ICT has become critical factor in empowering MSMEs in the developing world: LIRNEasia

By: Narinder Kumar, Analyst, CMR India

Recently LIRNEasia (Learning Initiatives on Reforms for Network Economies Asia) along with IIT Delhi organized an expert forum discussion on the impact of ICT on MSMEs(Micro, Small and Medium Enterprises) in the developing countries.

The forum disseminated the findings of two Systematic Reviews undertaken at LIRNEasia for dissemination among the policy makers and change agents, and to bring relevant stakeholders to share their experiences. The forum was conducted at IRD Conference Room, IIT Delhi, on 26th April 2016.

Dr. Ilavarasan (IIT Delhi) in his welcome note introduced the agenda of the forum and explained how the forum is taking forward the inputs from rigorous independent and academic researchers to the policy makers and change agents. He highlighted that participants represent diverse organizations – academia, government, private and non-governmental organizations (NGOs) and hoped to learn from each other’s’ experiences.

Dr. Samarajiva (LIRNEasia) introduced the Systematic Review to the forum. He explained the rigor and applicability behind the process of the systematic review and how it is helpful for policy making.

Dr. Ilavarasan shared the key findings from the systematic review on the impact of business relevant information through networked devices on the micro, small and medium enterprises (MSMEs) in the low and middle income countries. Major impact of the study were:

• Numbers of business calls increase with the longer use of the mobile phones, more than two years;
• ICT usage and possession improve the labor productivity;
• Network devices improve the operational support, strategic development and process improvement, and operational performance;
• After purchase of mobile phones, there is increase in the number of customers;
• Higher ICT expenditure has resulted in increase in turnover; and
• Profits have increased with the use of mobile money.

Dr. Samarajiva examined the mobile phone interventions for improving economic and productive outcomes in rural areas in low and middle-income countries (LMICs). The review focused on two major benefits of mobile phones - impacts due to coverage expansion and access to a phone and impacts due to mobile based services. Major effects of these two factors were:

• The mobile phones improve the coordination between buyers and sellers in hitherto separate agricultural markets, in effect merging them into a bigger market;
• They reduce price dispersion and align supply and demand in the market;
• They have positive effect on direct and indirect labor markets; and
• There is increase in disposable income, household assets and thus expenditure.

He also highlighted the need for presence of enabling conditions to realize the causal linkages between the mobile phones and the benefits. The review also showed that the information services, like SMS based services, reduced price dispersion but the desired impacts were not observed in the extant research.

The experts tried to reason out inconclusive results from the SMS related mobile services. The lack of usage of the mobile users is due to the irrelevant information being received by the farmers. For instance, a sugar cane farmer is not benefited by the SMS on wheat cultivation. Other factors include language, experience in using services, lack of trust on the information provider and inadequate information from the real users. The discussion also pointed out the differences between manufacturing and services sectors in ICT use by the MSMEs.

Panel experts shared the work being done by them. This provided opportunity to network and learn about panel expert’s contributions in the area of ICTs and MSMEs.