There is a significant digital divide within the small, micro and medium sized enterprises (SMME) sector in South Africa with almost 40% of businesses still operating without a computer.
This is according to new research released today by the UCT Centre for Innovation and Entrepreneurship (CIE) based at the UCT Graduate School of Business.
The study, sponsored by the Small Enterprise Development Agency (SEDA), explored the adoption and usage of ICT by lower-end SMMEs that used government-funded business support services. It included 1 800 SMMEs drawn from all nine provinces.
According to the study, there are three key characteristics that determine ICT usage amongst SMMEs and illustrate the SMME digital divide: business size, whether the business is urban or rural based, and the educational levels of the owner.
In terms of computer usage, for example, smaller businesses were more likely not to have and use a computer with 36% of micro, 27% of very small and 14% of small businesses indicating that they had neither a business computer nor any access to the internet.
SMMEs in urban areas are almost twice as likely (63,7%) to have and use a computer in their business as rural SMMEs (35,1%), and fewer than 30% of those with Grade 11 or less have used of a computer for business purposes, compared to more than 50% with a Grade 12 and more than 90% with a tertiary education.
The disparities in these three areas emerged not only in the area of computer usage – the pattern was similar for fax machine usage, landline access, email and internet usage.
According to Dr Mike Herrington, director of the CIE and the report’s lead researcher, the findings clearly identify the most vulnerable SMME groups at risk of failure due to a lack of ICT access and know-how.
"With just under 40% of businesses still operating without a computer and a similar figure without internet access, it is of concern as these SMMEs will struggle to be competitive and get left behind. This lack of ICT access could further disadvantage traditional businesses, for example, which are largely rural based, have lower monthly incomes and have business owners with lower educational levels," he says.
The same digital divide characteristics are also evident in SMME owners’ perceptions of their IT skills. Rural business owners were particularly negative in their perceived competence with respect to IT skills when compared to urban business owners. Perceived IT skills increased with greater levels of education, and business owners that have been taught to use a computer were significantly more likely to have and use a computer in their business.
When asked where they had been taught to use a computer, 40,2% said they taught themselves, 34,8% said they attended a computer course, but only 8,5% said they learnt the skills at high school.
"With only 8,5% of the respondents developing computer skills at high school, secondary schooling is falling well short in the development of IT skills, with many school leavers trying to fill this gap through self-study or by attending a computer course," says Herrington.
With many SMMEs still struggling to access computers and basic ICT like telephone and fax, one ICT device that dominated the survey findings was the cell phone. Cell phones are overwhelmingly the most popular form of connectivity with over 94% respondents indicating that they have used a cell phone for business purposes. However, smart phone usage was low and cell phones are still being used predominantly for sms and voice functions – only 22% of the SMME respondents accessed the internet via a cell phone.
"When analysing respondents that access the internet via a cell phone it was found these were almost exclusively urban-based (93,5%) and the overwhelming majority (90%) used a cell phone to complement, rather than replace a computer in their business. Becoming part of the internet generation without a computer seems to be a plausible option, but much needs to be done to facilitate access," says Herrington.
If cell phone technology is going to be instrumental in bridging the urban/rural digital divide, the report says that business owners in rural areas will need to be exposed to smart phones and other web-enabled technology. Internet and cell phone costs will need to be reduced as they are still out of reach of many small businesses.
The majority of SMMEs that have and use a computer have relatively unsophisticated software in their business. Word processing and spreadsheet software are the most popular packages used. A small minority of the businesses indicated that they used customer management or human resource software.
"Much of the software that has been offered to this sector has been too complex, too expensive and has not understood the needs of the SMME market – the research revealed a need for integrated computer programmes that are tailored to the small business market, affordable and easily accessible," says Herrington.
The research also made recommendations in several other areas to overcome the ICT challenges. "Education needs to be at the heart of South Africa’s interventions though," stresses Herrington.
"It is important to include technology in the school curricula as well as adult education programmes to ensure that the wider population becomes more familiar with technology.
"Secondary schooling has a critical position in improving the computer literacy of the population. In the sample of businesses surveyed, over half of the respondents (55%) had Grade 12 as their highest level of education. With only 8,5% of the respondents developing computer skills at high school, secondary schooling is clearly failing the population with respect to computer literacy."
The report also recommends that subsidised and easily accessible IT training courses, information road-shows, and community-based IT and business centres should be provided for SMMEs to encourage familiarity with IT technology, particularly in rural areas. Large businesses such as cell phone providers should be encouraged to invest in business centres as well. Futhermore, business training institutions and service providers must employ specialist IT people to advise and support businesses.
According to Tlalane Teffo, senior researcher at SEDA, the premise of SEDA’s participation in the study was that ICT can be used by all enterprises irrespective of the sector, size or nature of the business.
"The benefits of utilising ICT are vast; ranging from basic administration to accessing the global markets," says Teffo.
Overall, the ICT sector is dynamic and rapidly changing therefore small enterprises must always be abreast of the new and innovative applications to improve their services.
Charles Wyeth, chief operations officer of SEDA, has indicated that SEDA is currently in the process of revising its "Access to Technology" offerings for small enterprises, which will include increasing opportunities for small enterprises to be exposed to ‘normal’ office /business equipment and related production equipment.