The UN Conference on Trade & Development on Wednesday urged governments in the developing world to foster conditions for the greater adoption of Information and Communication Technologies for private sector development. The inter-governmental trade institution said this can be achieved by “liberalising markets to expand and improve network infrastructure and providing legal and regulatory environment for electronic transactions.”

In its Information Economy Report 2011, released worldwide, the Geneva-based UN body also argued that more effective use of ICTs by government programmes to underpin micro and small enterprises (MSEs) would help accelerate job creation and business growth.

The UN Secretary General Mr Ban Ki-moon said that “although some countries are already taking advantage of the close links between ICTs and private sector development, much more can be done to make ICTs a powerful force improving the competitiveness of the private sector.”

The report bemoaned that the ICT dimension is frequently absent from private sector development (PSD) strategies and neither policymakers nor MSE owners in developing countries are harnessing these new possibilities to the hilt. It further said to be successful, ICT-PSD solutions need to factor in both user needs (in terms of what information and other inputs are needed) and possible constraints (literacy rates, aversion to using new tools, scarce electricity and unaffordable user charges and prices).

Involving the private sector in the design and provision of training and advisory services could help ensure that the services offered are fully demand-driven, it said.

Even as the use of computers and high-speed internet has become quite common in MSEs of developed countries, this is “far from being the case in most parts of the developing world, especially among smaller enterprises,” it said adding that the Internet is primarily used by many enterprises in developing world to send and receive e-mails.

By contrast, relatively few engage themselves in electronic commerce and among those that do, it is more often used for placing than receiving orders. In general, it is easier for enterprises to purchase than to sell goods and services online, as the latter might entail creating or upgrading a web presence and restructuring sales and inventory processes.

The report noted that high-speed Internet connections are essential to enable enterprises make full use of Internet-based services and applications. One advantage is the possibility to use Voice over Internet Protocol (VoIP), such as Skype, which is of particular relevance for MSEs, as it is less expensive than traditional telephone services.

The report also highlighted how the rapid expansion of mobile money systems is presenting new opportunities for MSEs in low-income countries to access financial services.

To extract the full benefit, governments need to pioneer new legislation and regulations. It said mobile money deployments have taken off in the past two years.

Citing data from the GSM Association, the report said 109 such deployments had been implemented as of April this year, spanning all developing regions. Only 11 of these are in developed countries. Africa is leading the league with 51 mobile money systems in place and as many as 37 of the deployments are in the least developed countries. There are now more than 40 million users. It said for MSEs banking through mobile phone allows for real-time transfer and the receipt of small amounts of funds at low-cost. They can reduce the costs of processing and administering small loans thereby alleviating a pronounced disincentive for lenders to extend credit to MSEs.

The Unctad Secretary-General Mr Supachai Panitchpakdi, said in a foreword to the report that “Mobile money services promise widespread benefits for private sector development. With appropriate regulation, these services have the potential to contribute to much-improved financial inclusion.”

>geeyes@thehindu.co.in

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