Small enterprises lag in ICT connectivity - UNCTAD

Geneva: Small businesses, especially those in developing and transition economies, are losing out on the benefits of the information economy, UNCTAD's annual update of its data set on the enterprise use of information and communication technology (ICT) showed.

The new data suggested that the smallest companies in particular are less likely to be connected to the internet. While the difference is slight in a highly developed economy such as Switzerland, where 90-98 percent of all companies use the internet, the relationship between size of enterprise and internet use is more pronounced in developing countries.

For example, in Oman, while about 98 percent of companies employing 50 people or more in 2011 were using the internet, only around 10 percent of companies with nine employees or less used the internet.

Because micro, small and medium-sized businesses are significant incubators of innovation, growth and competitiveness, their relative lag in ICT connectivity has important policy implications.

UNCTAD also tracks businesses that have a web site, businesses with access to the internet by type and speed of the connection and business use of the internet and e-commerce.

Although the volume and value of global e-commerce transactions continue to expand, UNCTAD data showed that, in most markets, businesses are generally more likely to buy products than sell them online.

Meanwhile, in many developing and transition economies, most businesses - and micro and small enterprises in particular - are significantly less involved in e-commerce than those in developed countries. Even in relatively developed economies, the proportion of businesses selling their products online is below 50 percent.

In other countries such as Azerbaijan, Egypt, Kazakhstan and Thailand, the proportion of businesses selling online was 20 percent, according to the latest available data, reflecting the potential gains still to be achieved in this area.

Businesses are generally among the first adopters of ICTs such as the internet, computers and mobile phone technology because it helps boost their competitiveness in local and international markets and can be a significant asset to the efficiency and vibrancy of the business sector, which is a key engine of economic growth.

However, businesses are unequally equipped to take advantage of the opportunities presented by the information economy. When looking beyond aggregate figures, small enterprises are much less frequent users of ICTs for internal administration, e-commerce and interacting with governments. Some economic sectors also lag behind.

Measuring information society must be an integral component of national ICT plans and policies and research on ICT trends and impact on development would benefit significantly from improved data quality and availability.

This needs close cooperation between policymakers and statistical offices and among stakeholders in the national statistical system. At present only six African countries report such statistics.

The 2015 issue of the UNCTAD Information Economy Report will be dedicated to an analysis of e-commerce and its impact on developing economies.