Analysis of ICT-Access and Usage of Enterprises in Developing countries

case study Palestine

Khalid S. RabayahICT4D R&D Center

Arab American University

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Khalid QalawiICT department

Palestine Central Bureau of Statistics

The impact of ICT on economy is a debated issue; “ Productivity Paradox”

• The Solow Computer paradox: “ You can see the computer age every where but in

productivity statistics”.• Economists like S. Oliner & D. Sichel deny any

significant role of ICT on economy. • SYT Lee (2005): analysis on 20 countries: ICT

contribute to economy in developed and emerging countries but not in developing countries.

• Similar conclusions predicted by Banerjee, Dulfo, Qiang)

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Other researchers demonstrated positive outcomes, while others are

still attempting to understand • Best et al. 2007: Developing Countries with higher access to

telephony enjoyed better services, more competitive markets, growth of non-traditional businesses, etc.

• Grameen Phone initiative in Bangladesh is used by many sources to back optimistic claims.

• Other initiatives in Africa seems to show positive impactsResearchers are striving to explain using mixed arguments• Time lagging • Law of Inertia • Ineffective use “ people are inspired by the technology not its

use”• others 3

This study reports empirically on how business owners perceive ICT in the course of practicing businesses• Overview of Palestinian enterprises• ICT penetration: PSTN, Mobile, media technologies,

Computer and Internet, advanced ICT technologies; LAN, WAN, Website, E-commerce, security, … etc.

• ICT workforce and literacy• ICT expenditure• Rational behind not using ICT• Interpretation and modeling of ICT usage by enterprises

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The survey represents a true sample of the business sector and deals with

many aspects of ICT usage • 2,966 enterprises, covering all activities and sizes. • Tool: Extensive survey designed by experts in ICT, business and

statistics, with over 60 questions. • a team of 30 persons participated, managed by PCBS (

http://www.pcbs.gov.ps), throughout 2008. • Survey embarked upon: ICT penetration, ICT usage, Future

prospects, and Expenditure • Analysis and reporting: ICT4D research center @ Arab American

Univ.

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90% of all Palestinian enterprises are unofficial tiny enterprises, 2/3 have no employees, 57% of

are retailers

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Penetration index: number of (PCs + laptops + PCs with Internet connection + printers + copiers + scanners + TV + Satellite receiver + fixed phone + mobile + fax + digital camera + software packages + servers + video conferencing

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ICT penetration is strongly correlated to the enterprise size

Mobile penetration is almost flat, Internet is a function of enterprise size. Results in agreement with 14 African

countries (E-Access Africa, 2007)

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Penetration levelEmployment Size

Total0 - 4 5 - 9 10 +

Fixed phoneAfrican Countries 23.6 58.1 83.0 51.2

Palestine 39.3 66.6 88.3 42.9

MobileAfrican Countries 82.9 83.3 83.7 83.3

Palestine 61.8 78.0 78.2 63.5

Fax African Countries 4.4 25.5 57.6 26.1

Palestine 9.2 38.8 80.5 13.7

For enterprises with 10+ employees, computer Usage, Internet Connection, and Website Ownership are in

line with International records

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Majority of business owners see no need to use computers or to connect to Internet.

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Majority of Owners see Internet as communication tool and as a source of Information

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ICT-related specialists are 3.5% of the total number of work force. Majority are in no need for ICT specialists

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ICT literacy is not the main barrier hindering ICT utilization

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Enterprises with intangible commodities have higher computer and Internet usage

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13.5% have placed at least one purchase order, while 9.8% have received at least one selling order via the

Internet (E-mail)

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Using Internet in Business is meant to save time

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The chief obstacle for not using Internet for business transactions has to do with

culture and traditions of practices, (76.8%)

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Rationale for Not Using E-commerceRationale for Not Using E-commerce %Goods are Not Suited to be traded via Internet 26.2Security Concerned 2.9Privacy Concerned 3.6Prefer in Person Deals 50.6Not Enough Online Customers 1.4Cost of Tools, Development and Maintenance 1.7Lack of Skills 8.6Others 5.0

1.3% of all enterprises offer prices list and catalogues,0.5% of all enterprises have online payment, on their web

About 50% of enterprises plan to boost their ICT adoption, and 2/3 of service sectors

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Selected Variables Future Attitude Towards ICTpositive Negative

All enterprises 47.7 52.3Employment Size0 – 4 44.8 55.25 – 9 61.6 38.410+ 84.2 15.8Economic ActivityIndustrial 46.5 53.5Construction 58.3 41.7Wholesale and Retail 43.2 56.8Transportation and Communication 58.3 41.7Financial Intermediation 59.5 40.5Services 74.2 25.8

Private sector spent 175,282,000 USD, on ICT annually, 109,375,000 USD on telecom.

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ICT import: 204,884,000 USD, 6.5% of the total import, ICT export: 28,530,00 USD, 14% of imported ICT.

Many issues affect the decision to adopt ICTs

• Enterprises rely more on tangible vs. intangible. Law of Inertia: ICT requires dramatic changes in business

operation. Most local enterprises are Micro enterprises with simple

business operations, and ICT are more effective in complex business operations.

Social and cultural considerations play a major role, and comes before economic reasons.

Lack of resources and competencies. Cost and effective utilization of these solutions Balance between expenses and gains of these technologies to

their business operations

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Three levels of ICT adoption, (Avgerou, and Porter et al.)

Low IncomeRelies on mobility of primary commodities.

Simple ICTs: PSTN/Mobile

Middle Income More sophisticated and integrated in national &

international production system. Adoption of foreign Technologies

High Incomerequires high competitiveness, and high rate of learning

ICT is badly needed with rapid Technology innovation

Business development should be taken holistically, ICT alone makes NO difference

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ICT can be effective whenDemand side: Effective Business operations, new mind set,

operation reengineering, Capacity building, Continuous update and rapid learning processes, …

Supply side: ICT production and service providers, government

bodies, business associations, academic institutions should work to promote innovation, cooperation, customization, regulations to harness ICT solutions