable the use of ICT whether that

be services or product-related, will be subject of this definition.

7.1. Primary Groups

The ICT industry is divided into sectors, as denoted by the South African

Department of Communications:

• Information Technology • Telecommunications • Broadcasting services • Postal Services

Each of these networks provides commercial opportunity for SMEs in South Africa.

However, for the purposes of this report, the OECD definition for ICT activities has

been applied for definition. Consistent with the OECD definition, Postal Services

have also been excluded from the ambit of activities being considered as the primary

medium of communication is not electronic. This is also despite the Postal Services

Act No.124 of 1998 seeking to promote small and medium enterprise participation

within the highly vertically integrated services.

7.2. Networked Interaction

It is clear from the above definitions that the ICT industry can be segregated broadly

by either Product- or Service-related arenas. A Product-orientated activity might for

instance be the supply of a hand-held computer, whereas a Service-orientated one,

the integration of the hand-held device into an IT logistics solution.

Along this continuum, activities can also be placed according to whether they are

Content- or Carrier-characterised. Carrier-characterised activity might be the

offering of broadcasting services via a community radio station, where a content-


Page 38 of 105

11

1S

11

2P

1.1.3 1.1.4

Basic Telephony

Services

Voice: Local ISD, STD Mobile: Voice, Paging, Data

Call/Telephony

Services

Resale/Aggregation Callback, Account Mngmnt; Call

Basic Carriage &

Transmission

Interconnect (ends); Transmission Services

Leased Line & PSDN

Services

Leased lines; Broadband; Data Network Services;

Higher Level &

Network Services

EFT & Transactions; EDI-Commerce; Voice/Email; Video

Professional Services

Consulting; Systems Integration; EDP/Accounts/Audit; Engineering Services;

Network & Services

ISPs; ASPs; Pay-TV Networks; Broadcast Networks

Computer Comms &

Software SVCs

Bureau/Data Processing; Financial Mngmnt; Outsourcing;

Line, Transmission &

Broadcasting

Equipment

Cable & wire line; Cellular, Radio;

Switch LAN/WAN &

Data Equipment

COS; Bridges; Routers; Hubs; Multiplexers; Modems

Terminal & Peripheral

Equipment

CPE & Handsets; Mobile Paging; Printers; I/O Devices;

Computer Equipment

PC & Handhelds; Workstations; small-scale, mid-range, large-scale

Network Software

Net operating; Systems; Net Mngmnt/Diagnostics; Navigation tools;

Packaged Software

Applications, tools etc

Systems Software

Systems, utilities etc

Networked

Connections

Online Publications; News services content; Database

characterised activity might be the supply of radio slots that might be broadcast

using these services.


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By placing value chain activity on this two-dimensional axis, one can map out the

placement of activities comprising the ICT industry. Each grouping depicted below

is intended to show by way of example the types of businesses making up a category

and is not necessarily exhaustive.

Trade within this framework of activity does not necessarily take place between

adjacent categories or in a linearised fashion. Rather the networking nature of the

cluster is derived from complex interactions that take place between any numbers of

businesses from any category.

8. Activity & Opportunity within the ICT sector

8.1. Performance Trends within the ICT Sector

The following extracts of ICT activity on a global and local scale have been drawn

from the OECD Information Technology Outlook 2006 report.vi Please note that

where statistics have been stated, content provision activities, media and

broadcasting have been excluded, per OECD definition of ICT.

The definition and scope of ICT as discussed by these results is limited the following

International Standard Industrial Classification (ISIC Revision 3) codes:


Page 40 of 105

Table 1 ISIC8 codes for ICT

Manufacturing

3000 Manufacture of office, accounting and computing machinery

3130 Manufacture of insulated wire and cable

3210 Manufacture of electronic valves and tubes and other electronic components

3220 Manufacture of television and radio transmitters and apparatus for line

telephony and line telegraphy

3230 Manufacture of television and radio receivers, sound or video recording or

reproducing apparatus, and associated goods

3312 Manufacture of instruments and appliances for measuring, checking, testing,

navigating and other purposes, except industrial process control equipment

3313 Manufacture of industrial process control equipment

Services -- goods related

5150 Wholesale of machinery, equipment and supplies

7123 Renting of office machinery and equipment (including computers)

Services – intangible

6420 Telecommunications

7200 Computer and related activities

vii

8 International Standard Industrial Classification of All Economic Activities, Revision3


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This section serves to provide a broad outline of ICT within the world context and

with some local performance indicators. The intention is to provide a high-level

view of spend within the various ICT sectors and the possible opportunity nodes.

ICT is still enjoying rapid worldwide growth currently; with 2006 statistics figures

expected to have reached 6%. ICT spend has also grown on average 5.6% over the

period 2000 – 04 in current USD, while OECD countries’ share dropped from 89%

in 2000 to 83% in 2006. This is mainly due to increased spending in emerging

economies, notably China having seen a growth of 22% per year between 2000 and

2005 to USD 118 billion in current prices. Other than China, nine non-OECD

countries have seen massive growth including India (23% pa) and Russia (25% pa),

and a second group including South Africa, Indonesia and Eastern-European OECD

countries comprosing a second high-growth family. Rapid growth in ICT in these

economies is also reflected in their high share of international trade, foreign direct

Comms equipment

6%

Electronics & components

34%

IT equipment18%

Software3%

Services6%

Telecommunications33%

Figure 8-1 Top ICT 250 Firm Revenue Share by Sector, 2005

Note: Preliminary 2005 data are based on financial year

reports for 2005 or the most recent four quarters.

Source: OECD, Compiled from annual reports, SEC filings


Page 42 of 105

investment (FDI) and mergers and acquisitions (M&A). For more information

regarding trends of the ICT within the BRICS countries (Brazil, Russia, India, China,

South Africa) see Annexure ICT Spend in BRICS Countries 2000 – 05.

Amongst the top 250 firms of the OECD study, sales have shown good growth in

software and IT equipment and services, but communication seemed to have

suffered. These sectors also now command the highest mix of revenue generated

amongst the top ICT firms (see Fig 2 below).

IT Services has also been the only sector to remain profitable throughout the period

2000-05. However, revenue in software has continued to grow over the period to

almost match the same levels as that of IT Services. A worldwide view of revenue

mix reveals that more than half 2005 ICT spend was on communications services

and hardware, 23% on computer services, and 17% on computer hardware and 10%

on software.


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Figure -2 Worldwide ICT Spending by Market Segment 2005 - 08 USD Billions in Current Prices

0 0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Computer Hardware Computer Software Computer Services Communications

Note: Data for 2005 to 2008 are forecasts

Source: OECD based on data supplied by WITSA

Closer to home, South Africa also spent USD 23.6 million in 2005. In recent years,

large leaps in growth were seen in 2002 (56%) and 2003 (36%) but slowed down

considerably in 2005 (14%). The fastest growing segments have been in Software

and IT Services, which both saw 21% growth in 2005 but Communications only

managed a 9.5% growth for the same period. However, the largest portion of

revenue has fallen to the Communications. The highest sales volume growth in 2005

was also generated by Communications (USD 1,116 million), followed by IT

Services (USD 776 million), IT Hardware (USD 564 million) and Software (USD

404 million).

Unfortunately limitation of the study precluded sourcing accurate data of SMEs’

contribution to the industry’s growth.


Page 44 of 105

USD Million in current prices

0

5,000

10,000

15,000

20,000

25,000

Communications 6,896 5,845 5,772 8,947 11,709 12,825

IT Services 1,293 1,351 1,486 2,440 3,632 4,408

Software 627 724 800 1,328 1,965 2,369

IT Hardware 1,661 1,707 1,698 2,503 3,457 4,024

2000 2001 2002 2003 2004 2005

10,4779,627 9,756

15,218

20,763

23,626

Figure 8-3 South African ICT Spend by Market Segment, 2000-05

Source: OECD, based on data supplied by WITSA.

Growth in the South African ICT industry also outstripped that of the Top 250 Firms

as evaluated by in OECD countries. As shown below, all sectors of the South

African ICT market have outperformed those of the Top 250 Firms as a whole,

notably Software & IT Services.


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8.2. SWOT analysis

A SWOT Analysis (Strengths, Weakness, Opportunities, Threats) of the ICT sector

is summarised below. This analysis was generated for the ICT sector study by the

National Research and Technology Foresight Process (NTRF), which commenced in

1998 and published its findings in November 1999. The study was initiated by the

then Department of Art, Culture, Science and Technology (DACST) to identity the

technologies and technology trends across twelve industries that would shape

research and technology policy making the best likely impact on the creation of

19.4%

30.5%27.8%

13.2%

17.7%

5.1%

8.3% 8.3%

4.1% 4.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

IT Hardware Software IT Services Communications Total

South African Avg Growth % OECD,Top 250 Firms Avg Growth %

Figure 8-4 ICT Spend Growth per sector for SA vs Top 250 Firms, 2000 - 05

Source: OECD, based on data supplied by WITSA

Note: Communications for the Top 250 Firms comprises Communications


Page 46 of 105

wealth and quality of life for all South Africans. Unfortunately there is little

evidence of updated information from this extremely useful information which was

published in 2000. Even though some points are significantly outdated they can

serve as pointers within the ICT sector to highlight opportunities for supply within

the local ICT industry, and at the same time offer a means of managing and

harnessing the opportunities.

8.2.1.1.1. Strength

s

Weakness

• Accelerated roll-out of infrastructure

• Education and learning in the IT field

• Existing skills base in place - pockets

of excellence

• English is ICT’s lingua franca

• Government will to introduce IT

facilitated Public Sector Services

• Existing IT Infrastructure

• IT Costs are relatively low

• South Africa’s IT Leadership in

Africa

• South Africa’s International IT links

• IT is a new driver of the Economy

• Inequitable Access

• Lack of a National IT strategy

• Low Levels of Literacy and

Education

• Inadequate IT Skills Base, worsened

by the brain drain

• IT “Phobia” and Elitism

• Poor Government Services hamper IT

roll-out

• Industrial Age management is still

being used in the IT age

• Small Local IT Market

• Poor Technology Transfer

• International lack of clout in IT

• Poor conditions for investors

• IT precipitated antisocial behaviour

Opportunities Threats

• Emerging Information Society

• Accelerated roll-out of

telecommunications infrastructure

• IT worsens disparities in the

Information Society

• Lack of IT skills in the labour force


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• Policies to foster an Information

Society

• IT enabled

Learning/Education/Training

• Distance education

• National policy to stimulate IT

development

• Public Service Delivery through IT

• Transformation of Government using

ICTs

• Software development to address

developing world problems

• Indigenous knowledge exported via

ICTs

• Less legacy infrastructure than the

developed world

• International links solve several IT

weaknesses.

• Various ways of financing IT

operations

• SMMEs, the future of the IT industry

• Work patterns are more flexible

• ICTs can enhance security and safety

outside the IT sector

• Education funding is low

• Distance education is not a mature

medium

• Government Inefficiencies - too

sluggish for the fast moving IT sector

• Government policies may lead to job

losses

• Redundant and Inappropriate

Technologies

• Globalisation favours the developed

world

• A weak economy is further threatened

in a global information society

• New social problems arise

viii


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8.3. ICT Spend in BRICS Countries 2000 – 05

Source: OECD, based on data supplied by WITSA

USD millions in current prices

2000 2001 2002 2003 2004 2005IT HARDWARE

China 12 507 16 639 20 357 27 027 39 057 47 927Hong Kong China 1 961 2 007 2 033 1 921 1 980 2 026

Chinese Taipei 2 767 2 892 3 362 3 605 4 148 4 391India 2 257 2 764 3 457 5 013 7 204 10 264

Russia 1 816 2 107 2 345 2 881 3 900 4 852Brazil 6 263 6 404 7 031 9 905 12 407 15 946

South Africa 1 661 1 707 1 698 2 503 3 457 4 024SOFTWARE

China 1 085 1 658 2 253 3 344 5 295 7 940Hong Kong China 278 318 358 373 432 492

Chinese Taipei 519 628 739 860 1 046 1 228India 358 456 588 948 1 350 1 908

Russia 343 395 450 570 742 923Brazil 1 602 1 698 1 787 2 469 2 877 3 566

South Africa 627 724 800 1 328 1 965 2 369IT SERVICES

China 851 1 389 2 155 3 591 6 203 10 006Hong Kong China 540 601 688 747 903 1 071

Chinese Taipei 788 929 1 073 1 226 1 478 1 731India 1 120 1 386 1 787 2 859 3 876 5 243

Russia 891 979 1 158 1 537 2 099 2 747Brazil 4 937 4 792 5 101 7 353 9 040 11 911

South Africa 1 293 1 351 1 486 2 440 3 632 4 408COMMUNICATIONS



Russia 6 064 7 508 9 134 11 566 14 798 18 806Brazil 20 609 17 691 17 757 21 491 24 006 30 642

South Africa 6 896 5 845 5 772 8 947 11 709 12 825TOTAL ICT



Russia 9 114 10 989 13 088 16 554 21 539 27 327Brazil 33 410 30 585 31 675 41 217 48 330 62 065

South Africa 10 477 9 627 9 756 15 217 20 763 23 625


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9. NGOs and ICT for Development

Non-governmental development organizations and other organizations of civil

society run into thousands throughout the country. These, mainly small community

based organizations are big consumers of ICT products and services. A targeted

study to establish the ICT consumption needs this sector will be highly informative,

especially because, many of these organizations are both commercial and social

enterprises. These organizations mainly serve marginalized poor black and rural

communities, improving their performance opening access to ICT goods and

services would significantly improve their performance for the benefit of the

neediest members of the South African community.

10. Demographic of the sector

This is an area that needs additional research. But it is observed that the

concentration of ICT SMMEs is still found in the urban areas of the country. A brief

visit to Soweto, Sebokeng, Soshanguve in Gauteng showed that there are hardly any

ICT services providers in these areas except for a growing number of mobile phone

shops and an occasional internet café.

This presents the greatest challenge as the majority of the population lives in these

areas. One of the main reasons identified were lack of basic infrastructure, skills,

and information about funding. More work needs to be done in this area.

11. Future growth prospect of SMMEs within the ICT sector

11.1. Policy environment

11.1.1. Provincial ICT Development planning

The researchers could only get hold of ICT development plans for Kwazulu Natal

and the Western Cape Provinces. We could not establish whether other provinces

have or have not developed these plans.


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11.2. Funding environment

Governments has establish various institutions to provide funding for SMMEs

generally though there is little known about specific funding available for ICT

SMMEs.

11.3. Unexploited markets and under serviced areas

Traditional black residential areas – townships and rural areas are crossly under

serviced and are open for exploration. Opportunities to provide basic internet café

type services are abundant in these areas. It is a special market that requires special

services though, because of low levels of literacy in some cases.

12. Opportunities and challenges

12.1. Opportunities

Law governing communications and electronic commerce in SA is the “E-commerce

and Transactions Act of 2002”, designed to provide a national e-strategy for South

Africa, promote the use of ICT in SMMEs. SMMEs have been acknowledged as the

key generator of economic innovation, especially in ICT applications and specific

programs address SMMEs requirements directly so as to maximize the benefits of

the development of the information economy with in SMMEs. SMMEs in South

Africa cover a very broad range of firms, from established traditional family

businesses employing over a hundred people which are medium-sized enterprises,

down to the small self-employed from the poorest levels of the population (informal

micro enterprises). While the upper end of the range is comparable to the small- and

medium-sized enterprises (SME) population of developed countries, statistics reveal


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that an immense majority of SMMEs are concentrated on the very lowest end. These

are primarily black survivalist firms.

12.2. Challenges

Cost effective solutions: The SMME sector in South Africa makes up 99.3% of all

private sector enterprises. One of the major challenges facing SMMEs is the

acquisition and deployment of cost-effective and appropriate ICT solutions. SMMEs

must be able to identify the ICT infrastructure required to improve performance and

global competitiveness. Likewise, they must be aware of available products, services

and initiatives (public and private), locally and worldwide, to meet these

requirements9.

Lack of skills: The biggest challenge is how to effectively equip small businesses

with the skills and knowledge that enable them to effectively participate in

articulating their ICT needs one hand, while also generating the necessary human

capacity and supporting it to create solutions that respond to these needs in an

effective and sustainable manner. Very little research regarding SMMEs has been

done in South Africa. For instance, it was found that there is still great disparity

between courses offered, the graduates produced and the actual job market.

Additionally, most training service providers do not invest in job market surveys, or

in tracking of graduated students. Consequently, many ICT courses currently

offered do not have a significant impact on job creation.

Khula Report (2004) identifies the following major challenges

♣ Prevalence of Low Value-Adding ICT Enterprises – Most black SMMEs

in the sector are set to perform less value adding roles in the value supply

chain of ICT goods and services.

9 http://www.csir.co.za/plsql/pTl0002/PTL0002_PGE038_ARTICLE?ARTICLE_NO=7012122


Page 52 of 105

♣ Sustainability of Start-up ICT Enterprises – As a result of the lack of

capital base, access to support infrastructure, as well as the shortage of

management skills, black SMMEs are often unable to fund and/or sustain

their operations in the long term.

♣ Lacks of Entrepreneurial Culture/Job seeking mentality – Black people

were channeled by the Apartheid psyche to enter the job market over and

above being encouraged to develop their own businesses.

♣ Reluctance to partner with BEE and SMMEs – It has been submitted that

some enterprises involved in the services environment (as opposed to

product vendors) do not partner with BEE companies and other

programmes currently implemented by the DTI.

♣ SMME Development Programme – There needs to be a co-ordinated

industry effort at developing sustainable black SMMEs in the sector.

♣ Limited knowledge of Available Enterprise Support Programmes – Most

BEE enterprises has limited knowledge of government policies and

enterprise support measures that are currently in place. Consequently,

access to available enterprise incentives through the dti’s Black Business

Supplier Development Programme is very low.

♣ Insufficient support – Insufficient support received from government

quasi government enterprises for local manufacturers and their products.

♣ Financial Management Education – It is submitted that financial

management education and training directed at SMMEs and potential

entrepreneurs is lacking. It is further submitted that people in rural

communities, in particular, are intimidated by their lack of knowledge

and understanding of financial structuring and the attendant operational

complexity related to such structures.


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13. Issues for Possible Further Exploration

13.1. Trends Impacting the ICT Sector

Factors influencing ICT development and use in this country, especially with respect

to SMEs and how they are impacted.

Some of the possible factors that might need further exploration include:

• Competitiveness (Saitis report) • The enabling environment especially in areas where there is still limited access

(Saitis report) • HR Development (Saitis report) • Creating the Information Society in South Africa (Saitis report) • Emerging Technology Applications (OECD IT Outlook 2006 report) • Funding R & D (with foreign examples of how this has been made accessible)

(OECD Drivers of Innovative Clusters report) • Factors influencing an IT Purchase (SME Survey 2003, p49) • Skills and HR

14. Recommendations

14.1. Recommendations: ICT developments to benefit

SMMEs

Duncombe and Heeks (2001: 4) used findings of a study in Botswana to develop

ICT-related categorisation of enterprise, which recommends different priorities for

different enterprises which is useful for the support and development of SMME’s

through ICTs in South Africa. The categories of SMME’s include:

• Non-ICT users: those who do not use ICTs or telephones. For them, the

priority will be to build information networks; to develop community

telecommunications and radio/TV/news-paper-based channels first and

foremost: and to use ICT intermediaries only as a secondary priority.


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• Non-IT users: those who use telephone/fax but not computers. For them, the

priority is to gain access to ICT intermediaries and also to improve capacities

for information capture, processing and dissemination.

Non-networked ICT users: Those who have stand-alone computers. For them, the

priority is to build basic management and information capacities and to help make

more/better use of the computers they already have. This group is a clear reminder

that access to ICTs and effective use of ICTs are two quite different things.

• Networked/intensive ICT users: those making significant use of networked

computers. For them the priority is to adopt a more integrated and strategic

approach to ICTs that applies the technology to key business goals. ICT

initiatives for enterprise should focus on this group.

Duncombe and Heeks (2001, p. 4) assert that the success of ICT developments in

developing countries will be critically dependent on know-how’s and skills capacity

within the local and ICT sector and amongst secondary ICT-users. In their opinion it

is especially technical managerial and developmental skills that need to be developed

to fully harvest the benefits of ICT.

To fully support the development that ICT can bring to SMMEs Duncombe and

Heeks (2001, p. 4) recommends:

• A needs driven approach to interventions

• Emphasis on market demands rather than supply. Agencies and policies need

to think far more about the drivers/pull factors that make enterprises’ want to

use ICT rather than those that allow them to use it.

• Macro-level policy interventions are less costly and have shown to be more

successful than micro level individual enterprise interventions.


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Duncombe and Heeks (2001) assert that enterprise level support to flyers10 will have

little need for direct business assistance but can be assisted through policy measures

that facilitate access to finance, reduce to cost of access to infrastructure, support

skills and technology and creates market access (through linkages and vendor

development programmes, for example) (5).

To move towards e-readiness leadership, increased telecommunications

liberalisation, human capital development, creation of a business environment and

strengthening data infrastructure within the enterprise sector is needed. Coetzee, et

al (Ed) mentions it is because of a lack of leadership in ICT initiatives in South

Africa that fragmentation occur throughout various sectors and organisations. As

consequence there may be a large number of small ICT initiatives that operate

without a common goal. Owing to the fragmentations in ICT, investments in the

development of SMME ICT capacity do not have a significant impact and are not

addressing and industry need. Strong ITC leadership is needed, dedicated by the

needs of SMMEs (Coetzee, et al, Ed).

Increased telecommunications liberalization should be implemented to expand

connectivity and reduce costs of access to ICTs.

Human capital development is another priority of support to SMMEs. Academic

networks can especially play a role her in small businesses to appreciate and

leverage the potential benefits offered by ICT in sub-Saharan Africa (Ndiwalana &

Tusubira, 2006:4). ICTs can also be introduced in schools to develop potential

SMME owners to use ICTs.

Tanburn and Singh (2001) indicated that an environment fit for the development of

SMMEs through ICT should be competitive in nature. It should not protect

10 Flyers and potential flyers are typically SMME that are growth orientated. They

are almost exclusive urban or peri-urban based. They are market orientated, having

identified niche product or services leading to profitable and sustainable market

opportunities. They benefit from a higher degree of integration into market systems,

which are most highly developed in lower proximity.


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traditional telecommunications providers for instance (Tanburn & Singh, 2001: v).

A lack of competition result in uncompetitive prices – that is usually overpriced

services, such as telecommunications providers in many developing countries

(Tanburn & Singh, 2001, p. v).

Another system of support to SMMEs will be to develop ICT applications and

information content specifically for their enablement and development of (Bauer,

2001). This is another aspect in which academic networks in South Africa can

support SMME development through research.

14.2. Challenges and corrective measures

14.2.1. Leveraging ICT enabling from business use11

The Government should work to create a better understanding of how SMMEs can

harness the power of ICT and better communicate the benefits to be had by adopting

ICT. Strategies could include:

♣ -Using specialist channels to communicate messages that address ICT

issues faced by small businesses; and

♣ -Making simple e-commerce tools readily available to small businesses.

SEDA should stimulate increased knowledge of the applications of ICT and

encourage this application to SMMEs. This could be achieved by:

♣ -Regularly bringing together exceptional achievers in the adoption of ICT

via an ideas forum;

♣ -Lowering the cost of ICT-related information to SMMEs;

11 Adapted from: Western Australia Information and Communications Technology Industry

Development Forum. 2006. Enabling Growth: The contribution of ICT to West Australian Economy.

Perth, Australia


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♣ -Increasing the accessibility of SMME advice by facilitating mentoring

and

♣ -Making simple e-commerce tools readily available to small businesses

14.2.2. Promoting the use of ICT to enable exports

across all SMMEs

The Government should consider playing a greater role in the promotion of online

activities, predominantly online commerce. This could be done by:

♣ -Establishing workshops for business enterprises showcasing the advantages of online selling technologies and the business benefits associated with them. Workshops should be targeted to industries where there is thought to be potential for greater use of the Internet and associated services;

♣ Focus should also be given to dealing with business concerns about ICT

security and privacy by explaining the security technologies available and

promoting their use;

♣ The initiative should also include avenues by which Government can

demonstrate the ways business can use ICT and the Internet to enhance

export opportunities; and

♣ -The workshops could also facilitate the two-way flow of information so

that Government can better understand why particular industries are not

adopting Internet services such that more policy action can be considered.


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14.3. Potential support mechanisms that could be

applied

14.3.1. Enhancing `ICT enabling' through skills development12

SEDA in collaboration with the ICT SETA should continue to support individuals in

gaining appropriate basic ICT skills. This could be achieved by:

♣ -Communicating the message to SMMEs of the significance and

importance of obtaining basic ICT skills;

Providing all SMMEs with the opportunity to gain the basic ICT skills needed to be

an active participant in society by:

♣ Improving access to vocational education courses that focus on ICT;

♣ Including ICT topics of study in non-ICT training courses;

♣ Encouraging the adoption of continuing professional development which

focuses on ICT;

♣ Partnering with industry and education and training providers to improve

the perceived attractiveness of ICT courses;

♣ Using its position as a large employer, Government to provide on-the job

ICT enterprise development training to public service employees;

♣ Further encouraging the use of ICT to facilitate learning at an early age in

the school environment - this would include the ongoing provision of ICT

infrastructure in schools and ongoing ICT professional development for

teachers;

12 From: Western Australia Information and Communications Technology Industry Development

Forum. 2006. Enabling Growth: The contribution of ICT to West Australian Economy. Perth,

Australia


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♣ Partnering with education and training providers to identify the core ICT

competencies necessary and establishing common standards of ICT

literacy across the education and training system.

14.3.2. Liaison with industry

SEDA should undertake ongoing liaison with industry to identify the ICT skill needs

and supply chain opportunities of business and in particular those needs that are not

being met. Policy programs can then be structured in such a way so as to target

identified skill gaps through the provision of education services and perhaps even the

promotion of South Africa and Africa as a place for interstate ICT-skilled people to

work.

Expand current assistance to start-up ICT businesses to established small and

medium sized ICT businesses.

This should include facilitating access to services such as legal services, design services and venture capital providers as well as more traditional services such as commercialisation and business growth.

14.3.3. Enhancing local ICT import competing firms

Identify and investigate the country’s import-competing industries with a view to

developing a program to assist them in their operations.

14.4. Opportunities and how they can be explored

South Africa's government has put a strong emphasis on ICT sector development

through the execution of a National ICT strategy. This plan proactively addresses


Page 60 of 105

ICT penetration with in SMMEs, particularly for disadvantaged segments of the

society. Since 1994, the ICT sector has been growing flamboyantly, with ICT budget

expenditure at US$9.6 billion, 6.9 percent of GNP. This mirrors a comparative

advantage in high-level professional skills over blue-collar manufacturing skills. The

South African government has implemented a number of frameworks for policies,

infrastructure, partnerships and task forces that will help South African communities

play a role in the global economy. The ICT sector not only provides a significant

number of new jobs, but also is positioned as an enabler of increasing

competitiveness in sectors such as SMMEs, as a source of future export earnings,

and as a key enabler to achieve development goals (NICTS).

SMMEs are recognized as potential engines for economic and social growth all over

the world. Although figures may vary, SMMEs account for the majority of firms and

a corresponding share of employment within developing economies. The sector

largely exceeds the average economic growth of national economies in many

developing countries and contributes significantly to employment creation.

Accordingly, governments and development partners alike have recognized the

important role that the SME sector plays in overall development. Government

policies and programmes are therefore increasingly focused to supporting the growth

of SMMEs. These range from tax incentives to technical assistance, from regulatory

provisions to training and other types of incentives13

Information and communication Technology (ICT) can provide small enterprise an

opportunity to conduct business anywhere. The use of internet allows small business

to project virtual storefronts to the world as well as conduct business with other

organizations. Small enterprises can use ICT to establish e-commerce applications

13 . Hallberg, K., A Market-Oriented Strategy for Small and Medium

Enterprises, in IFC Discussion Paper no. 40. 2000, The World

Bank: Washington DC.


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particularly in developing economies where the infrastructure is not classified as

“high. technology”. E- commerce is the process of buying, selling, or exchanging

products services and information via computer networks including internet

services14.

ICT helps SMMEs through leveraging the benefits and synergy that accrue from

working together; academic networks can mitigate many of these challenges through

nurturing an appropriate human resource base, researching in appropriate

technologies as well as improving small businesses through creating a bigger market

for local solutions. It is through ICT that stronger negotiating position that can be

used to articulate and lobby for an environment that stimulates the use of ICT within

small businesses15

14.5. Specific interventions or quick gain strategies for

SEDA.

2010 presents plenty of work opportunities for SMMEs in the ICT sector to cater to

the huge influx of visitors to South Africa and neighbouring countries. There are

already many opportunities in the building and construction, tourism, and

telecommunications sectors.

Improvement of information systems: Small enterprises rely primarily on informal

information. This is essential to sales and is appropriate to small enterprise

14 Brian J. Corbitt, Nabeel A. Y. Al-Qirim E-business, E-government & Small and Medium-size Enterprises:

Opportunities and Challenges 15 Ali Ndiwalana and F. F. Tusubira, ICT in Small Businesses: How can Academic

Networks be more relevant? http://www.wideopenaccess.net/files/ICTs_SMEs_NRENs_reviewed.pdf


Page 62 of 105

conditions. However, it is often of poor quality and is restrictive in its range.

Enterprise information systems must therefore be improved: networks must be

developed, through business linkages more than social or institutional linkages. A

much greater emphasis must be put on demand-related information: it is mostly

supply-related information that is provided at present. As well as supporting informal

information systems, there is a need to help larger enterprises through the transition

point to greater use of formal information and greater use of ICTs.

Research: Research should be driven by a bottom-up approach to help cultivate and

make ICT more relevant to SME needs. This will help create local ownership of ICT

projects by giving small business owners an opportunity to participate in defining

their needs and help build internal skills capacity to effectively utilize ICT within

small businesses. The ability to effectively utilize ICT is often the major constraint

and not equipment as is frequently assumed.

More government and other sector’s involvement: In order to fully harness the

latent potential of ‘baby’ ICT industry, governments and other bodies have a huge

role to play in terms of human capacity development. This can happen at two of

levels: First, they can help create more awareness of how small businesses can

leverage ICT to become more efficient and productive, in the process creating more

local demand for ICT services. Secondly, they can develop more appropriate human

capacity to respond to this growing demand by equipping the locals with skills that

allow them to not only be job seekers but also have the capacity to discern these

needs and create own businesses that respond to them.

Training: South African government and other private institutions needs to deliver a

strategic response that would drive ICT training policy towards the ultimate goals of

producing SMME trainees with in ICT sector, and positively contributing to the

reduction of poverty and to clear economic growth.In order to successfully conduct

staff training program, a strategy is required that takes into account the particular

characteristics of the enterprise. Ιn small enterprises the staff that can be trained on


Page 63 of 105

ICT is extremely limited and naturally cannot acquire specialized computing

knowledge nor can it be easily upgraded. Thus as a consequence, the training

program must be carefully designed so that it covers the necessary knowledge within

a relatively short period of time. Training programmes should be focused on:

♣ reaching relevant SMMEs

♣ motivating SMMEs for ICT

♣ ICT skills of employees

This should be customized as SMMEs are so different in context and learning needs.

This programme should be delivered through local trainers. However, it is important

to note that negative side-effect of this kind of customized training programme is it is

very costly.

Co-ordination of SMME policies: Co-ordination of SMME policies amongst

government departments: Currently the SMME policy in South Africa is not co-

ordinated or aligned, resulting in duplicated and conflicting efforts and a loss of

synergy.

There are numerous benefits for all types of SMMEs in all sectors in investing in

ICT. There are however a number of barriers, including cost, infrastructure and

training. The latter can however be overcome successfully by means of

interventions. Assistance to SMMEs is however necessary on both policy and

practice level.


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SMMEs, www.pnc.gov.za, 16th April, 2007

South African ICT Sector Development Framework,

http://www.dti.gov.za/saitis/docs/html/chap01.html

Tanburn J & Singh AD 2001. ICT and Enterprises in Developing Countries: Hype

of Opportunity. SEED Working Paper, no. 17, Series on Innovation and

Sustainability in Business Support Services (FIT).

The BMi-Techknowledge Group; “The South Africa Telecoms SME Customer

Profile & Market”, 2007.

The SME Survey; “SME Survey 2006”,

http://www.smesurvey.co.za/content/dynamicsubs.asp?MenuSubs_ID=11, 2007.

Van Hertog, P; “OECD Innovative Clusters Drivers of National Innovation

Systems”; 2001.

Wakelin O & Shadrach B n.d. Impact Assessment of Appropriate and Innovative

Technologies and Enterprise Development.


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Western Australian ICT Industry Development Forum. 2006. Enabling Growth:

The contribution of ICT to the Western Australian Economy. Retrieved June 6,

2007 from. http://www.tiac.wa.gov.au/ictforum/reports.html

Youth Development Trust 2003. Youth Information and Communications

Technology Training, Entrepreneurship and Job Creation: A report prepared by the

Youth Development Trust for the IDRC.


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16. Annexure A: Annotated bibliography Our Name for the resource Short Description Details How this is useful http://www.itweb.co.za/sections/business/2005/0508080838.asp?A=ELR&S=e-Learning%20and%20Business%20Education&O=FPIN

BTI, in line with its mandate to support information and communications technology businesses, has established the Bodibeng Entrepreneurial Training Institute (BETI) to provide quality business skills training to ICT entrepreneurs.

BTI might be a useful source to interview

1. SAITIS TOR FOR SMME SKILLS AND ENTERPRISE DEVELOPMENT

http://www.thedti.gov.za/saitis/Initiatives/Copy%20of%20ToR%20-%20Black%20ICT%20SMME%20v4p4.pdf

SAITIS PROJECT OFFICE Terms of Reference Black and Women ICT SMME Skills and Enterprise development Private Bag X84 Pretoria 0001 South Africa www.saitis.co.za Telephone: +27 (12) 310 1496 Facsimile: +27 (12) 322 4600

What happened to this initiative? .

2. PRESIDENTIAL NATIONAL COMMISSION ON SMMES IN ICT

http://www.pnc.gov.za/content/view/88/58/

OUTLINES who the players are and what the national agenda with regards to SMMEs in ICT is.

For context

3. Black and Women Indicates what the SAITIS


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Our Name for the resource Short Description Details How this is useful ICT SMME Skills and Enterprise Development Executive Summary March 2002

strategy was about.

4. Foresight ICT report This report addresses Information and Communications Technology (ICT), a unique sector because it represents a scientific discipline and industry in its own right, as well as cutting across all other sectors. Even a cursory glance at the other outputs reveals the all-pervasive role of ICT as we enter the information age

It was done in 2000, so is a little outdated.

5. USA Impact evaluation Powerpoint

Evaluate impact of Universal Service Agency (“USA”) on Universal Service and Access in South Africa. Focus on the period of 1997 - 2004. Benchmark USA against similar agencies in developing and developed countries. Pinpoint successes and failures of USA during its first eight years of operation. Inform stakeholders on USA’s achievements and shortcomings relative to the Agency’s mandate in the Telecommunications Act (as amended).


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Our Name for the resource Short Description Details How this is useful 6. SAITIS BASELINE

STUDIES: A Survey of the IT Industry in South Africa September 1999

This baseline study, a Survey of the IT Industry, is the first of a two-part study to provide an overview of the status of the information and communications industry in South Africa. These two studies feed into a three-year, $ 3,5 million Canadian) dollar programme called the South African IT Industry Strategy (SAITIS) project. SAITIS is being funded through a bilateral assistance programme launched by the Canadian International Development Agency (CIDA), in conjunction with the Department of Trade and Industry (DTI). Additional support has been provided for this baseline study the Acacia Programme of the International Development Research Centre (IDRC).

PROJECT TEAM: Tina James (IDRC) Philip Esselaar (Miller Esselaar and Associates) Jane Mosebi (Forge Ahead BMI-T) Angus Bowmaker-Falconer (Information Resources Group) Claire Sibthorpe (IDRC) Yokow Quansah (Information Resources Group)

Useful for defining the ICT industry

7. Survey of the IT Industry and Related Jobs and Skills in South Africa January 2000

http://www.thedti.gov.za/saitis/studies/jobs_skills/full-studies.pdf


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Our Name for the resource Short Description Details How this is useful 8. NEDLAC ICT

SUMMIT 2002 Plenary Session on behalf of Business

Lists the following associations active in the ICT industry * Information Industry South Africa * Information Technology Association * Black IT Forum * South African Communications Forum * Communications Users Association of South Africa * South African Value Added Network Services Association * Internet Service Providers Association * South Africa Cellular Service Providers Association * Electronic Commerce Association of South Africa * Computing Technology Industry Association * Geospatial Information Technology Association of South Africa * National Association of Broadcasters * Telecommunications Skills Development Forum * Electronic Industries Federation * South African Electrotechnical Export Council


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Our Name for the resource Short Description Details How this is useful * Smart Card Society of South Africa * Association for Services Management International * Telephone Services Association * The Infosecurity Organisation

9. IFIP Report by Computer Society of South Africa

Summary of 2000 SA IT industry programmes. The CSSA was actively involved in all of these efforts - either corporately or through individual members. This report will briefly refer to several of these projects.

10. SA Women in

Computing

This bibliography consists of a range of articles that consider aspects of gender and computing in South Africa.

11. Engendering Computing Toolkit

Worldbank

List of basic facts around disadvantaged groups and ICTs. Seems to be rather old.

12. Gender, ICTs and Entrepreneurship

Worldbank

Document that outlines how men and women differ in their access to, use of an benefit from ICTs.

13. Information communication technologies and the potential for rural tourism SMME

This article explores how information communication technologies (ICTs) can help tourismbased small, medium and micro-enterprises (SMMEs)

Author: France Bourgouin DOI: 10.1080/03768350220123864

2002 Source


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Our Name for the resource Short Description Details How this is useful development: the case of the Wild Coast

address their constraints to growth and development in rural South Africa. More specifically, it reports on research conducted in the Wild Coast region of the Eastern Cape province focussed on the constraints, and related information needs affecting the success of rural SMMEs operating in the tourism industry, and explores how ICTs might address these limitations. Within the context of the constraints faced by rural SMMEs, this article examines the information needs and current patterns of communication that impact on the development of the sector, the nature of tourism SMMEs in the case study area, and the potential use of ICTs to support tourism-based SMME development in rural areas.

Publication Frequency: 5 issues per year Published in: journal Development Southern Africa, Volume 19, Issue 1 March 2002 , pages 191 - 212 Subjects: Africa; African & Third World Politics; Number of References: 42 Formats available: PDF (English) Purchase Article: US$25.00 - buy now buy now add to cart buy now [ show other buying options ] purchase type customer type online access payment method price Single Article Purchase Personal 3 days credit card US$25.00 buy now buy now add to cart add to cart Issue Purchase


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Our Name for the resource Short Description Details How this is useful Any permanent credit card US$85.58 buy now buy now add to cart add to cart If you would like to pay in any other currency please see the purchasing help pages for more information.

14. Information and communication technology and small, medium, and micro enterprises in Asia-Pacific - size does matter

15. A framework for a generic business behaviour guideline (GBBG) for ICT organisations in the 'new' South Africa

Source Special Interest Group on Computer Personnel Research Annual Conference archive Proceedings of the 2006 ACM SIGMIS CPR

This paper reports on research in progress which investigates the need for a set of generic guidelines for acceptable business behaviour in Information and Communication Technology organisations in the 'new' South Africa. The investigation focuses on managers and employees in ICT organizations from before the democratic elections in 1994 in South Africa up to this day. It

Good list of appropriate references included too!


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Our Name for the resource Short Description Details How this is useful conference on computer personnel research: Forty four years of computer personnel research: achievements, challenges & the future table of

looks at the impact of different ethnic and individual cultures on different organisational cultures. Emphasis is placed on the impact of affirmative action (AA) and black economic empowerment (BEE) on ICT organizations and the perceived lack of skills and experience in affirmative action candidates. The inherently under-developed in interpersonal skills of many ICT professionals seem to aggravate the situation. Some organisations attempt to adapt their organisational culture to accommodate new ethnic cultures in the organisation. The purpose of the research is to determine the need for a set of generic business behaviour guidelines for employees in the ICT industry and to design the framework of a Generic Business Behaviour Guideline (GBBG) document/manual.

16. IT for Development Journal

Looks like a neat journal with appropriate international content.

17. Research to inform Strategic Policy and Initiatives for the Information and

Useful for the definition of the ICT sector. Also includes an overview of research on the topic


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Our Name for the resource Short Description Details How this is useful Communication Technology Sector in the Western Cape

18. Using Voice over IP to Bridge the Digital Divide - A Critical Action Research Approach

19. Using the Livelihoods Framework to Analyze ICT Applications for Poverty Reduction through Microenterprise

IDPM, School of Environment and Development University of Manchester Manchester, United Kingdom This paper provides a contribution to theorizing information and communication technology (ICT) and development by applying a livelihoods approach. This is found to provide the basis not only for an information-centered understanding of ICTs but also a means for broad and systematic analysis of poverty. The speciªc development issue analyzed is the role of ICT in microenterprise because microenterprise represents a viable route out of poverty through increased and more diversiªed income streams for poor households. A case study of Botswana is presented to demonstrate how the livelihoods


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Our Name for the resource Short Description Details How this is useful framework can be applied. This suggests that ICT applications may only bring marginal direct beneªts for poverty reduction. Viewed from the perspective of a livelihoods approach, greater beneªts for the poor may be derived from ICTs if they are applied to strengthen a broader range of social and political assets and if they are able to assist in building more effective structures and processes that favor the poor. The livelihoods approach is therefore able to identify information and ICT as only one part of a much broader development picture, and it avoids the overemphasis on technology that can beset some development informatics/ICT for development (ICT4D) research. Mainstream application of livelihoods ideas tends not to Engage explicitly with either information or ICT issues but the framework developed in this paper shows how such engagement can occur. It identifies both an analytical role for information/ICT that helps understand livelihoods of the


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Our Name for the resource Short Description Details How this is useful poor, and a functional role that uses these assets within livelihood Strategies.

20. South African 2004 ICT Sector Performance Review

Link Centre

The annual South African ICT Sector Performance Review (SPR) seeks to monitor and assess policy in the telecommunications sector – and where it overlaps with broadcasting and IT – against policy outcomes in the sector, and in so far as they impact on the economy and society. It does so by examining the performance of the sector in terms of delivery against national policy objectives. The study draws on the methodology developed by LIRNE.NET, an international ICT policy and regulatory training and research collaborative now consisting of Danish Technical University, Technical University of Delft, London School of Economics, the Wits University LINK Centre and, most recently, LIRNEasia based in Sri Lanka. The first baseline study for South Africa was conducted by the LINK Centre in 2003 and was followed with baseline studies in nine other African countries, including

Useful Report on access trends, development, growth, etc.


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Our Name for the resource Short Description Details How this is useful Botswana, Cameroon, Ethiopia, Ghana, Mozambique, Rwanda, Uganda, Tanzania and Zambia. These studies were undertaken by members of Research ICT Africa! a network of African researchers at 14 African universities (see www.researchICTafica.net for more information on the network and the country SPR case studies).

21. SMME SECOND PAPER Supporting Small Businesses in the Western Cape

John Oxford Eric Wood

This report is the second phase report for the project to develop a microeconomic Strategy for small business support. It follows the first phase report which provided an overview of the small business sector in South Africa and the Western Cape. This second phase report provides and assessment of current initiatives to support small businesses and outlines programmes to promote small businesses in the Western Cape. The report reviews the considerable array of national and provincial small business support. Strong evidence suggests small businesses are either unaware of the government’s programmes to support them or are skeptical

Outlines a bit how the SEDA mandate works


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Our Name for the resource Short Description Details How this is useful about their quality and effectiveness. In response to the perceived failure of many government initiatives to deliver quality support both national and provincial government are initiating new structures to provide centrally administered support to small businesses (nationally via the Small Enterprise Development Agency and provincially via the Real Enterprise Development centres – Red Doors).

22. ICT in South African Townships A means for women of small enterprises to run their business more efficiently?

Masters Thesis with some nice primary information

23. Government Policies on SME Development in the SADC

Objectives: This paper seeks to improve the understanding and effectiveness of Information and Communication Technology (ICT) policy, strategies and implementation for the development of Small and Medium sized Enterprises (SME) in the 14 countries of the


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Our Name for the resource Short Description Details How this is useful Southern African Development Community (SADC). Prior Work: This paper builds on existing ICT and SME policy and development studies carried out in the SADC region. The SME sector in SADC continues to dominate as the source of employment and poverty alleviation for the majority of people. However, there are still concerns about the slow progress in ICT adoption by SMEs. Approach: This study will gather data from the top decision-making and governmental levels in the SADC countries using surveys, interviews and document analyses. These methods will help to capture and record evidence from the different governments and SME sectors in the region. The technology supporting both generic and industry specific applications are reviewed in relation to the requirements of typical SMEs within the region. Policy comparisons with both


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Our Name for the resource Short Description Details How this is useful developed and underdeveloped countries are undertaken for reference. Results: Whilst governments of the SADC countries have put in place policies to foster the development of ICT within the SME sector, following the protocols and guidelines proposed by the SADC, the implementation has been slow. The supply push for technology implementation reflects a preoccupation of the SADC countries governments rather than requests from the SME sector. The paper identifies ICT needs and concerns of SMEs within the region. The plight of the SME sector continues to exist despite SADC innovations and support, showing a need to improve the policy intervention strategies for SMEs. Implications: The study will benefit policy makers, researchers and practitioners in the SME sector, particularly in the SADC region. By critically highlighting the ICT


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Our Name for the resource Short Description Details How this is useful adoption strategies which the Member States are putting in place, it will encourage SMEs to adopt and use appropriate ICT for their operations and development. The policy interventions need to be reviewed to consider how best the SMEs can benefit from the wide range of technologies available to facilitate their growth to achieve sustainability and reduce dependence on continued public funding. Value: The study will provide an initial evaluation of the effectiveness of SADC countries to provide support for the adoption and implementation of ICT solutions for SMEs. This will enable governments of SADC to review and revise policy implementation and development.

24. Position Paper for the South African Non-Governmental Organization Coalition $On Information Communication

Paper on how ICT impacts society


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Our Name for the resource Short Description Details How this is useful Technologies The Global Information Infrastructure And The Global Information Society

Strategies for Strengthening NGO Participation in the Digital World 25. Information Access

for Development: A Case Study at a Rural Community Centre in South Africa

This paper examines the theoretical linkage between ICT and advances within a business in a rural Community in the North West Province of South Africa. Various aspects are addressed like services and service delivery mechanism, locally adapted content and context, realistic approach To technologies and financial sustainability. A rural community centre in Itsoseng was investigated Regarding the above aspects and the results are provided. It became apparent that if these above aspects are not seen as integrated activities within a rural community, success is difficult to Achieve. Success in providing


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Our Name for the resource Short Description Details How this is useful human and institutional capacities that harness information and Knowledge is imperative.

26. Rethinking the High Skills Thesis

Andre Kraak, HSRC

The chapter then reviews the National Skills Development Strategy (NSDS) in this new theoretical light, and suggests that it is a good example of the alternate model proposed, which emphasizes simultaneous upskilling in the low, intermediate and high skill sectors of the South African economy. The analysis then goes on to interrogate the feasibility of this ambitious project. The chapter concludes that several structural factors – some global, others political, economic as well as operational – will act to limit this simultaneous multi-layered upskilling at the low, intermediate and high skill sectors.

ICT is constrained by lack of human resources.

27. VSAT Case Studies This document presents three casestudies on Very Small Aperture terminals, a technology that could help bridge the digital divide.

Only peripherally relevant

28. THE FIRST STATE OF LOGISTICS SURVEY FOR SOUTH AFRIICA

Sponsored by CSIR Centre for Logistics and Decision Support and Spoornet “The case for measurement and revitalisation of

Givers a perspective on how logistics might constraint growth of SMMEs. The issue of


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Our Name for the resource Short Description Details How this is useful 2004

basic logistics infrastructure in our dual economy” Given the socio-economic conditions and current spread of economic activity in South Africa, the small business development perspective is critical. The question is how to balance the national corridor competitiveness focus with sustainable SMME development (implying a need for access to the national logistics system). Information on these issues is very limited. We provide an initial overview, and hope to be able to analyse this in more detail in future surveys. These core structural problems can inter alia be attributed to the fact that we neglected to measure the state of logistics in our economy in the past – making macro logistics issues Invisible and disabling any attempt to develop policy and make optimal infrastructure investment decisions. We therefore petition for this survey to become an annual institution in South Africa. It will assist the country to develop strategically relevant policies, and to make

ICT capability is mentioned in passing


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Our Name for the resource Short Description Details How this is useful strategic infrastructure investment and maintenance decisions, which will in turn facilitate sustainable industry and small business development. Time series data will also enable us to monitor the success of these interventions over time.

29. Case study of Small enterprise support centre.

Masters thesis: Case study on the support provided by the Business Place

Masters thesis that mentions in passing how the business support centre’s access to ICT is useful.

30. Modern Energy: Impacts on Micro-enterprises Phase 1, Task 1.2 A Literature Review into the Linkages Between Modern Energy and Micro-Enterprise

Report based on South Africa and India that postulates that energy provision is linked to the development of micro enterprises. ICT is mentioned in passing, but the link is very clear.

Report for DFID Page three mentions how energy impacts on ICT sector businesses

31. Fitting the pieces together: A composite view of government’s strategy TO ASSIST THE UNEMPLOYED in South Africa 1994 – 2004 Judith Streak and Carlene van der

The paper has five parts, followed by a conclusion. Section one explains the ways in which government can work to assist the unemployed. It identifies two channels of assistance: measures to facilitate job-creation (indirect channel) and measures aimed at providing goods, services or income directly to the

Role of ICT as seen by government explained at bottom page 28 top page 29


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Our Name for the resource Short Description Details How this is useful Westhuizen1 12 October 2004

unemployed (direct channel). Sections two to five track the evolution of government’s development strategy, covering both the indirect and direct measures adopted over time. Section two gives a brief overview of the development strategy put forward by the RDP, highlighting those elements that have been taken forward in the subsequent design of government’s strategy to assist the unemployed. Section three describes the development strategy and the measures to assist the unemployed proposed in the GEAR policy document, released in June 1996. Section four considers how the strategy to assist the unemployed emerged in practice between 1996 and 2000. Section five gives attention to the post-2000 period. It asks how government’s development strategy and measures to assist the unemployed have shifted in emphasis over the last four years. The conclusion recaps the main points that emerge from the paper.

32. LIST OF ICT papers in


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Our Name for the resource Short Description Details How this is useful developing world

33. KZN economic review.

The Employment and Economic Policy Research division of the HSRC was Appointed by KwaZulu-Natal’s (KZN’s) Department of Economic Development and Tourism in September 2002 to undertake an economic review of the KZN province with a view towards establishing a provincial industrial strategy. The terms of reference are to provide a review of the KZN economy, in terms of the following key themes: � Growth in traditional and non-traditional primary, secondary and tertiary sectors; � Changes in industrial structure, within and between industries; � The contribution of nodal developments; � Firm access to new opportunities such as beneficial trade arrangements (e.g. AGOA); � Trends in labour absorption within the province; � Human resource development and take-up of Skills Development Strategy; � Impact of HIV/Aids on the KZN economy; and

Interesting, ICT is not seen as a key opportunity in KZN’s industrial review report? Again ICT is only mentioned in passing. This is an interesting finding all by itself.


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Our Name for the resource Short Description Details How this is useful � The contribution of public institutions in KZN in promoting economic Development.

34. ICT in Manufacturing

Information and Communication Technologies (ICT) are considered to be key for An advanced manufacturing strategy. ICT forms the basis for most advances in Manufacturing technologies. The scope of this document is to capture the base Technologies involved across all industry and technology sectors.

Have some interesting ideas for quick gain projects.

35. Prospects for the Digital Economy in South Africa Technology, Policy, People, and Strategies

This study explores the on-going development of a global digital economy through a case-study analysis of its impact on and prospects in South Africa. It argues that four factors are key to understanding the impact of the digital economy on a developing country: (i) the level of technology, including its information and communications infrastructure and system of production and distribution; (ii) the policy and regulatory framework and initiatives; (iii) the human capacity and income distribution; and (iv) the strategic

It would be helpful for prospective investors in ICT.


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Our Name for the resource Short Description Details How this is useful approach of the state in response to dramatic global and domestic processes. The paper explores these four factors in the Republic of South Africa, with a focus on the period 1995-2000. Data for the study are drawn from survey research, published reports from national and international bodies, scholarly journals, structured interviews, and participant observation. Key findings of the study are as follows: an insufficient information and communications infrastructure remains a barrier to growth of the information economy in South Africa, especially in peri-urban and rural areas; awareness of the importance of the information economy is growing, but current human resources and development strategies are insufficient to meet human capital requirements; significant efforts have been made in order to re-orient the South African policy environment into one supportive of growth in a global digital economy; and South Africa’s role as a leading African and


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Our Name for the resource Short Description Details How this is useful developing world economy places additional burdens on its need to engage in regional, and global policy formulation activities in support of the emergence of a new regime for global e-commerce that is supportive of the strategic goals of the developing world.

36. Discussion Paper No. 2002/77 The New Economy and Developing Countries Assessing the Role of ICT Diffusion

Using data from developing countries, this paper explores the nature and direction of the links between ICT diffusion and per capita income, trade and financial indicators, education, and freedom indicators. Internet hosts, Internet users, personal computers and mobile phones represent indicators of ICT. The Gompertz model of technology diffusion is used to study ICT dissemination. The results show that income and government trade policies influence ICT diffusion. Depending on the ICT indicator, Freedom indices may or may not affect ICT diffusion. Moreover, only personal computers and Internet hosts seem to have a positive influence on income. Contrary to expectations, ICT diffusion does not seem to

Mina N. Baliamoune * August 2002


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Our Name for the resource Short Description Details How this is useful enhance education.

37. The Role of Information and Communication Technologies In Global Development Analyses and Policy Recommendations

The United Nations ICT Task Force has an important role to play in clarifying such issues through the unique mix of experience and expertise it can draw on. Its mandate is to promote aware-ness, inclusive policies and innovative technological and business models. It serves as a focal point for establishing strategic direction, better co-ordination and policy coherence for the application of ICT to promote de-velopment. It lends a truly global dimension to the many efforts to bridge the global digital divide, foster digital opportunity and place ICT at the service of all the world’s citizens. It serves as a strategic tool of the United Nations system, and the global community at large, in achieving the goals of the Millennium Declaration. The Task Force utilises different methods to perform its mandate. It works through plenary meetings, informal consultations with stakehold-ers, as well as electronic outreach to broader

Section 5 is about business development and entrepreneurship


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Our Name for the resource Short Description Details How this is useful audiences across the world. It has launched a matrix of Working Groups and Regional Networks as plat-forms for the implementation of the overall ‘Plan of Action’. These Working Groups are now addressing a broad range of policy issues and have launched several major global initiatives on their own in the areas of policy and governance, e-strategies, capacity building, connectivity and access, and entrepreneurship. This book illustrates the contribution being made by the Working Groups as well as individual experts and those involved in the work of civil society organisations to promote that common agenda.

38. ICTS and Small enterprises in Africa

This project reported here investigates what role new information and communication technologies (ICT) may play in small enterprise development in Africa. Drawing on field research in Botswana, the project analyses the information and communication needs of these enterprises and assesses opportunities for ICT application. Information gaps are widespread

2001 publication of which I


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Our Name for the resource Short Description Details How this is useful and relate particularly to new markets, to finance and to skills. There is a strong reliance on informal information practices among all categories of enterprise. This has many positive features but there also needs to be a move to more formal information sources and to strengthening of information-providing business linkages. ICT have brought benefits but they are not a main priority for the majority of African small enterprises. There must be an equal – or greater – focus on other information-handling technologies, and an understanding of all the resources required to turn data into actionable decisions. Intermediated models of ICT are most suitable, but the intermediaries must be selected carefully. Different categories of enterprise need different information-related interventions. In particular, there is a danger of 'bringing business weapons to a welfare war': of imposing Western models of enterprise on vulnerable and


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Our Name for the resource Short Description Details How this is useful marginalised groups

39. FORESIGHT SYNTHESIS REPORT: DAWN OF THE AFRICAN CENTURY

This Synthesis Report condenses the work of the foresight project team; twelve sector working groups and three cross-cutter working groups into a document of some eighty pages. Their work has spanned a period of some two years and involved more than three hundred and fifty working group members and hundreds of other role players drawn from across the broader community. Scientists, engineers and technologists, social scientists, policy analysts, government officials, health practitioners, trade unionists, NGO staff and community activists have participated in this, the first South African National Research and Technology Foresight (NRTF) study. The NRTF project has been a significant learning experience for the participants. The various parties - benefited from exposure to new processes and ideas, not to mention the valuable networking that the foresight catalysed. It is intended this foresight will be not

Page 56 has a section relevant to ICT


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Our Name for the resource Short Description Details How this is useful be a one-off event, but the beginning of a continuing process that informs the functioning of the country's national system of innovation. The first stage of the work involved setting the parameters and scope of the study. An immediate decision had to be that of selecting for consideration the sectors deemed to be of most relevance to South Africa. These are: • Agriculture and Agroprocessing • Biodiversity • Crime Prevention, Criminal Justice and Defence • Energy • Environment • Financial Services • Health • Information and Communication Technologies • Manufacturing and Materials • Mining and Metallurgy • Tourism • Youth

40. African e-Index Towards an SME e-

The SME sector is where most of the world's poor are currently

THis looks like a key report


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Our Name for the resource Short Description Details How this is useful ACCESS AND USAGE across 14 African countries 2006

working. The SME e-Access and Usage survey was carried out by the Research ICT Africa! (RIA!) network in 14 African countries between the last quarter of 2005 and the first quarter of 2006. Its primary objective is to understand the impact of ICT on private sector development, and how ICT can contribute to a vibrant SME sector and economic growth in the context of developing economies. The countries covered included Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. To this end, the SME e-Access & Usage survey was motivated by the lack of clarity about the impact of ICT on small businesses. The literature to date has failed to create a tight link between the use of ICT and issues

41. eGovernment, eHealth, Technology Enhanced Learning: Adoption in Mozambique, South Africa & Tanzania

This comparative report showcases the current level of national ICT and eGovernment, eHealth and eLearning adoption through presentation of relevant data and illustrative case studies,

Section 3 From page 32looks relevant to South Africa. In a broad sense. Not on SMES directly .


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Our Name for the resource Short Description Details How this is useful Comparative Report 2005

collected by responsible government and other appropriate trans-national organisations, with the goal of informing policy at national, regional and international level. While there is considerable ICT related activity in Mozambique, South Africa and Tanzania, the results of current and completed projects are not well documented. In addition, there are often different government stakeholders involved in projects, even within the same thematic area. While this presented a challenge compiling this report, it also provided an opportunity for the IST-Africa Consortium to interact with a variety of responsible government agencies and lay the foundation for future cooperation. Only through documentation of current initiatives is it possible to determine future ICT research collaboration opportunities.

42. Benchmarking the Plan of Action of the World Summit on the Information Society (WSIS) in Africa October 2005

The WSIS Plan of Action adopted 10 objectives to be achieved by 2015, and on the basis of these objectives, ECA sent out a questionnaire by fax and email to all the National Information and

P51 interesting stats on e-business


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Our Name for the resource Short Description Details How this is useful Economic commission for Africa

Communication Infrastructure (NICI) focal points in the 53 ECA member States, with a view to assess their commitment to the implementation of the Plan of Action at the national level. Th e objectives of the survey were to: • Measure the current level of implementation of these objectives in the African countries; and, • To use the outcomes of the survey to establish a road map for the realization of the Plan of Action plan in all countries by 2015. Th e questionnaire is divided into 12 sections based on the general objectives, goals and targets as well as the action lines of the WSIS Plan of Action. Th ese are: 1. General objectives, goals and targets of the Plan of Action; 2. The Role of Governments and all Stakeholders in the Promotion of ICT for Development; 3. Information and Communication Infrastructure: an Essential Foundation for the Information Society; vii Benchmarking the Plan of Action of the World Summit on the


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Our Name for the resource Short Description Details How this is useful Information Society (WSIS) in Africa viii 4. Access to Information and Knowledge; 5. Capacity Building; 6. Building Confidence and Security in the Use of ICT; 7. Enabling Environment; 8. ICT Applications: Benefi ts in All Aspects of Life; 9. Cultural Diversity and Identity, Linguistic Diversity and Local Content; 10. Media; 11. Ethical Dimensions of the Information Society; and 12. International and Regional Cooperation. The conclusions drawn from the survey provide a concise appraisal of the current level of implementation, as well as the challenges and the policy recommendations necessary to establish a road map for the realization of the WSIS Plan of Action in all countries by 2015.

43. South Africa: A Response to the APRM Questionnaire on

Page 150 interesting facts about SA and ICT. Also interesting references to follow up


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Our Name for the resource Short Description Details How this is useful Progress Towards Addressing Socio-Economic Development Challenges

44. The overall purpose of this report is to create an action plan for EDD (Enterprise Development Department) of DFID (Department for International Development) regarding ICT and small enterprise development (SED) with emphasis on growth- orientated enterprises (flyers). Further, to suggest best practice and priorities for intervention and possible project/programme support. Finally, to suggest further priority avenues of research in the area. Specifically, the report will illustrate how adoption of ICT within SED can further international development targets: by summarising existing work and innovations on ICT and SED and highlighting specific developing country applications of ICT for SED. The emphasis within the ‘flyers’ component of the study is to identify areas of direct ICT application, predominantly for formal sector

Very appropriate Report!, although a little old


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Our Name for the resource Short Description Details How this is useful enterprises. The focus, therefore, is on those enterprises that already have access to ICT or have the potential for direct access and application. This report considers four functional ‘action areas’ for ICT and SME development: § First, ICT as an enterprise output – SMEs producing hardware, software and telecommunications products. § Second, ICT as a primary, processing technology – SMEs providing data entry services, ICT-based business services, software customization, distance learning, etc. § Third, other ICT-related support activities – computer training, consultancy and other services. § Fourth, ICT as a secondary processing technology – covering communication (email/Internet/mobile), data processing (small business information systems) and ICT-based manufacturing systems (NC/CNC production systems, for example). The first three of these categories encompass the ‘ICT-sector’ and are primarily concerned with the production of


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Our Name for the resource Short Description Details How this is useful ICT goods and services. The fourth category includes all other SME sectors that are ICT consumers. Typically, in low-income countries, these would be predominantly service-based – including financial, business, and technical services, the tourist sector and importers/exporters. The report also acknowledges the need to refocus the debate surrounding the ‘digital- divide’ more centrally on issues of information value and ownership and transfer of knowledge and know-how. After all, ICT are merely a technology-based means of transmitting information, enhancing knowledge, increasing productivity or creating new products and services, and have no intrinsic value for development in them.

i Wikipedia website; http://en.wikipedia.org/wiki/Operational_Support_Systems; June 2007. ii Wikipedia website, http://en.wikipedia.org/wiki/Scalable_Video_Coding; June 2007. iii Data Pro Group official website; http://www.dataprogroup.co.za/investor/gloossary.asp; June 2007.


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iv OECD Directorate for Science, Technology and Industry; “Classifying Information and Communications Technology (ICT) Services”; 2007. v The South African Department of Communications; The First ICT Research Report; 11.05.2007; http://www.doc.gov.za/index.php?option=com_docman&task=doc_download&gid=9&Itemid=431; June 2007. vi OECD; “OECD Information Technology Outlook”; 2006. vii James, T; “SAITIS Baseline Studies: A Survey of the IT Industry and Related Jobs and Skills in South Africa”; SIATIS; January 2000. viii Department of Trade and Industry Official Website; SAITIS BASELINE STUDIES: A Survey of the IT Industry and Related Jobs and

Skills in South Africa; http://www.dti.gov.za/saitis/studies/jobs_skills/full-studies.zip; January 2000.

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