Micro, Small, and Medium Enterprises (MSMEs) comprise the largest share of companies and employees in low- and middle-income countries. They help end poverty, promote innovation, advance economic inclusion, and create jobs. Formal MSMEs employ 91% and 81% of private sector workers in lower-middle-income and low-income countries respectively. Hence, MSMEs are enablers of social and economic development.
Digital connectivity, fixed or mobile broadband access to the Internet, has significant benefits for MSMEs. A report by the ITU and UNESCO Broadband Commission for Sustainable Development Working Group on Connectivity for MSMEs explores the opportunities and barriers of increasing the connectivity of MSMEs.
Connectivity offers various advantages for MSMEs and all the stakeholders involved, including founders, employees, communities, and the economy as a whole. It allows MSMEs to enhance their visibility, gain access to crucial business information, reduce expenses, and improve operational efficiency. By enabling digital connectivity, MSMEs can foster innovation and promote new entrepreneurial ventures that can contribute to economic growth.
A survey of MSMEs in eleven countries in Francophone Africa shows the most widely used digital connectivity functions by the MSMEs are communications with customers or suppliers through e-mail, and marketing and advertising through social media. Although these can help to increase the reach of the enterprise and increase productivity, they are not sufficient to fully benefit from digital connectivity.
Other services that require additional digital technologies, such as cloud storage, creating a website, accessing a platform, and using digital payments are used by only 40% of all the enterprises surveyed and 20% of the smallest enterprises.
There are a number of barriers to overcome in order to provide opportunities for all MSMEs to adopt and benefit from connectivity. These are access to reliable connection and electricity supply, affordability, awareness of the relevance of connectivity, safety and security, and knowledge and digital skills (ability to navigate the Web, use mobile apps, create a website, run applications, engage in online marketing, and develop mobile apps).
Busu Natural Skincare, a micro-enterprise in Kenya that sells products in individual shops and online faces several challenges in using digital connectivity. The company spends between 17% and 19% of its revenues on connectivity, which is not always reliable, with outages that result in downtime. There is a lack of trust in online payments, resulting in the need to use cash on delivery. Further, not all potential customers are online, particularly in rural areas, limiting the size of the accessible market.
MSMEs need to provide safety and security for their customers and suppliers to generate the trust needed to conduct business online. However, MSMEs face challenges in implementing cybersecurity due to the need for trained staff, which can be expensive. Well-enforced relevant laws are needed to provide an incentive and framework for additional consumer protection.
Mobile use and its evident gender gap
The device used for internet connection widely depends on the size of the enterprises. The smallest enterprises are more likely to use mobile as opposed to fixed broadband as their main form of connectivity while the largest are more likely to use fixed broadband with a personal computer, alongside mobile connectivity and devices.
A report by the GSMA studying micro-entrepreneurs’ use of mobile phones for business in ten low- and middle-income countries (Ethiopia, Ghana, Kenya, Nigeria, Senegal, Bangladesh, India, Pakistan, Indonesia, and Guatemala) finds women micro-entrepreneurs are less likely than men to use mobile internet for their business.
Most male and female micro-entrepreneurs own a mobile phone and use it for personal reasons in all survey countries. Gender gaps in mobile phone ownership are evident among male and female micro-entrepreneurs in all countries except Ghana. Mobile phone ownership remains a key barrier for women microentrepreneurs in Ethiopia, India, and Pakistan.
In Ethiopia, only 51% of women micro-entrepreneurs own a mobile compared to 74% of men. Phone borrowing is also common with 23% of female micro-entrepreneurs and 15% of male micro-entrepreneurs reporting using a mobile phone for business without owning one.
There is a large drop-off in every survey country from personal to business mobile use, especially for women. Even when they already use a mobile for business, women often use it for fewer activities than men in all countries except Bangladesh and Indonesia. In almost all countries, women micro-entrepreneurs are less likely than men to be aware of the more popular uses of mobile for business beyond communication, such as marketing, promoting or advertising their business.
The main barriers preventing micro-entrepreneurs who own a mobile phone from using it for business are: not having the right kind of phone, preference for cash over digital transactions;
lack of confidence or digital skills; and safety and security concerns, such as theft, fraud, and being contacted by strangers. While these barriers were similar for both male and female microentrepreneurs, women reported them more than men, compounded by social norms and structural inequalities.
Targeted action and multistakeholder collaboration are needed to address the barriers to MSME connectivity and mobile phone usage. It is important to recognize there is no one-size-fits-all solution and women micro-entrepreneurs are not a homogeneous group. Products or interventions that are designed and implemented to reach and support women micro-entrepreneurs with mobile should consider their diversity, their different needs, and circumstances.