Important Aspects of Information Service Businesses that Support Microentreprises in Developing Countries

Abstract

One major challenge for ICTD (Information and Communication Technologies for Development) projects has been on how to make the project sustainable in the long run, specifically on how to make the project self-sustaining and not relying on external sources of funding (e.g. governments, donors, or NGOs) to finance its daily operations. One widely proposed approach to solve this problem has been to rely on market-based mechanism where the project has a business component that can support its financial needs (e.g. [5]), which is also the general approach taken by social entrepreneurs and social businesses [8].This paper specifically looks into information services that support the business needs of microentrepreneurs in developing countries and identify important aspects that businesses delivering such service need to consider for it to be sustainable. Microenterprises are typically single-person owned and operated businesses that are very common in the developing world. Importantly, microenterprises play an important role in the informal sector and significantly aid their households to move out of poverty [3]. But, as with other businesses, microenterprises have information needs to support their business operations, such as: information on where to sell their offerings, information on how to price their offerings, and information on cheaper source of supplies that their offering needs. These information needs are fulfilled by information services and, as several studies have shown, currently can be crudely provided through microentrepreneurs’ usage of mobile phones [1,4,6]. But current trends [7] in the advancement of mobile technologies, increasing coverage of mobile services, and decreasing price of both services as well as devices provide opportunities for a richer type of information service that can be provided for these microenterprises. But the question now is: what important aspects should businesses need to consider for their service to not only support important developmental goals but also for it to be profitable and sustainable in the long runBased on our work that investigated into business practices of mobile food vendors in Indonesia [2] this paper points to six important characteristics of microenterprises that are important to take into account when developing any information-service business targeting this group of users: resource poverty, income variability and vulnerability, overlaps between business and personal/family activities, highly risk averse, reliance and trust on social network, and education level. Consequently, these characteristics points to five important aspects that any business needs to consider in its delivery of information service for microenterprises: how to price, who pays, function overlaps, service embeddedness, and adoption method.References1. Aker, J.C. Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger. American Economic Journal: Applied Economics 2, 3 (2010), 46-59.2. Dawood, R., Jackson, S.J., and Yew, J. Supporting the Information Needs of Mobile Microentrepreneurs in the Developing World: The Case of Indonesian Food Cart Vendors. (2010).3. Gulyani, S. and Talukdar, D. Inside Informality: The Links between Poverty, Microenterprises, and Living Conditions in Nairobi’s Slums. World Development 38,12 (2010), 1710-1726. 4. Jensen, R. The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector. The Quarterly Journal of Economics 122, 3 (2007), 879-924.5. Kuriyan, R., Toyama, K., and Ray, I. Integrating Social Development and Financial Sustainability: The Challenges of Rural Computer Kiosks in Kerala. Information and Communication Technologies and Development, 2006. ICTD ’06. International Conference on, (2006), 121-130.6. Muto, M. and Yamano, T. The Impact of Mobile Phone Coverage Expansion on Market Participation: Panel Data Evidence from Uganda. World Development 37, 12 (2009), 1887-1896.7. UNCTAD (United Nations Conference on Trade and Development). Information Economy Report 2010 ICTs, Enterprises and Poverty Alleviation: Executive Summary. United Nations Conference on Trade and Development (UNCTAD), New York, NY, 2010.8. Yunus, M. Creating a World Without Poverty: Social Business and the Future of Capitalism. Public Affairs, New York, NY., 2007.