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SMEs growth in ICT crucial for innovation — UNCTAD

The United Nations Conference on Trade and Development has said the growth of Small and Medium Scale Enterprises in the Information Communication Technology sector of Nigeria and other African countries is crucial for innovation and the sustained growth of the sector.

It said because of its high technology-intensive and capital requirement, the continent’s ICT sector was being driven by a handful of multinational enterprises and large public enterprises with the pool of Small and Medium Scale Enterprises in the sector only grabbing crumbs.

UNCTAD noted that the participation of SMEs in the sector was undermined by constraints arising from infrastructure and institutional shortfalls that mostly account for high capital and operational costs.

It added that an unconducive policy and regulatory environment fostered monopolies in the sector, which impacted on the potential contributions of SMEs. UNCTAD said the sustained growth of the sector would be impacted if the competitiveness and growth of the SMEs were not encouraged since they were more adaptive to market forces and highly innovative in terms of their products.

In its ‘Economic development in Africa report 2022,’ it stated, that “These key features are essential to the sector’s sustainability and its enhanced potential in effectively supporting the participation of Africa in the high-end value chains through the improved quality and diversity of manufacturing products.”

It added that ICT is a potential driver of structural transformation in Nigeria and other African countries.

According to the UN trade department, the sector grew by 40 per cent between 2015 and 2020, and the growth was largely driven by telecommunications.

It added that inadequate broadband penetration was still slowing down the possibilities of the sector.

UNCTAD said, “In general, ICT remains a potential driver of fundamental structural transformation in Africa, growing at an average of 40 per cent between 2015 and 2020 (International Trade Centre, 2020).

“Notably, this unprecedented growth is largely driven by the telecommunications sector, which has witnessed a surge in mobile penetration across countries. However, inefficiencies in broadband penetration remain apparent at 17.4 per cent, below the 39 per cent) (World Trade Organization, 2016).

“As such, only 10 per cent of the African population have access to the Internet (International Trade Centre, 2020), suggesting fundamental limitations in the utilisation of associated ICT services in improving the quality and diversity of products by most African firms, notwithstanding ICT sector growth.”

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