- Written by Dr Francis Odhuno Dr Francis Odhuno
Like many countries around the world, Small and Medium Enterprises (SMEs) are an important factor in the Papua New Guinea (PNG) economy, especially in terms of production and employment. So much so, that increasing the number of people employed by SMEs to 2 million jobs and the sector’s contribution to at least 50% of the country’s Gross Domestic Product (GDP) by 2030 has become a hallmark of the Government’s promise of empowering its people, with a view to taking back their country.
To achieve these ambitious targets, the Government, in its SME Policy 2016, planned key interventions, including information and communication technology (ICT) support systems and tools for SME business development across the country. However, before such intervention measures are implemented, it is important for the policy makers to have a rough idea whether using any form of ICT, such as computers, fixed land line and mobile phones, or the internet and websites, are likely to contribute to the success of the country’s SME sector.
What ICT products can contribute more to the success of SMEs in PNG?
In order to provide indicative answers to this question, Francis Odhuno and Diana Ngui analysed data from a survey of 1,117 SME business owners and managers in urban, rural and remote locations across the 22 provinces in PNG. The survey was conducted by Tebbut Research as part of the World Bank-supported SME access to finance project, so a large part of it relate to access to finance. However, responses to other questions put to each SME owner/manager permit the construction of variables related to a broad range of business environment topics including ICT infrastructure.
In theory, the use of these ICT infrastructure may increase competitiveness of SMEs, so they either have to become more productive and grow or become less productive and close down. The empirical examination of the use and impact of ICT resources on the performance of the sample of PNG SMEs suggests three key insights:
- The use of computers and mobile phone is more likely to contribute to growing SME business profits;
- SMEs in the rural and remote places are more likely to develop new products and services if they use landline telephones; and
- Using the internet or website for business is less likely to result in SMEs increasing their product/service sales.
It would seem, therefore, that not all forms of ICT infrastructure are likely to support SME business development and growth in PNG. The Government’s plan to invest in ICT infrastructure and establish information hubs or portals is a good idea; but the benefit of
those portals in terms of allowing SMEs to search the internet or host their websites there is not (empirically) supported by the survey data – perhaps because internet prices are so high in PNG.
On the other hand, extending and ensuring efficient fixed landline telephone coverage in the country’s rural and remote places should be a policy priority as it is more likely to enhance the entrepreneurs’ operational capabilities. But extending mobile phone coverage while also reducing mobile phone airtime charges will also go a long way in contributing to the growth of SME business profits.
In summary, whether business owns or pays to use computers, landline telephones, mobile phones, internet or website for business is not an issue for debate in the 21st Century. And investing in and using various ICT resources may be necessary but not sufficient condition for improving SME enterprise performance – what’s the use of a website if customers or potential customers aren’t going to visit it to find out what’s on offer? Targeting entrepreneurial training is critical, as it will lead to more SME owners and managers understanding the benefits of using various ICT resources, especially the internet and websites for their businesses.
Read full Discussion Paper here.