Information and Communication Technologies and Small Enterprise in Africa

Lessons from Botswana

Full Final Report: Section 1

January 2001 Results of a research project undertaken by IDPM In co-operation with the Botswana Institute for Development Policy Analysis Supported by the UK Department for International Development

Richard Duncombe & Richard Heeks

IDPM, University of Manchester Published by: Institute for Development Policy and Management University of Manchester, Precinct Centre, Manchester, M13 9GH, UK Tel: +44-161-275-2800/2804 Email: idpm@man.ac.uk Fax: +44-161-273-8829 Web: http://idpm.man.ac.uk

Table of Contents: This Section

Section 1 A Framework for Understanding Information, ICTs and Small Enterprise 1.1 An Overview of Information, ICTs and Small Enterprise 1.11 An Integrated Model 1.12 Information and Development 1.13 Data, Information and Knowledge: The Information Chain 1.2 The External Information Needs of Enterprise 1.21 Enterprise Information Networks

1.3 Understanding Enterprise Information Networks 1.31 Imperfect Information, Transaction Costs and the Enterprise Environment 1.32 Formal and Informal Information 1.33 Resource Constraints within Enterprise Information Networks 1.4 Drawing Initial Conclusions About ICTs and Small Enterprise: Promise and Problems

Section 1 A Framework for Understanding Information, ICTs and Small Enterprise

The contribution of small enterprises to overall economic and social development in LDCs is wide-ranging. Arguably their most important contribution is to employment creation and income generation for poor and disadvantaged populations. There are also wider macro-economic benefits of a vibrant small business community, providing stimulus for development of indigenous production of import-substituting goods and services, contributing to exports, and providing inputs into larger-scale industrial and commercial activity. Small enterprises also make social contributions to development, through selfimprovement, enabling individuals to gain experience and confidence and to enhance skills, as well as providing for collective improvement through community-based organisations such as co-operatives. Small enterprise therefore makes an important contribution to both social and economic development. Like all enterprises, small enterprises in Africa make use of information, have information-related problems, and potentially or actually make use of ICTs. It is the purpose of this section to lay out a framework that connects these various items: enterprise, information and ICTs.

1.1 An Overview of Information, ICTs and Small Enterprise

1.11 An Integrated Model
Analysis of ICTs in small enterprise development needs to be based on three underlying principles that build up to an integrated model: Information is the key to understanding ICTs. Information and communication technologies may be defined as 'electronic means of capturing, processing, storing, and disseminating information'. All that these technologies do is provide new

mechanisms for handling an existing resource: information. We can therefore understand nothing about ICTs unless we first understand information practices and needs. This research therefore began not with the technology as its starting point but with the existing information and communication practices of small enterprises, with the role of those practices within the enterprise's main business systems, and with enterprise requirements for improvements in those practices. ICTs are not the only 'technology' that handles information. ICTs are based on digital information held as 1s and 0s, and comprise computer hardware, software and networks. They coexist either complementing or competing with other information-handling technologies that include (Heeks, 1999):

'Intermediate' technology, still based largely on analogue information held as electro-magnetic waves such as radio, television and telephone. 'Literate' technology, based on information held as the written word such as books and newspapers. 'Organic' technology, based solely on the human body such as the brain and sound waves.

Any study of information and small enterprise must therefore encompass these other technologies since there may be situations in which they are more appropriate than ICTs. Within an integrated model, an information system is defined not only in terms of the latest means of digital data-handling but also in terms of pre-existing 'nondigital' technologies, which commonly are of greater importance in less developed countries. Information systems are more than just technology and information. In building up a systemic model of ICTs, two separate elements have already been identified: the technology itself and the information on which it operates. In order to make this useful, we add in two further components: processes of purposeful activity and people to undertake those processes. All of these together now make up an 'information system', such as a support system that helps staff in an enterprise share information with suppliers using electronic mail. But this information system cannot sit in a vacuum. As shown in Diagram 1, it exists within an environment of institutions (organisations, groups, markets) and of influencing factors (political, economic, socio-cultural, technical and legal). Recommendations, in particular, need to understand this environment and the constraints it might impose. This is particularly important when technology is adopted within environments very different from those for which it was originally intended. Diagram 1: An Integrated View of Information and Communication Technologies

An integrated approach gives rise to a contextual view of ICTs in the development of enterprise which has benefits:

An integrated approach recognises that information handling forms a central, intrinsic part of all business activities. It is a reminder, therefore, that information is not a resource that can or should be considered in isolation from other business resources such as skills, technology and money. An integrated approach will be able to gauge the effectiveness of ICTs alongside existing information systems, and to assess how ICTs can successfully interact within the pre-existing 'organic' and 'intermediate' information environments. It will show that ICTs are not separate to other means of business communication and information handling. Instead, as noted, ICTs complement or compete with those other technologies. An integrated approach emphasises the importance of understanding the real information needs of a diverse range of enterprises in advance of proposing ICT-based solutions because of the very diverse environments in which enterprises exist.

Completing the Systemic Picture Because of its value, this integrated approach will underpin the discussion within this section, which will particularly take into consideration both the enterprise environment and the role of information in seeking to understand ICTs and small enterprise development. However, the model presented is a static one whereas information systems are active entities. In thinking about information systems and enterprise, we can therefore think about other factors that present a more holistic view:

Purpose: what is the information for? This is addressed in the next subsection. Content: what is the information? This will be discussed again in Sections 1.2 and 1.3.2. Structure: where does information come from, how is it communicated, and where does it go to? These issues of sources, channels and recipients are also discussed below. Process: what is done with information? Information system processes are summarised by the CIPSODA acronym: capture, input, processing, storage, output, decision-making and action. These are discussed further in Section 1.13.

1.12 Information and Development

If information is the key to understanding ICTs, then the starting point for analysis must be an overview of the purpose of information within the development process. Knowledge gaps and information problems have been highlighted as primary impediments to the growth and development of LDCs:
"Information is the lifeblood of every economy. In more traditional economies, information may be less codified, more often conveyed in personal interaction, but it is vital nonetheless ... The ways people get information, and the incentives they have to gather and provide it, are affected by the way society is organised: legal rules and social conventions, institutions and governments, all determine how much information people have and the quality of that information ... Without reliable information markets do not work well." (World Bank, 1998)

Information in support of enterprise development can be addressed to one of three important development objectives. Information for alleviation of poverty. Poverty can be perceived in terms that illustrate a potential role for information as a resource for informing choices and decision making. The poor are denied choice by their lack of key resources, including income, health, education and power. But they are also denied choice by their lack of a further resource: information. Lack of information prevents the poor from knowing what choices are possible, restricting them to decisions that are inefficient. Providing information increases the range of potential choices though these typically only become viable once inputs of other resources are made. This reflects a multi-dimensional approach for defining poverty profiles, explaining the causes of poverty and enacting poverty reduction strategies (Hanmer, Pyatt and White, 1999; UNDP, 1999; World Bank, 1999). The multi-dimensional approach states that the provision of economic means (income), whilst essential, is insufficient to ensure long-term relief from poverty. Also essential are the provision (or ownership) of economic, social and political assets and capabilities. These relate to property rights, access to education, the provision of healthcare services, access to physical infrastructure services, the sustainable use of environmental assets, and access to information.

A systemic view also recognises that information provision is a two-way process. As well as supplying information to the poor, there is an equally important role in disseminating information from the poor to the wider national or international community: what has been described as 'giving the poor a voice' (World Bank, 1998). Information for support of poor enterprise. As well as empowering the poor generally, information also plays a specific role in relation to the income-generating activities of the poor. These activities will typically be survivalist or trundler 'enterprises' (see Box 1) of whom the majority remain in rural areas.

Box 1: Small Enterprise Types Adapted from Grindle et al (1989) and Mead (1994) Survivalists: those who have no choice but to take up the income-generating activity because they have no other source of livelihood. Income provided may be povertyline or even sub-poverty-line. Most 'entrepreneurs' in LDCs are of this type. Trundlers: those whose enterprise turnover is roughly static and who show no great desire or no great capacity to expand. Income provided will be enough to meet basic needs. These form the second-largest group of small entrepreneurs in LDCs. Flyers: those true entrepreneurs who have taken up enterprise because they see opportunities for growth. Income levels may meet more than basic needs, and enterprises may graduate to the medium-scale category. Only a very small proportion of LDC small entrepreneurs fall into this category.

Poor entrepreneurs are often cut off from access to information relating to supply of enterprise inputs and demand for enterprise outputs. Sometimes this is because of geographical isolation, but it also arises from lack of social capital a constrained social network of information providers. Social capital (crudely, "who you know") is increasingly recognised as a key element in building and sustaining enterprise-based livelihoods (Barr, 1998; Fafchamps, 1999). Much emphasis has been placed on improving the flow of information to poor entrepreneurs relating both to supply (World Bank, 1998) and demand (Van Crowder, 1997). However, that improvement must recognise the particular role that income-generating activities play for the poor relating more to vulnerability-reduction than to enterprise growth. Information for enterprise growth and development. Information may take on quite a different role in the context of the development of flyers and potential flyers. These are typically located in urban areas within sub-sectors experiencing overall growth. Such enterprises have a far greater resource base than that available to poorer enterprises, and they seek information specifically for the purposes of enterprise growth. They are also likely to be better placed to make use of information provided.

1.13 Data, Information and Knowledge: The Information Chain

If information is a key resource for enterprise development, then it must be better understood. Yet 'information' is used in many different ways; usually as a generic term that ignores complex underlying processes. Moving from this to a better understanding requires a more holistic view that gives a better sense of the differences and relationships between data, information and knowledge. Data can be described as raw, unprocessed, information. Most 'information' that is acquired by an enterprise will be in this unprocessed form as data. For example, unprocessed financial data in the form of invoices; delivery notes and cash slips; completed stock sheets and inventories; or verbal feedback from customers concerning the quality of products and services. In a formal sense, data can only be considered as information when it has been processed in some way and made useful to its recipient. Potential examples of information could be: a summary of a range of customer responses to a new product or service; the organised and correctly-entered contents of a cash book, expense ledger or debtors' book; or a cash-flow forecast based on data obtained from previous records and future projections. Knowledge is distinct from both information and data. New knowledge is gained through the ability of a recipient to understand information and adapt it to their existing knowledge base. This means the recipient must have the capacity to understand and assimilate information in a way that is useful to the enterprise. Enhanced knowledge is likely to be the most valuable end product of the accessing and processing of new data. Examples could be new knowledge in relation to market trends, new technology and skills, or better financial management that is likely to enhance the business when successfully applied. By delineating data, information and knowledge, information can be conceptualised as part of a human-centred process that will have both supply and demand components, and not as a freely-available commodity. Information can be considered, not only in terms of access and content, but as indicated in Diagram 2 as part of an information chain that will incorporate issues of access, assessment and application; and usability for decisions and actions. This therefore represents a modified version of the CIPSODA processes outlined above. The role of information can be assessed throughout the chain and not just in relation to access and content. Such a holistic view would, for example, be more inclined to assess the impact of information for enterprise on the basis of the outcomes of information provision rather than simply on the basis of ability to access data. Diagram 2: The Information Chain

Adapted from Heeks (1999)

In order to function, a dynamic model for access, assessment, application and action will require overt resources both tangible and intangible. Tangible resources will include a physical infrastructure and the necessary access tools. These may range from the simple use of a pen and paper or a means of transport to a telephone or a computer/modem. Intangible resources, which form a major component of any information system, will include money and skills. A separately-highlighted component of overt resources are action resources those needed to take action on the data/information provided. It is not only overt resources (physical and organisational) that need to be in place for the information chain to function, but also embedded resources. These are more difficult to define, but include human-centred needs such as trust of the information source and the necessary motivation to interact with and use the information system. Pre-existing knowledge is a further resource requirement for successfully assimilating new information, drawing upon a relevant existing knowledge base. So, too, is having a sufficient level of empowerment to actively participate in using an information system. In investigating the role and provision of enterprise information, the information chain must be a focal model. To date, there have been far too many simplistic assumptions that delivering data to enterprises is enough. As Diagram 2 indicates, this is by no means the case data delivery is just a first step of several, each of which requires the presence of resources in short supply in many African enterprises.

1.2 The External Information Needs of Enterprise

Enterprise information is either internally- or externally-generated. Internallygenerated information is accumulated within the enterprise derived from the existing enterprise knowledge base, or gained as a result of the competencies, skills, traits and abilities of the enterprise owner or enterprise employees, incorporating financial, technical and managerial data. Most market-related information, however, will be externally-generated: information relating to market price, product quality requirements, existing and potential customers, sources of finance and new innovation, for example. The relationship between internal and external information is one of constant interaction and fluidity. UK-based research, for examples, shows many SME

managers make no internal/external distinction, focusing instead on the business function or concern to which information relates (HERTIS, 1994). Nevertheless, the distinction is still of value, not least because the role of ICTs is potentially quite different for external compared to internal information. Although both internal and external information are included in the research reported here, the primary focus has been on external information since it was felt a) that this plays a more important role in constraining/enabling enterprise development; and b) that there is greater potential for ICTs to handle external rather than internal information. The content of externally-generated information can be categorised primarily in relation to business inputs, output markets, and the enterprise environment and schematically represented as shown in Diagram 3. Diagram 3: Areas of External Information Content for Enterprise

Adapted from Heeks (1999)

Of course, external information needs are likely to differ depending on the nature of enterprise and its environment. Informational differences between survivalists, trundlers and flyers have already been noted above. Examples of other variations include:

Lifecycle stage: start-ups need basic locational information about input supplies; existing enterprises need information on supply improvements. Market: enterprises serving export markets will, fairly obviously, need different information sources and content to those serving domestic markets. Likewise, those dependent on a single customer (e.g. government) need more focused information than those with a diversified customer base. Formality: formal sector enterprises need information about laws and regulations far more than informal sector enterprises. Location: rural enterprises will tend to have more localised information needs than urban enterprises.

Given the focus of this research on information needs, and on understanding the relationship between information, enterprise and environment, further investigation of external information systems was warranted.

1.21 Enterprise Information Networks

Understanding the role of external information and the enterprise environment in enterprise development demands a network approach to link sources and recipients.
"When talking about networks of enterprises we do not use the term to denominate any specific form of inter-enterprise organisation. Rather we see the network metaphor as a tool to investigate the dynamic interaction between the enterprise and its environment, in whatever form it may take." (Pedersen and McCormick, 1996:5)

The network model illustrated in Diagram 4 puts the entrepreneur at its heart, as the central hub of an enterprise-specific set of information networks. The entrepreneur fulfils the role of searching out and identifying new market opportunities; of managing and co-ordinating information relating to the allocation and efficient use of resources; and of collecting and utilising information concerning product, process and management innovations. Information channels and sources will be established through the contacts, relationships and linkages formed with customers, suppliers, collaborators and competitors. Diagram 4: Schematic Representation of Small Enterprise Information Networks

Three particular types of enterprise information network will be described here in more detail.

Business networks. Business networks will be largely defined by contractual relationships, which involve transactions between enterprises. Enterprises will form relationships with others, which will give rise to information flows, through three forms of linkage:

Information flows through forward business linkages: relationships with customers or potential customers, and the marketing of final goods and services. Information flows through backward business linkages: relationships with the suppliers of inputs, including finance, materials, labour and technology. Information flows through horizontal business linkages: with established competitors or new market entrants, supplying home-produced or imported products and services. Also through collaborative relationships with similar firms producing similar products or services.

Social networks. Understanding the small enterprise universe in terms of networks emphasises the importance of the social interaction that underlies all economic activity. The advantages of building networks for small enterprises have been identified in a number of studies. Strong social networks help to reduce market uncertainties and build trust in economic relationships. In LDCs, this is considered to be of particular importance due to the lack of effective institutional, regulatory and legal bodies for mediating between economic actors, particularly in the informal sector (Fafchamps, 1999). Problems of late payment, poor delivery, quality control, bad debts, etc, demand flexibility and understanding within the system of economic exchange. Hence the need for strong social networks to regulate such market imperfections (Barr, 1998). Social networks not only embody a regulatory function but also, and most critically, a means of market access. This is particularly so with regard to access to information for enterprises, where referrals through social contacts are found to be critical for accessing market information leading to new business opportunities (Fafchamps, 1999). Enterprise information networks are defined by a number of social characteristics which are more prevalent in LDCs (Grindle et al, 1989). These include:

The tendency of micro/small entrepreneurs to have multiple occupations, which may include a combination of formal and informal employment, and which may vary seasonally, from week to week, or day to day. This may provide them with a broader social network than might be suspected from use of single-occupation models. A large overlap between family networks and enterprise networks. Enterprises, as well as providing employment and paying wages to the immediate family, may also provide a resource upon which the extended family can draw in times of hardship. For good or ill, information networks for poorer enterprises therefore tend to rely strongly on family connections. A tendency for enterprises to be confined to markets defined by specific social 'territories'. These are likely to be more strongly defined in developing countries according to non-market parameters, such as family lineage, caste,

class, or village allegiances. Again, information tends to run within, rather than across, these social fault lines. The existence of patron-client links, with the entrepreneur having a strong client relationship to a particular local patron. The existence of this linkage may preclude development of some alternative linkages and may also constrain the nature of information delivered to the enterprise.

As noted, economic and social networks in less developed countries are likely to overlap. Hence, African enterprise information networks will be shaped by both traditional and modern social structures, which themselves will be defined by complex interactions between family and ethnicity, region and class, etc. This is but one example of a broader issue the need to recognise LDC enterprises, especially small enterprises, as social institutions. Imposing Western-inspired business models and business assumptions on these social institutions can often lead to problems, and this will apply equally in the information and ICTs domain. In information terms, it may make more sense to conceptualise most African small enterprises in social rather than business network terms. Institutional networks. Institutional information networks include those contacts, relationships and linkages that are established between enterprises and governmental, non-governmental and private institutions. Institutional information networks can be considered to fulfil three separate purposes (Briscoe, 1995):

Regulatory networks which may give rise to either an enabling or a restrictive environment for enterprises. Information will largely be that which is generated by central/local government bodies, or possibly regional or international organisations concerning trade relations, licensing, business/labour law, etc. Promotional networks promotional activities carried out on behalf of enterprises, which may be conducted by governmental, non-governmental or, in some cases, private institutions. These activities will create the potential for exchanging large amounts of information through the provision of human and technical infrastructure, the research and publicising of economic opportunities, the formation of business associations or professional bodies, and the organisation of marketing or promotional events such as trade fairs. Assistance networks direct assistance in the form of preferential purchasing, financial assistance, marketing, skills enhancement, etc. These networks may include both commercial and non-commercial organisations. At one end of the spectrum the networks cover commercial banks and money lenders providing commercial loans and assistance. At the other end, they cover government bodies and NGOs providing non-commercial finance and other non-fee paying assistance.

One characteristic of many small enterprises in LDCs is the absence of strong institutional information networks given the informal sector location of much enterprise activity. Of those networks that do exist, assistance networks are likely to be most prevalent; regulatory networks least prevalent.

1.3 Understanding Enterprise Information Networks

Enterprise information networks are clearly critical to the delivery of information to small enterprises in Africa. We need to understand them further and will do so from three perspectives: that of transaction costs; that of formal/informal information; and that of the information chain.

1.31 Imperfect Information, Transaction Costs and the Enterprise Environment

Theories of imperfect information have been influential when considering the relationship between enterprises and their economic environment. These theories give rise to a number of important ideas concerning the role of information in the development of the enterprise:

First, information about future events is inevitably uncertain. Enterprises are required to make decisions in the face of uncertain or incomplete market knowledge. Uncertainty will be exacerbated within markets that are information and knowledge poor. The element of risk in business decision making is likely to be higher when there is little information about patterns of demand or consumer behaviour, little infrastructure for the advertising and promotion of products and services, and the lack of a marketing culture. Second, the information held by parties to a transaction is not likely to be equitable. Inequality of access to information between buyers and sellers will also be more pronounced. This may be the result of information scarcity or the inability of economic actors to acquire such information, arising from both a lack of business training and inadequate consumer education. Third, individuals (both producers and consumers) have limited ability to process complex market information and are unlikely to come to optimum decisions regarding the allocation of resources.

What does all this mean for African small enterprise? It means that small enterprises operate under conditions of immense uncertainty. Not only do the risky conditions noted above apply, but they are exacerbated by further political, economic and social volatilities. To try to reduce such uncertainties, it would be natural for entrepreneurs to have a great demand for information in order to try to reduce decision-making risks. Whilst there undoubtedly is a thirst for information, we must note other factors many of the uncertainties are unknowns about which data cannot be gathered; informational inequalities mean much data is held by distant institutional actors and is inaccessible; processing limitations may make data unprocessable even if gathered. The result is that enterprises in Africa have to seek non-informational strategies in order to address uncertainties. These include diversification/multiple occupation, an unwillingness to move from a social transaction to a business/market transaction model, and a generally risk-averse approach to enterprise. ICTs may have some effect here, but not a great one, and their introduction must take account of environmental uncertainties, inequalities and risk aversion.

1.32 Formal and Informal Information

In understanding external information systems and enterprise, the distinction between formal and informal information must be discussed. Analyses of the role of information in enterprise development have been mostly concerned with formal content, sources and channels: information that is recorded and available in a readable form. This might include technical information from a manual, market information from a market report or needs survey, official government information, or online information from a database. Informal information is that which the entrepreneur sources from his/her network of personal often local contacts such as customers, suppliers, other business contacts, and friends and family members. Informal information is typically subjective, unstructured and unrecorded. It will also be of variable quality, sometimes taking the form of rumour or hearsay. Evidence shows that micro/small-scale entrepreneurs favour information that is obtained from within their immediate or close environment, from informal sources that exhibit a similar outlook and aspirations to themselves (Gibb, 1992; Van Bussell; 1998). In LDCs, informal support networks, acting as sources of business information and business advice, are found to be of considerably greater importance than formal purposive support services such as those provided through governmental or nongovernmental business assistance (Marsden, 1990; Briscoe, 1995; Sarder, 1995). As noted above, social networks take precedence over business networks, and business networks may take precedence over institutional networks. Studies show that formal information provided from institutional sources is particularly inappropriate for meeting the needs of small-scale entrepreneurs. Large government- and NGOfunded enterprise-support institutions have thus been criticised as poor information providers. Smaller private sector business membership organisations such as small business associations and local chambers of commerce have been considered more effective information intermediaries although their effectiveness in assisting the informal and microenterprise sector has still been extremely limited (Levitsky, 1989). For the latter it is social or, to a lesser degree, business networks that act as the main information delivery channels. Informal information is particularly significant in less developed economies for the following reasons:

The lack of a formalised information infrastructure in most LDCs, which relates to the continued prevalence (and importance) of the oral tradition and the lack of a formal information and documentation culture. An overemphasis on confidentiality and secrecy, particularly within state-run institutions, and the fact that the importance of reliable information for attaining development goals has only recently been acknowledged (Alemna, 1998; Adam, 1999). The lack of a modern communication infrastructure and the lack of capacity (education and skills) to assimilate formalised information. The predomination of informal sector economic activity in terms of employment and number of enterprises economically active which results in

the identified high degree of overlap between social and enterprise information networks. Reliance on informal information sources, however, may have its limits. For 'flyer' enterprises that wish to develop and possibly grow in size, reliance on informal localised information, although still essential, may also become an inhibiting factor. Flyers may wish to access formal credit facilities; they may want to expand their market reach beyond their immediate locality or they may wish to access modern technology and training. It may be necessary to look further afield for raw materials and other business inputs; and they will have to take greater account of the legal/regulatory framework within which they are operating. All of this requires movement beyond the confines of informal information. Informal information networks can also fail poor/disadvantaged entrepreneurs. Informal information is constrained and insular if the entrepreneur's social and business network itself is small and knowledge-poor. It will therefore restrict the quality and range of decision-making. This will be particularly felt by enterprises in remote areas that lack a basic communication infrastructure and transport links (Barton, 1997).

1.33 Resource Constraints within Enterprise Information Networks

A number of resource constraints exist within enterprise information networks that have a particular impact on small enterprise. Some of these are discussed below using Diagram 2's information chain as the framework for discussion. Lack of supply of formal data. As just indicated, good quality formal market and non-market data is lacking in most LDCs. This includes externally-generated data provided through governmental, non-governmental and private institutions; and internally-generated data provided from within the enterprise sector itself. The lack of formal data within LDCs reflects the lack of well-developed institutional sources, including a lack of:

Private sector business services for data provision, such as market data and business statistics. Effective business associations co-ordinating the provision of data within subsectors. Professional organisations covering technical and commercial disciplines. Public data sources serving business needs, such as public libraries.

There are also inefficiencies in the supply of official data held by government bodies. Enterprises themselves generate large amounts of data that could potentially have market value. Data can be made available at a very simple level, through the distribution of a business card for example, or at a more complex level through the publication of annual reports and accounts. Other ways in which enterprises generate formal data include: through official sources, by filing tax returns, completing official registration forms, or by completing census or other official questionnaires. Formal data could finally be generated by making available financial statements and reports, by producing marketing data in relation to products/services offered, by advertising or

promoting products/services through formal channels, and by producing product lists, price lists or technical manuals. In the informal sector virtually no formal data of this type is generated by the enterprises themselves. Even as they grow and generate more data, most LDC small enterprises (formal or informal) fail to generate much formal data. This makes it hard to build a picture of small enterprise activity. This absence hits not just statistical bureaux and academic researchers; it also hits other small enterprises and their enterprise information networks, denying them ready access to even a basic formal picture of small enterprise activity in their area. As enterprises seek to grow, this absence of formal data may become a constraint of increasing prominence. Lack of information-handling capacities. The vast majority of small enterprise owners and workers within LDCs have low levels of education, are often illiterate, and often lack the technical, managerial and business networking skills and experience that are necessary for successful entrepreneurial activity. The problem of insufficient human capital is increasingly seen as central to understanding the slow progress of economic development in many African countries. Lack of education is often suggested as the primary obstacle to economic improvement, and there is no doubt that levels of literacy and of primary and (particularly) secondary school enrolment remain low. Information-handling capacities are required throughout the information chain. For information access, entrepreneurs require knowledge about the whereabouts and the accessibility of sources of data. They require the skills to search, acquire and then select the most useful data, and they require the necessary communication infrastructure and access technology. A wider range of knowledge and informationhandling skills (possibly ICT skills) will be required for data processing, for the application of information within the business, and for the subsequent use of information through business decision making and action. Resource inequalities for access. Although data may be available, it may be difficult to access for different sections of the small enterprise community. Lack of economic means to access data sources will be felt especially by survivalists due to lack of disposable income for purchasing the means of access through limited transportation and ownership of modern communication tools. By contrast, flyers may not suffer such a problem. However, it is probably the rural-urban divide that introduces greatest inequalities since most formal data sources are urban-located. Geographical isolation may give rise to lack of knowledge about data sources, which may be insufficiently publicised. Enterprises that are geographically and economically isolated may also lack effective business information networks such as membership of business associations and chambers of commerce that give access to formal data. Finally, access to the national ICT infrastructure and the data it carries will vary considerably according to geographical location and economic means, both of which will prejudice rural micro/small enterprise. Lack of assessment and application resources. For the vast majority of small enterprise owners in Africa, there may exist a range of additional socio-cultural

barriers that will not only inhibit their ability to access, but also to assess and apply data generated from external information networks where that data arises from very different socio-cultural environments (Panos, 1998; World Bank, 1998; Heeks, 1999):

Such externally-provided data is likely to lack 'source proximity'. The sources of most available (digitised, for example) data will be extremely distant, both geographically and culturally, from African recipients. Such externally-provided data may be presented in ways that reflect the environments and the values of its creators, and may lack any embedded characteristics of direct relevance to users in very different socio-cultural settings in Africa. There will be a lack of trust and security. The evidence shows that business owners place greater value on information received through personal contact, and are able to build up greater trust in personalised information channels and sources. Conversely, formal information received from remote sources (possibly in a digitised form) is generally non-personalised and distant, and lacks the security necessary when making decisions that may involve an element of risk. Enterprises will lack the relevant knowledge to make sense of new information. The knowledge of most recipients will be restricted to their local environment. In order for business owners to access, to assess the value, to select and to process distant external data it will be necessary for them to have previous knowledge about the contexts and environments from within which the data has been generated. At present many African small entrepreneurs lack that knowledge.

Lack of decision-making and action resources. Information supplied through formal or informal information networks has little value unless it informs decision making (choices) and gives rise to actions and outcomes. This implies that information access and provision should not be considered in isolation from other necessary resources for action. For example, information about new suppliers or potential customers is of little value if a business has no working capital to purchase material supplies or to invest in increased production for new customers. This is a reminder that information is a necessary resource for poverty alleviation and for enterprise development, but by no means a sufficient one. It is also important to realise the extent to which information and resources are intertwined. Information should not be considered as separate from more fundamental resources for action, such as money and skills. This is also a reminder that effective information provision needs to form part of a multi-dimensional and integrated approach to enterprise development. It reinforces the earlier observation that information cannot be seen in isolation from other resources relating to business inputs and output markets (World Bank, 1998; UNDP, 1999).

1.4 Drawing Initial Conclusions About ICTs and Small Enterprise: Promise and Problems

ICTs can provide opportunities for enterprise development within LDCs. New opportunities for enterprises with digital connections will include information access and sharing on a global scale, opportunities for participation in online discussion groups and other forums for the exchange of ideas, expertise and experience. Digital networking is also seen as helping facilitate global and regional electronic trade and commerce, and as providing opportunities for distance education and training for business owners and employees (Dzidonu et al, 1998; Oshikoya and Hussain, 1998). Digital networking may help to overcome many of the problems of geographical isolation which are felt in LDCs, giving enterprises the opportunity to communicate with commercial contacts regionally or world-wide. Businesses can also obtain commercial, technical, product or service information directly relevant to their business area from informed and specialist sources. A significant weakness of small enterprises in LDCs is their lack of ability to access business networks and form the necessary forward, backward and horizontal linkages that give rise to both information channels and potential long-term contractual relationships. These enterprises also suffer from weak local information support structures which results in a business environment that is information poor. It is suggested, therefore, that extending ICT-based linkages further afield may overcome the lack of information exchange taking place locally. It is further suggested that such networking will facilitate electronic trade opportunities for small and medium-scale exporters or for enterprises that have not previously traded across borders. The main argument for increased trade through electronic commerce is the potential for reduction in transaction costs. The costs of personal interaction may be reduced through messaging systems, and possibly video links given sufficient bandwidth. Documents such as standard quotations, purchase orders and invoices can be exchanged through electronic data interchange, and payments can be made through electronic bank-to-bank transfers. Goods and services can be advertised and marketed over the Internet using dedicated firm-based Web sites, specialist marketing intermediaries or Web-based national trade promotion organisations. Additionally, new business opportunities can be opened up by locating tender opportunities and obtaining new customers via the Web. For goods and services that can be delivered by electronic means information, software, published material, images, music, video, etc electronic networking also provides a means of transportation (InfoDev, 2000). Poor communication links have been a major obstacle to African exporters. For example, the costs of travel, poor document delivery services, lack of ability to market and advertise goods and services, and lack of ability to locate potential customers. All of these obstacles could, potentially, be overcome through electronic commerce especially in the sphere of tradable services. However, the reality will be more problematic, particularly for the smaller and more rural enterprises. In addition to pointing to the overwhelming issue of getting access to ICTs, the information chain is a reminder of other difficulties.

There is an immediate concern that the content of ICT-mediated information such as provided through CD-ROMs, Web sites, training packages, etc will lack source proximity. It is likely to be compiled by people and organisations that are remote from the environments within which the African small enterprises operate, and it is unlikely to be tailored to enterprise-specific information needs. As a result it will easily be misunderstood or unusable. Information provided from remote sources may also lack the trust, confidence and security that is gained through personal business networking and interpersonal communication. It is also argued that small entrepreneurs will generally lack the wider knowledge and experience necessary to effectively assess, apply and act upon ICT-mediated information (Duncombe and Heeks, 1999). This position is reinforced when the lack of local (ICT-based) information content is considered. Most digital Web-based information about LDCs is compiled and published externally by large companies, donors, NGOs and other research and development organisations. At present there are few local organisations (both public and private) producing detailed Web-based information content that would be of direct relevance to local communities and enterprises in Africa. In sum, then, whilst the promise of ICTs is considerable, the reality is likely to be far more problematic. Even assuming one could connect up a 'digital pipe' to every African small enterprise, would relevant data be found to deliver down the pipe, and would the entrepreneur be able to use that data if it could be found? From the understanding provided by the information chain and the social perspective on African enterprise, the idea that 'wiring Africa' will lead directly to development appears nave in the extreme. However, theoretical perspectives must be informed by the primary research results that are reported later.

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