2025 Broadband Advocacy Target 6
GET MSMEs ONLINE
By 2025, improve connectivity of micro-, small- and medium sized enterprises (MSMEs) by 50%, by sector
The connection of Micro-, Small- and Medium-sized Enterprises (MSMEs) with broadband will increase their competitiveness and allow them to participate in the global marketplace where online business transactions are increasingly the norm.
In 2018 when this target was established, these goals were considered particularly ambitious, calling for a 50% increase in broadband connectivity in MSMEs by sector. For example, a sector in which MSMEs are 80% unconnected in 2018, will have only 40% unconnected by 2025. However, since the onset of the COVID-19 pandemic, MSMEs have experienced extreme consequences, with 1 in 4 being expected to shut down due to the crisis.
Digitalization can both give MSMEs a competitive edge during normal times and enable them to better cope with the increasing challenges brought by the pandemic and strengthen their future resilience.
However, MSMEs face several challenges in broadband adoption:
- availability of necessary technologies to digitalize (high-speed connectivity in urban and rural areas) and suitable digital tools and services;
- capacity of SMEs to digitally transform, when it comes to financial resources and time (and the pandemic has deepened these constraints); and
- capability of SMEs to gauge, plan, implement and optimize their transformation through digital skills
This target has become particularly relevant due to the pandemic. Many MSMEs, particularly in low- and middle-income nations, were caught off-guard following the introduction of quarantines. With no broadband Internet access, they were unable to pivot swiftly to online operations to sell products and services.
Connectivity data disaggregated by enterprise size is widely available for high-income nations, although not always for micro enterprises. For most low- and middle-income nations, even aggregated data on total enterprises with Internet access is not available, let alone by sector. Hence it is difficult to gauge the severity of the problem. The nature of the connectivity is also important. A one-person micro enterprise might find having a smartphone with wireless access sufficient to carry out operations, particularly for social-media based online selling.
A survey of informal enterprises in nine African countries found low levels of ICT use. Use of the Internet for business purposes was 7 per cent on average ranging from 24 per cent in South Africa to 1 per cent in Rwanda. Computer ownership is also low with over 90 per cent of businesses surveyed in Ghana, Kenya, Mozambique, Nigeria, Rwanda, Tanzania and Uganda reporting not having one. Most cited not having a need for Internet access or computers in their business. A UNDP survey focusing on MSMEs in Kenya revealed that they were adversely affected by the pandemic, with one out of every 10 enterprises surveyed indicating a shutdown of their businesses due to the pandemic. However, MSMEs that have higher digital maturity reflected lower levels of negative impact on income (Gender parity is deemed achieved when the gender parity score, defined as the female percentage divided by the male percentage, stands between 0.98 and 1.02.).
Use of the Internet for business purposes, information enterprises, Africa
Source: RIA After Access Informal Business Survey Data 2017