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As there are different authors for the articles on this blog, each article does not necessarily reflect the views of the Bokamoso Leadership Forum.

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21 November 2011

Transforming Small and Medium Enterprises through Strategic Information Systems

Written on November 21, 2011 by Reuben in

About two years ago we reflected on the Information Technology and Communication (ICT) for Development, looking specifically at EASSy, SEACOM, and GLO-1 Submarine projects. The hope was that these projects would transform Africa’s place in global society, unfortunately the Africa Competitive Report 2011 reported that African economies' export growth rates continue to lag behind, more than those of other developing regions. Those who followed the implementation of those projects expected citizens of the continent to have access to high-speed Internet at low cost. Unfortunately this has not been the case as the continent continues to suffer from contextual, strategic, and operational problems.

The continent lacks production and export diversification making it susceptible to external economic breakdown. For the African continent to attain sustainable growth there is a need to develop a well-diversified export sector to reverse its marginalization in the global trade. African governments need to invest heavily in information technology and telecommunications infrastructure, in order to create enabling environments that attract Foreign Direct Investments (FDI) and promote the growth of Small and Medium Enterprises (SME). In most African countries SMEs represent the largest proportion of established businesses, thus their role cannot be under-estimated with respect to economic growth, employment, and gross domestic product (GDP). Enabling ICT environments would help SMEs respond to business environment pressures, while fulfilling customers’ demands and gaining competitive advantage, as they cannot rely solely on the limited domestic markets.

In Africa, mobile phone usage has grown exponentially, thus we need to create mobile-enabled or techno-enabled economies. Today, SMEs could take advantage of mobility-enabled devices such as blackberries, PDAs, digital cameras, and laptops as entry points into new business landscapes, especially e-commerce. It is a must that SMEs adopt information systems and use them beyond accounting and cost control to help create new technical paradigms for future growth. Thus, enabling SMEs to access adequate information and consider a number of parameters as they plan for long-term goals. Africa’s economies need to look at information as a mode of development and the adoption of technology as a powerful working tool. Accessing information will guarantee that the Small and Medium Enterprises are competitive in a knowledge intensive market, and also guarantee the continuity of local societal values.

The challenge is that all the information systems are predominantly developed for Western conditions. Though some of the systems can be easily adopted by SMEs in developing economies, we cannot make implicit assumptions about infrastructure efficiency and availability. In developed nations, the technological dynamics of the telecommunication services have provided these nations with an added advantage to capture all markets globally. The presence of FDI in African countries could stimulate growth by helping to develop technology infrastructure, technological capabilities, managerial skills, and provide technical assistance to Small and Medium Enterprises.

In countries such as Singapore, India, Indonesia, and Brazil, SMEs have an important place in economic growth. In order for Africa to achieve the millennial goals or attain developed nation status there is a need to create enabling environments, adopt new technological skills, and allow new sets of leaders to transform governments. In 1995, Singapore reported 65,000 SMEs dominating retail and wholesale trade, thus supporting economic growth. African countries could learn from countries like Singapore, where foreign investments and local enterprises are heavily promoted simultaneously.

It is important that SMEs acquire the technical know-how and take advantage of information technology to rapidly differentiate their products and services. There are SMEs in African countries that are taking advantage of information systems to improve their strategic position and access to global markets, but the numbers remain small. With the growing influence of the open-source movement, technology is more affordable and indispensable than ever before. As a continent, we cannot overlook local enterprises’ ability to sustain economic growth.
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