ICTs as an Enabler for Private Sector Development

This October, the United Nations Conference on Trade and Development (UNCTAD) its annual Information Economy report, which focused on the role of information and communications technology (ICT) in enabling private sector development: Information Economy Report 2011; ICTs as an Enabler for Private Sector Development (PSD).

The report shows that the potential of leveraging ICTs to develop the private sector is far from fully exploited. It finds that many national and donor strategies related to PSD currently fail to take adequate account of the ICT potential, which has greatly expanded thanks to changes in the global ICT landscape.

From the Executive Summary:

“Governments and their development partners should take a holistic and comprehensive approach to leveraging ICTs in PSD, although a review of PSD strategies indicates that this is often not the practice. Similarly, donor strategies often refer to the use of ICTs in PSD in a peripheral manner only, if at all. On its own, new technology will have limited effects on PSD. However, when carefully integrated into policies and processes, ICTs can reduce business costs, promote transparent, rules-based systems, and improve communication between the public and private sector. Governments need to work with the private sector to create an investment climate and a business environment that encourage the use of ICTs within private firms as well as in government. The potential of ICTs can then be realized, through adequate infrastructure and skills, and a commitment by governments to making markets work effectively. In some areas, there is already considerable experience and evidence to guide policy initiatives. In other areas, where opportunities for ICTs to contribute to PSD have emerged only in the past few years (as in the case of mobile money services), more analysis and testing of different business models is needed to assess potential and identify best practices.”

The report identifies four facets of the ICT-PSD interface and argues that policy interventions should take into account this holistic approach:

1. ICT infrastructure as a factor in the investment climate.
2. ICT use as a factor to improve the performance of the private sector.
3. The ICT producing sector as a strategic component of the private sector.
4. ICT use as a component of interventions aimed at facilitating PSD.

In these areas, UNCTAD makes several policy recommendations, such as:

• To take a comprehensive and systematic approach when integrating the ICT dimension into PSD strategies in developing countries.
• To continue to extend affordable and relevant connectivity to locations with poor ICT infrastructure.
• To adopt regulatory frameworks aiming to improve confidence in the use of technologies and their applications.
• To include ICT modules in business skills´ training programmes.
• To harness mobile money services to meet the needs of MSEs and to make financial markets more inclusive.
• To use ICT tools to reduce the cost of doing business, and to help MSEs bring goods and services to domestic and international markets.
• To develop Donor Guidelines to ensure that the ICT potential is fully harnessed in their PSD strategies.

The Information Economy Report 2011 explores various options and examples of interventions by national governments and their development partners related to the four facets of the interface between ICTs and PSD. Among the cases cited are:

• Customs automation in Madagascar and Liberia and reforms to streamline business registration procedures in the Philippines, as a means to provide a more conducive business environment.
• Programmes to increase the number and quality of entrepreneurial and ICT skills in Egypt, Singapore, Burkina Faso, Ghana and Panama as a means to promote the development of human resources.
• Regulating and promoting the development of mobile money applications in Africa, as a means to enhance financial inclusiveness and open up business opportunities for micro- and small enterprises.
• The case of ICT freelancers in Bangladesh, as an example of existing opportunities to find low-skilled employment in the ICT producing sector.
• The use of ICTs to support women entrepreneurs in developing countries, as a means to overcome the existing gender gap in available digital opportunities.

The role of ICT in innovation has been a subject of interest for some time. It is clear, that through the use of ICTs, firms can greater access to information and markets (and customers), which can stimulate the innovation process. This report is interesting because it highlights the role of ICT in micro and small firms in developing economies.

DECLARATION OF INTEREST: I was one of the contributing authors to this report, along with others identified in the Acknowledgements.