[Column] Ndiritu Muriithi: Need for information technology knowledge for small businesses
Kenya has taken a leap towards recognition of the importance of the informal sector by publishing the first comprehensive survey on the industry.
The Micro, Small & Medium Establishments Basic Reportcompiled by the Kenya National Bureau of Statistics provides vital data for policy makers, researchers and investors interested in the sustainability of small businesses that contribute a third of our GDP and employs an estimated 15 million people. In fact, the sector employs more people than the formal sector.
Technology has become embedded in business operations therefore the report would not have been complete without a chapter on use, gadgets and knowledge of Information Technology (IT).This chapter points to knowledge gaps that create opportunities to improve the sector and a ready market for vendors of IT hardware.
It is curious the majority reported they don’t use ICT because it is not needed (43.1%), or that it is not applicable to their businesses (34.5%). Curious because from a policy point of view this flies in the face of the conventional wisdom that ICT improves productivity. If business owners believe ICT is not adding value, it stagnates productivity, competitiveness and innovativeness.
But if you are thinking businesses don’t use ICT, think again! According to the survey only 2 per cent of the respondents were found not to be using any form of ICT at all. Though most of these businesses interact with technology, including using mobile phones for example to carry out MPESA transactions, their first response to their use of ICT in business was no interaction, begging the question;- how is it that businesses don’t find ICT useful yet it’s part of operations?
A likely explanation for this “not applicable finding” could be that the owner does not connect a particular ICT gadget to its use in their business.
This should interest providers of training and non-financial support services to small business. A new area of training to demonstrate how to apply and get value out of ICT is needed urgently as shown by the finding that 76.7 per cent of the business are reported as not receiving any advice.
Where advice is received it comes from other MSMEs (4.8%), salesmen (4.5%) and publications (6.5%). Government institutions provided technological advice in only 1 % , a poor show for the Kenya Industrial Research Development Institute and the Kenya Industrial Estates, two of Government agencies responsible for technology advice to businesses.
Common ICT gadgets - mobile phones, tablets, computers, photocopiers, radio, printer, digital/video cameras, fax and television were surveyed. About 80 per cent of those surveyed have a mobile phone, out of which 41 per cent are using it for business.
A bit surprising however, is the prevalence of radio as a business tool, reported in 15 percent of businesses. Whereas in consumer surveys and opinion polls it is often clear that radio is the main source of information, the finding that it is also the way they receive business news is novel.
Computer penetration is 9.5 per cent, while tablets exist in only 1.2 percent of the cases, a market size of about 170,000 for software vendors. But given the increasing prevalence of smart phones the actual size could be far higher.
A significant 10.5 per cent do not have any of the gadgets due to high cost (4.3 percent), and lack of electricity (4.5%) although this could come down due to reduction of prices and increasing electricity connection.
On payments, over half do not use mobile money applications creating opportunities for players suggesting room for growth. Use of (Safaricom) paybill or till number was reported in 29 per cent pointing to a gap for other mobile virtual network operators to provide payment solutions.
The findings in the SME book place the informer sector on a growth trajectory that should be fully exploited to unlock its massive potential to create wealth.
Ndiritu Muriithi is the Chief Economist Metropol Corporation
