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The role of ICT
The promise of ICT to contribute to poverty reduction lies in
its power to give the poor access to improved information and
communications. ICT can remove the constraints to obtaining
and communicating information, thus empowering enterprises
and poor people. Utilization of ICT reduces transaction costs
and improves information about new opportunities and
communications with markets within the supply chain.
Specifically, ICT can:
• Provide reliable market access (local, regional and inter-
national) through increased use of affordable
communications (phone, fax, e-mail)
• Improve contact with suppliers and transport links to and
from markets (e.g. through enterprises databases, prod-
ucts and suppliers)
• Inform choices, particularly regarding offers of raw mate-
rials and finished goods, enabling better prices for
enterprises when dealing with traders
• Provide information about available non-financial business
development services (e.g. training schemes, business skills
and marketing)
• Provide direct or intermediated access to business devel-
opment services (e.g. training packages, advice on better
practice)
• Provide access to legal information, including information
on registration, regulations, contract and tax law
• Improve access to information about financial services (e.g.
micro-finance institutions – MFIs).
A value chain model of ICT application
Regarding ICT applications, four direct value chain roles of ICT
could be defined:
•
Value chain core:
using ICT for core operations of the enter-
prise
•
Value chain boundaries:
transactional applications of ICT
used to interface with suppliers or customers; mainly seen
in terms of e-commerce
•
Value chain support:
application of ICT for access to infor-
mation and decision-making
•
Networking support:
using ICT in building networks (cluster
development and linkages to other stakeholders).
ICT roles for livelihood enterprises (see Table 1) will be mainly for
value chain support and networking support (through informal
information systems). Access to ICT can be enabled through tele-
centres or localized business information centres (BICs).
However, ICT interventions for livelihood enterprises should not
be judged solely on monetary impact (as issues of governance).
Environmental sustainability and social benefits cannot be readily
separated from enhancements to their ICT for enterprise
purposes.
Growth enterprises will support all four ICT roles (see Table
1). Therefore ICT is of most direct value to growth enterprises.
They are better placed than others to make use of ICTs, and they
provide a greater capacity to generate wealth, employment,
exports, innovation, and to build a wider range of local and exter-
nal business linkages. However, growth enterprise sectors
(including the ICT sector) will play a critical role in increasing
the volume of ICT critical mass in developing countries. A focus
on ICT sector production of goods and services will emphasize
organic growth – encouraging a step-by-step approach to build-
ing local capacity and partially serving needs of ICT consumers.
Intervention priorities
Following up the role of ICT and its implications described
above, a question that could be raised is: livelihood or growth?
Livelihood enterprises represent the area of greatest needs for
intervention, but ICT-related interventions have greatest effect
on growth enterprises. Whatever the conclusions would be, it
should be recognized that one size does not fit all, and targeted
strategies are required due to the diversified roles ICT plays:
•
Livelihood enterprises:
for these, information is not the crit-
ical issue; there are greater constraints that relate to
markets, finance, skills and motivation. They have the least
capacity to meet information needs, and want to rely
heavily on enterprise support agencies to meet those needs.
They need help in building informal linkages. Therefore
ICT is of limited value.
•
Growth enterprises:
they have a greater capacity to meet
their information needs. They need help in building busi-
ness linkages. Therefore ICT can be of significant value
and they should be the priority focus for ICT interventions.
Growth enterprises are best placed to make use of ICT;
they provide a greater capacity to generate wealth, employ-
ment, exports and innovations.
There are arguments that more focus should be put on demand-
and less on supply-side interventions. In value chain support,
enterprises need more help getting information on demand and
on customers. For value chain boundaries activity needs to stay
customer- rather than supplier-focused. Demand-side inter-
ventions should focus on development of linkages to customers
Photo: Sanjay Acharya/IMAP