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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