{{A special research on E-Business}}
{How is it a solution to SMEs in developing countries?}
For SMEs in developing countries e-commerce poses the advantages of reduced information search costs and transactions costs.
Surveys show that information on the following is most valuable to SMEs: customers and markets, product design, process technology, and financing source and terms.
The Internet and other ICTs facilitate access to this information. In addition, the Internet allows automatic packaging and distribution of information (including customized information) to specific target groups.
However, there is doubt regarding whether there is enough information on the Web that is relevant and valuable for the average SME in a developing country that would make investment in Internet access feasible.
Underlying this is the fact that most SMEs in developing countries cater to local markets and therefore rely heavily on local content and information.
For this reason, there is a need to substantially increase the amount and quality of local content (including local language content) on the Internet to make it useful especially to low-income entrepreneurs.
{How is e-commerce useful to developing entrepreneurs in Africa?}
There are at least five ways by which the Internet and e-commerce are useful for developing country entrepreneurs:
E-commerce facilitates developing country entrepreneurs with the access of artisan and SMEs to world markets.
E-commerce also facilitates the promotion and development of tourism of developing countries on a global scale.
It also facilitates the marketing of agricultural and tropical products in the global market.
E commerce provides avenues for firms in poorer countries to enter into B2B and B2G supply chains.
And it also assists service-providing enterprises in developing countries by allowing them to operate more efficiently and directly provide specific services to customers globally.
{{How can we Empower the Agricultural Sector through Business to Consumer (B2C) E-Commerce}}
The International Federation for Alternative Trade (IFAT) is a collective effort to empower the agricultural sector of developing countries.
It is composed of 100 organizations (including 70 organizations in developing countries) in 42 countries.
Members of the organization collectively market about $200-400 million annually in handicrafts and agricultural products from lower income countries.
{What is the extent of ICT usage among SMEs in African countries?}
Currently the Internet is most commonly used by SME firms in developing countries for communication and research.
The Internet is least used for e-commerce. E-mail is considered an important means of communication.
However, the extent of use is limited by the SMEs’ recognition of the importance of face-to-face interaction with their buyers and suppliers.
The level of confidence of using e-mail for communication with both suppliers and buyers increases only after an initial face-to-face interaction.
E-mail, therefore, becomes a means for maintaining a business relationship. It is typically the first step in e-commerce, as it allows a firm to access information and maintains communications with its suppliers and buyers.
ICT usage patterns among SMEs in developing countries shows a progression from the use of the Internet for communication (primarily e-mail) to use of the Internet for research and information search, to the development of Web sites with static information about a firm’s goods or services, and finally to use of the Internet for e-commerce.
Today, the e-mail is the predominant and most important use of the Internet in developing countries around the world.
However, it’s also considered inexpensive, although imperfect, alternative to the telephone or facsimile machine-.
For example it is inexpensive due to the higher speed of information transmission and imperfect because it does not provide two-way communication in real time unlike the telephone.
Many firms use the Internet to communicate with suppliers and customers only as a channel for maintaining business relationships.
Once firms develop a certain level of confidence on the benefits of e-mail in the conduct of business transactions and the potential of creating sales from its use, they usually consider the option of developing their own Web site.
SMEs go through different stages in adopting e-commerce. They start with creating a Web site primarily to advertise and promote the company and its products and services.
When these firms begin generating traffic, inquiries and, eventually, sales through their Web sites, they are likely to engage in e-commerce.
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What are the main barriers of E-Commerce in Africa?}
Lack of awareness and understanding of the value of e-commerce. Most SMEs in developing countries have not taken up e-commerce or use the Internet because they fail to see the value of e-commerce to their businesses.
Many think e-commerce is suited only to big companies and that it is an additional cost that will not bring any major returns on investment.
Lack of ICT knowledge and skills. People play a vital role in the development of e-commerce. However, technology literacy is still very limited in most developing countries. There is a shortage of skilled workers among SMEs, a key issue in moving forward with using information technology in business.
Financial costs. Cost is a crucial issue. The initial investment for the adoption of a new technology is proportionately heavier for small than for large firms. The high cost of computers and Internet access is a barrier to the uptake of e-commerce
Infrastructure.
The national network/physical infrastructure of many developing countries is characterized by relatively low tele-density, a major barrier to e-commerce. There are also relatively few main phone lines for business use among SMEs.
Security. Ensuring security of payments and privacy of online transactions is key to the widespread acceptance and adoption of e-commerce. While the appropriate policies are in place to facilitate e-commerce, lack of trust is still a barrier to using the Internet to make online transactions.
{How has it helped in empowering women in Africa?}
Women have gained a foothold in many e-commerce areas. In B2C e-commerce, most success stories of women-empowered enterprises have to do with marketing unique products to consumers with disposable income.
{What is the role of government in the development of e-commerce in developing of Africa?}
While it is generally agreed that the private sector should take the lead role in the development and use of e-commerce, the government plays an instrumental role in encouraging e-commerce growth through concrete practicable measures such as:
Creating a favorable policy environment for e-commerce; and Becoming a leading-edge user of e-commerce and its applications in its operations, and a provider to citizens of e-government services, to encourage its mass use.
{{What is a favorable policy environment for e-commerce?{}}}
Among the public policy issues in electronic commerce that governments should take heed of are:
Bridging the digital divide” or promoting access to inexpensive and easy access to information networks; Legal recognition of e-commerce transactions; Consumer protection from fraud; Protection of consumers’ right to privacy; Legal protection against cracking (or unauthorized access to computer systems); and Protection of intellectual property.
{How can governments in Africa use e-commerce?}
Governments in Africa can use e-commerce in the following ways:
E-procurement. Government agencies should be able to trade electronically with all suppliers using open standards-through ‘agency enablement’ programs, ‘supplier enablement’ programs, and e-procurement information systems.
Customs clearance. With the computerization of customs processes and operations (i.e., electronic submission, processing and electronic payment; and automated systems for data entry to integrate customs tables, codes and pre-assessment), one can expect more predictable and more precise information on clearing time and delivery shipments, and increased legitimate revenues.
{{Tax administration}}. This includes a system for electronic processing and transmission of tax return information, online issuances of tax clearances, permits, and licenses, and an electronic process registration of businesses and new taxpayers, among others.
More often than not, the e-commerce initiatives of government are a barometer indicating whether or not the infrastructure supports e-commerce use by private firms. This means that if government is unable to engage in e-procurement, secure records online, or have customs fees remitted electronically, then the private sector will also have difficulties in e-commerce uptake. Virtually, the benefits from e-commerce accrue to the government, as the experiences of some countries reflect.
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