ICT usage and its impact on profitability of SMEs in 13 African Countries

Abstract

This paper reports on a small and medium enterprise (SME) Survey carried out by the ResearchICTAfrica (RIA) in 14 African countries. It argues that the negative return on investment reported in the literature can be attributed to the failure to distinguish between the formal and informal sectors. This paper demonstrates that informal SMEs have a higher profitability than formal ones. It further shows that ICTs are input factors for informal as well as formal SMEs. The paper argues that there is still demand for fixed line phones amongst SMEs, but that mobile phones have become the default communications tool because fixed lines are either too expensive or not available. The primary policy recommendation arising out of this is that applications for SMEs need to be developed using mobile phones. © 2006 IEEE.