Using ICT to enable SMEs

Friday, 26 April 2013 04:49 -     - {{hitsCtrl.values.hits}}

A brochure recently published by the WTO for a workshop on e-commerce for SMEs is a document worth studying by SMEs wanting to explore the world of e-commerce to better their businesses.

E-commerce is the sale or purchase of goods or services conducted over computer networks by methods specifically designed to receive or place orders, although payment need not necessarily be conducted online.

As SMEs are involved in many businesses in the manufacturing and services sectors and contribute to national economy, the document is a useful read not only for SMEs ,but policy makers and private sector representatives too as it gives examples of how some developing countries have made use of ICT to improve or develop their businesses and points to a study by UNCTAD, which notes that SMEs, while generally lagging in ICT, have the most to gain from increases in productivity due to e-commerce, but run the risk of missing opportunities in productivity and profitability by not engaging in e-businesses.

While the extent of ICT use is dependent on sector and size of business, those involved in export import and tourism sectors are identified as those having stronger incentives to invest in implementing ICT in their businesses.

While e-commerce is considered an opportunity to gain a stronger foothold in the multilateral system, its advantages for SMEs include less expenditure on storage space, insurance, infrastructure requirements, etc. Store fronts or large buildings are not required to attract customers as all that is needed is a well-designed web storefront.

With increased access to internet and accessing the web through mobile technology, use of mobile applications are expected to continue to expand in the future. Therefore, businesses can gain from increased productivity and enhance their competitiveness.

The rapid growth of internet sales can be seen by the statistics given in the brochure. In 1991, less than three million around the world were internet users and e-commerce was nonexistent. By 1999, an estimated 300 million users accessed the internet and approximately one quarter of them made online purchases from e-commerce sites to a value of approximately $ 110 billion and this year, purchases are set to be over $ 125 trillion.

The paper analyses the use of ICT in business to business (B2B) business to consumers (B2C) and business to government (B2G) and mobile e commerce. Although B2C transactions, which is selling to consumers through catalogues using shopping cart software, are better known, B2B transactions are said to far exceed B2C transactions.

The global market for mobile telephony is also discussed. No longer a luxury item in limited use, the commercial deployment of next generation technologies and devices are expected to open up many new e-commerce business opportunities. The mobile phone network is described as the ‘biggest machine’ the world has seen and is now being used to deliver development opportunities on a scale never imagined. SMEs can use mobile technology in the agricultural and fisheries sectors for micro credit services and mobile money.

The paper also notes how farmers in developing countries are utilising mobile technology to increase their commercial potential and efficiency and ability to tap new markets. Also important is that information can be transmitted to give early warning signals to mitigate the risk of losses due to extreme weather or spread of disease.

How mobile services can enable access to markets and other value chain stakeholders is explained by an example of how farmers in Morocco coordinate with local truckers to improve product transport and to identify the best locations to deliver their products and even to bring back products to be sold in their local markets.

An example given from the fisheries sector explains how a company in Senegal provides fishermen with real time weather reports and market prices using WAP (Wireless Application Protocol) and SMS technology via mobile phones. This interactive technology enabled fishermen to input stock information for marketing, departures and estimated times of return so that local fishing unions could be alerted in an emergency. A Geographic Information System (GIS) using GPS and GSM technologies is also in operation to increase protection at sea for fishermen and their boats in partnership with insurance companies.

Mobile money services have also helped to improve how businesses operate and contribute to close the poverty gap due to their effective way of conducting payments and providing access to finance. They help to increase productivity and efficiency while reducing transaction costs.

For e-commerce to be most effective, financial, legal and physical infrastructure must be in place adequately and this is an area for the public and private sectors to work together. Thailand has already assigned government agencies to support SMEs in doing business via e-commerce. Advantage of doing so is that it can ensure that such businesses possess the necessary skills to use such technology and educate them on how best to leverage internet and their mobile phones to take advantage of e-commerce.

Sri Lanka, which is continuing to make enormous progress in ICT, is ideally suited to use ICT to enable SMEs, particularly those in rural areas, to upmarket themselves.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.

Recent columns