Public policy challenges and implications of the Internet and the emerging e-commerce for sub-Saharan Africa

Public policy challenges and implications of the Internet and the emerging e-commerce for sub-Saharan Africa

Information Technology for Development 10 (2003) 1–12 1 IOS Press

Public policy challenges and implications of the Internet and the emerging e-commerce for sub-Saharan Africa: A business perspective

William K. Darley Department of Information Systems, Marketing, E-commerce & Sales, University of Toledo, Toledo, OH 43606, USA Tel.: +1 419 530 2177; Fax: +1 419 530 2290; E-mail:

Abstract. As businesses move to establish closer links with their customers and suppliers in the global marketplace, a new set of requirements is being placed on businesses in sub-Saharan Africa. The rules of commerce are being turned upside down, and for sub-Saharan African businesses to compete, local governments would have to create an enabling Internet and information infrastructure. This paper examines the Internet environment in sub-Saharan Africa and explores what the Internet can do for businesses. It investigates the public policy challenges and implications of the Internet and the emerging e-commerce for sub-Saharan Africa. The paper ends with a discussion and conclusion.

1. Introduction

The World Wide Web has introduced an entirely new way of offering products and services, and the rules of domestic and international commerce are being turned upside down. Also, the ability to communicate with partners, suppliers, and customers in a timely and cost effective manner has become a key determinant of success and profitability. Individuals and companies worldwide are communicating through the Internet more frequently than ever before. As more and more companies move to establish closer links with their customers, business partners, and vendors in the global marketplace, managers must contend with a new set of requirements.

With the growing interests in globalization, a manager’s ability to access and use information becomes critical. A nation’s information infrastructure plays a vital role in the ability of a business to compete. Even though there has been discussion of the Internet and information infrastructure in sub-Saharan Africa, the symbiotic linkage between business and government in this information age has been largely ignored. In a world moving rapidly toward Internet dominance, this is an oversight.

This paper seeks to fill this void. Specifically, it examines the Internet environment and what the Internet can do for sub-Saharan African (SSA) business. As a backdrop, it discusses selected socio-economic indicators, information infrastructure, and Internet usage of 44 countries in the region. Such factors and features have direct bearing on Internet access or use. Public policy challenges and implications with respect to the Internet and the emerging e-commerce for sub-Saharan African businesses are explored to determine the role of government.

0268-1102/03/$8.00 2003 – IOS Press. All rights reserved

2 W.K. Darley / A business perspective

Table 1 Socio-economic indicators

Country Literacya Life Expectancya GDP per capitaa Electricity Use per Cars in Useb

(1995) (In years) (1999) (PPP) (In US capitaa,c (kwh) per 1000 Dollars) (1998) (In billions) (1996) people (1995)

Angola 42.0% 48.39 1,000 1.86 10.0 Benin 37.0% 54.08 1,300 0.25 4.1 Botswana 69.8% 39.89 3,600 1.68 26.8 Burkina Faso 19.2% 45.89 1,000 0.22 2.5 Burundi 35.3% 45.44 740 0.15 2.7 Cameroon 63.4% 51.32 2,000 2.73 7.4 Central African Republic 60.0% 47.19 1,640 0.10 0.4 Chad 48.1% 48.56 1,000 0.09 1.4 Comoros 57.3% 60.85 700 (1997) 0.02 – Congo 74.9% 47.14 1,500 0.55 11.5 Congo, DR 77.3% 49.44 710 6.27 15.9 Cote D’Ivoire 48.5% 46.05 1,680 1.88 12.4 Djibouti 46.2% 51.54 1,200 0.18 22.4 Equatorial Guinea 78.5% 54.39 1,500 (1997) 0.02 10.3 Eritrea NA 55.74 660 NA – Ethiopia 35.5% 40.46 560 1.32 0.8 Gabon 63.2% 56.98 6,400 0.93 19.5 Gambia 38.6% 54.39 1,000 0.07 6.5 Ghana 64.5% 57.14 1,800 5.88 5.0 Guinea 35.9% 46.50 1,180 0.53 2.5 Guinea-Bissau 53.9% (1997) 49.57 1,000 0.04 2.9 Kenya 78.1% 47.02 1,550 3.99 6.5 Lesotho 71.3% 52.99 2,400 (1997) 0.34 2.5 Liberia 38.3% 59.88 1,000 0.48 6.3 Madagascar 80% (1990) 53.24 730 (1997) 0.60 3.7 Malawi 56.4% 36.30 940 0.80 1.8 Mali 31.0% 47.50 790 0.29 1.9 Mauritania 37.7% 50.48 1,890 0.15 3.6 Mozambique 40.1% 45.89 900 1.11 0.6 Namibia 38% (1960) 41.26 4,100 1.11 40.8 Niger 13.6% 41.96 970 0.37 2.9 Nigeria 57.1% 53.30 960 13.74 7.1 Rwanda 60.5% 41.31 690 0.18 1.6 Senegal 33.1% 57.83 1,600 0.73 9.8 Sierra Leone 31.4% 49.13 530 0.23 7.8 Somalia 24% (1990) 46.23 600 0.26 1.0 South Africa 81.8% 54.76 6,800 181.40 94.3 Sudan 46.1% 56.40 930 1.32 4.0 Swaziland 76.7% 38.11 4,200 0.99 27.5 Tanzania 67.8% 46.17 730 1.82 1.7 Togo 51.7% 59.25 1,670 0.41 – Uganda 61.8% 43.06 1,020 0.68 1.1 Zambia 78.2% 36.96 880 6.39 12.7 Zimbabwe 85.0% 38.86 2,400 10.77 26.9

Sources:aWorld Factbook, 1999, Washington DC: Central Intelligence Agency. bInternational Marketing Data and Statistics 1998: EUROMONITOR Plc (London, England). cRounded off to 2 decimal places.

2. Socio-economic indicators

Table 1 presents information about selected socio-economic indicators. Specifically, literacy level, life expectancy, per capita income, electricity consumption per capita, and car use per thousand are examined

W.K. Darley / A business perspective 3

because they have direct bearing on Internet access and use. Low per capita income, literacy rate, life expectancy, electricity consumption, and mobility can constrain or hinder Internet access or use.

For literacy level, the two lowest are Niger and Burkina Faso with 13.6% and 19.2% literacy rates, respectively. Literacy rates range from 13.6% in Niger to 85% in Zimbabwe. Twenty countries in the region have literacy rates less than 50%. However, the literacy rates in the urban areas in most countries are considerably higher than those in the rural areas. Low literacy rate means less Internet use.

For life expectancy, the range is 36.3 to 60.9 years for Malawi and Comoros, respectively. The mean life expectancy is about 52 years. Approximately seventy percent of the countries have life expectancies less than 52 years. Low life expectancy is indicative of socio-economic problems that may hinder Internet access and use.

Also,GDP per capita ranges from as low as $530 in Sierra Leone to as high as $6,800 in South Africa. Nearly 60% of the countries have a GDP per capita less than $2,000. Next to South Africa, Gabon and Swaziland have the second and third highest GDP per capita, respectively. Low per capita income means less money for computers and, consequently, less likelihood of Internet access.

Electricity consumption per capita ranges from 0.02 for Comoros and Equatorial Guinea to 181.40 Kwh for South Africa. Benin, Burkina Faso, Burundi, Central African Republic, Chad Comoros, Djibouti, Equatorial Guinea, Gambia, Guinea-Bissau, Mali, Mauritania, Rwanda, Sierra Leone, and Somalia have less than 0.30 Kwh per capita. Twenty-seven or approximately 60% of the countries have less than 1 Kwh per capita consumption. Low electricity consumption per capita also means less likelihood of Internet usage.

An indicator of social mobility is automobile use per thousand people. South Africa comes first with 94, followed by Namibia, Swaziland, Botswana, and Zimbabwe with 40, 28, 27, and 27 cars per thousand, respectively. Countries with less than one car per thousand are Central African Republic, Ethiopia, and Mozambique. Twenty-eight or 64% of the countries providing data have less than 10 cars per thousand. Low mobility limits the ability to get to the “community” Internet centers or Internet cafes.

3. Information infrastructure

This section looks at telephones,cellular phones, and television sets in use because they can have a direct bearing on Internet access or use. Currently, it is possible to access the Internet via (a) WAP (wireless application protocol) or wireless access requiring mobile phones, (b) computer-telephone access, and (c) television-telephone access (interactive television). Different combinations of the aforementioned devices are essential antecedents to Internet access and use.

Most telephone carriers in the advanced economies offer one or two ways to connect to the Internet. Phones act as modems when hooked up to a portable computer or some other personal digital assistant (PDA), or smart phones equipped with micro-browsers connect to limited Internet-based content and browse text-only versions of websites. Thus, whether sub-Saharan Africa consumers access the Internet via computer or television sets heavily depends upon phone ownership.

Table 2 presents data on the information infrastructure in terms of ownership or access to telephones and cellular phones. The average number oftelephone lines per thousand for the region is about 29. Thirty-five out of 44 or about 80 % have below average telephone lines per thousand. The range is one per thousand in Chad and Democratic Republic of Congo to 107 per thousand people in South Africa. Thirty-four or 77% of the countries have teledensities of less than ten per thousand people; teledensity of one per 100 is a widely accepted measure of basic access to telecommunications [21].

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Table 2 Information infrastructure

Country Telephone Linesa Cellular Phonesb Fax Machinesa Radio Receiversc Television per 1000 people per 1000 people per 1000 people per 1000 people Receiversc per

(1997) (1996) (1996) (1997) 1000 people (1997) Angola 5 0.30 – 54 13 Benin 6 0.41 0.2 110 11 Botswana 56 – 2.3 154 20 Burkina Faso 3 0.01 – 34 9.1 Burundi 3 0.09 0.7 69 3.9 Cameroon 5 0.14 – 163 32 Central African Republic 3 0.14 0.1 83 5.3 Chad 1 – 0.0 236 1.4 Comoros 8 – – 141 1.9 Congo 8 0.37 – 126 12 Congo, DR 1 0.14 0.1 161 64 Cote D’Ivoire 9 0.86 – 376 135 Djibouti 13 0.25 0.1 84 45 Equatorial Guinea 9 0.13 0.2 428 9.8 Eritrea 6 – 0.3 100 0.4 Ethiopia 3 – – 202 5.5 Gabon 33 5.55 0.5 183 55 Gambia 21 2.32 1.0 165 3.6 Ghana 6 0.68 0.3 236 93 Guinea 3 0.13 0.1 49 12 Guinea-Bissau 7 – 0.5 43 – Kenya 8 0.10 0.1 108 26 Lesotho 10 0.59 0.3 52 27 Liberia 2 – – 329 29 Madagascar 3 – – 209 22 Malawi 4 0.37 0.1 258 – Mali 2 0.11 – 55 4.3 Mauritania 5 – 1.7 146 25 Mozambique 4 – – 40 4.9 Namibia 58 4.03 – 143 37 Niger 2 – – 70 13 Nigeria 4 0.11 – 226 66 Rwanda 3 – – 101 0.1 Senegal 13 0.14 – 560 145 Sierra Leone 4 – 0.4 53 15 Somalia 2 – – 355 134 South Africa 107 21.95 2.4 492 261 Sudan 4 0.06 0.3 272 86 Swaziland 24 – 1.3 168 23 Tanzania 3 0.29 – 219 17 Togo 6 – 3.8 130 16 Uganda 2 0.18 0.1 280 3.3 Zambia 9 0.28 0.1 120 32 Zimbabwe 17 – 0.4 102 33

Sources:aWorld Bank Atlas, International Bank for Reconstruction and Development/World Bank, Washington DC, 1999. bAdapted from UNESCO Statistical Yearbook 1996, United Nations (New York), 1999. cUNESCO Statistical Yearbook 1999: UNESCO Publishing (Paris, France) and Bernan Press (Lanham, MD, USA).

Noteworthy is the fact that Africa as a whole has 12% of the world’s population but just 2% of the world’s phone lines. In comparison, Latin America has 8% of the world’s population and 6% of the telephone lines. Compounding sub-Saharan Africa’s low teledensity of 0.5 (approximately one phone

W.K. Darley / A business perspective 5

for every 200 people) is the fact that the vast majority of phone lines are in the urban centers, where about 20% to 30% of the population live [10,26]. The lack of phone lines limits the number of sub-Saharan African inhabitants who can access the Web.

For cellular phones, only four countries have penetration rates greater than one cellular phone per thousand people. The highest is South Africa with 21 cellular phones per thousand. Gambia, Namibia, and Gabon follow with 2, 4, and 5 cellular phones per thousand, respectively.

We also look at fax machines, television, and radio because we believe that the cognitive schema one develops in life influences how one responds to an innovation such as the Internet and the comfort level one brings to such new situations. Thus, the speed of diffusion of Internet use will, in general, be faster among those consumers who already have some related knowledge or experience.

Table 2 also provides data on fax machines, television, and radio. Forfax machines, the average number per thousand people is about one. Most countries have less than two per thousand. Only three countries, Botswana, South Africa, and Togo have two or more fax machines per thousand. The average number oftelevision receivers is about 35 per thousand people. Seventy-five per cent of the countries have less than 35. Fourteen countries have television penetration of less than ten per thousand. The countries at the low-end are Rwanda, Eritrea, and Chad with 0.1, 0.4, and 1.4, respectively. Ivory Coast, Senegal, and South Africa are at the high-end with 135, 145, and 261, respectively. Chad and Rwanda have fewer communication resources per thousand people. The average number ofradio receivers per thousand is about 175. Sixty-four percent of the countries have less than 175. The range is 34 in Burkina Faso to 492 radio receivers per thousand in South Africa.

Generally, the lower the number of phones, cellular phones, and televisions per thousand, the less the Internet access and use. Also, the lower the familiarity with related technology, such as fax machines, television, and radio, the less the diffusion of the Internet.

4. Internet usage

The average sub-Saharan African user (a) works for a non-government organization, private company or university, (b) is male, and (c) is well educated. In addition, he lives in an urban area and speaks either English, Spanish, or French. Users surveyed in the region revealed the following: 44% in Zambia were nationals as compared to 90% in Ghana; 86% in Ethiopia, 83% in Senegal, and 64% in Zambia were male; 87% of the users in Zambia and 98% in Ethiopia had a university degree. In South Africa, the average user was male, 26 to 30 years of age, spoke English, was high-school or university educated, earned between $24,000 and $45,000 per year, and worked in the computer industry [11].

According to a recent survey, there are about 1.8 million Internet users (around 4% to 5% of the population) in South Africa. The figure is much lower for blacks. Only 0.1% of black women have Internet access at home with the figure going up to 0.6% at work. Black males fare a little better at 0.1% and 1.2%, respectively [17].

Internet access in sub-Saharan Africa (SSA) has been largely confined to the capital cities. It is estimated that there are now a little over a million subscribers in Africa. With each e-mail connection supporting an average of three users, this puts current estimates of African Internet users at about 3.1 million [10]. About 60% (1.82 million) of these users are based in South Africa, (population= 42 million) leaving about 1.2 million users among the remaining 734 million people on the continent. Of these, North Africa has about 700,000 users, and the rest of sub-Saharan Africa outside of South Africa has about 500,000 Internet users. This breaks down to about one Internet user in 4,000 for Africa.

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Table 3 Internet infrastructure

Country PCsa per 1000 Internet Usersb,c Access Costsd Internet Internet Users as people (1997) per 1000 people 10 Page 50 Page Userse % of Populatione

Angola 0.7 1.07 100.00 100.00 12000 0.11 Benin 0.9 0.95 28.93∗ 28.93∗ 10000 1.16 Botswana 13.4 2.05 84.15 118.47 12000 0.76 Burkina Faso 0.7 0.23 – – 4000 0.03 Burundi – 0.07 – – 2000 0.03 Cameroon 1.5 0.39 22.92 22.92 20000 0.13 Central African Republic – 0.17 30.43 30.43 1000 0.03 Chad – 0.12 – – 1000 0.01 Comoros 0.3 1.07 – – 800 0.14 Congo – 0.00 – – – – Congo, DR – 0.03 – – – – Cote D’Ivoire 3.3 0.38 182.14 877.38 20000 0.13 Djibouti 6.9 2.01 – – 1000 – Equatorial Guinea – 1.29 – – 500 0.11 Eritrea – 0.23 – – 500 0.01 Ethiopia – 0.12 48.45 222.26 7200∗ 0.01∗∗

Gabon 7.5 2.45 – – 5000 0.41 Gambia 2.6 0.34 – – 4000 – Ghana 1.6 0.79 100.00 100.00 20000 0.10 Guinea 0.3 0.12 – – 5000 0.07 Guinea-Bissau – 0.36 – – 1500 0.12 Kenya 2.3 1.56 68.39∗ 155.30∗ 45000∗∗ 0.16∗∗

Lesotho – 0.28 106.74 152.37 1000 0.05 Liberia – 0.08 – – 300 0.01 Madagascar 1.3 0.30 12.41 14.59 8000 0.05 Malawi – 0.60 46.97∗ 220.39∗ 1000 0.10 Mali 0.6 0.14 231.31∗ 926.55∗ 10000 0.09 Mauritania 5.3 0.12 – – 2000 0.07 Mozambique 1.6 0.63 26.67∗ 26.67∗ 15000 0.08 Namibia 18.6 5.46 94.50∗ 94.50∗ 9000∗∗ 0.55∗∗

Niger 0.2 0.09 3000 0.03 Nigeria 5.1 0.08 67.91∗ 362.58∗ 100000 0.08 Rwanda – 0.04 – – 1000 0.01 Senegal 11.4 0.75 216.29∗ 433.55∗ 30000 0.030 Sierra Leone – 0.08 143.25 716.25 2000 0.04 Somalia – 0.00 – – 200 – South Africa 41.6 22.80 13.97 13.97 1820000∗∗∗ 4.19∗∗∗

Sudan 1.1 0.03 – – 10000∗∗∗∗ 0.03∗∗∗∗

Swaziland – 2.74 66.09∗ 67.52∗ 3000 0.28 Tanzania 1.6 0.24 170.41∗ 483.27∗ 25000 0.07 Togo 5.8 1.00 – – 10000 0.20 Uganda 1.4 0.39 38.55∗ 38.55∗ 25000 0.11 Zambia – 0.93 45.23∗ 112.82∗ 15000 0.16 Zimbabwe 9.0 2.69 60.65∗ 69.97∗ 30000∗∗ 0.27

Sources:aWorld Bank Atlas, International Bank for Reconstruction and Development World Bank. bAfrica Internet Populations, May 1999 ( cComputations based on population data from the World Factbook (1999) and Internet accounts data from Africa Internet Populations (1999) based on the following formula:

(Internet Accounts× 3) × 1000 Population

W.K. Darley / A business perspective 7

Table 3, continued dAfrica Link/Internet Access Costs in Africa for a Small Organization, June 27, 1996, (http: // afr/alnk/). ∗ Access costs averaged. eSource: (data reported, July 2000). ∗∗SANGONet (data reported, May 1999). ∗∗∗Media Africa (data reported, May 2000). ∗∗∗∗DIT Group (data reported, March 2000).

The world average is about one Internet user for every 35 people. Figures for the other regions of the world are as follows: one Internet user for every four people for North America and Europe, one in 125 for Latin America and the Caribbean, one in 200 for South East Asia and Pacific, one in 250 for East Asia, one in 500 for the Arab States, and one in 2,500 for South Asia [11,21].

Even if access to a computer is available, individuals in this region are up against tremendous costs. The current average total cost for using a local dial-up Internet account for five hours a month in Africa is about $50/month (usage fees and telephone time included, but not telephone line rental). This cost is more than the average monthly salary in the sub-Saharan region [10–12].

In contrast, the cost of 20 hours of Internet access in the US is $29, including telephone charges. European costs are higher ($74 in Germany, $52 in France, $65 in Britain, and $53 in Italy). Note that these European countries have per capita incomes at least 10 times greater than the African average [11]. Also, the average telecommunications revenue per subscriber line in Europe is about $770, while it is approximately double that at $1,460 in sub-Saharan Africa. In light of the lower per capita income in the region, the ratio of revenue in sub-Saharan Africa to that of Europe is extremely high [12]. In addition, cost also limits the number of sub-Saharan African people who can access and use the Internet.

Table 3 provides some details about personal computers, Internet accounts, Internet users per thousand, and access costs in sub-Saharan Africa. The average number ofpersonal computers per thousand people is eight. Of the 28 countries providing data, 22 are below this average. The range is 0.2 in Niger to approximately 42 per thousand in South Africa. The number ofInternet accounts for most countries varies from 75 to 330,000 (South Africa). For the number ofInternet users per thousand, of the 44 countries providing data, seven have above two Internet users per thousand. These countries include Botswana, Djibouti, Gabon, Namibia, South Africa, Swaziland, and Zimbabwe. At the low-end are countries such as Somalia, Congo, Democratic Republic of Congo, Sudan, and Rwanda. At the high-end are South Africa and Namibia with approximately 23 and 6 per thousand, respectively.

Table 3 also provides information on Internet usage. About 60 percent of the users are to be found in South Africa, which has 1.8 million users. Nigeria comes in second with 100,000, followed by Kenya, Senegal, and Zimbabwe with 55000, 30000, and 30000, respectively. Five countries (i.e., Cameroon, Ghana, Ivory Coast, Tanzania, and Uganda) have from 20,000 to 25,000 users each. The rest of the countries have less than 16,000 users each. With the exception of South Africa, which has more than 4 percent of its population with access, the region’s penetration hovers around 0.03% to 1.39%. Most of the countries in the region have less than 1% of their population with access.

Table 3 also provides details ofInternet access costs and shows the cost estimates by USAID for a small organization in sub-Saharan Africa countries. In preparing the Leland Initiative, USAID investigated current costs for Internet access in Africa by computing the likely costs that would be encountered by a small organization using an Internet service provider to transfer a modest amount of electronic mail and documents, an average of either 10 or 50 pages per day. USAID chose this method of calculating costs to facilitate comparisons across providers and countries, in light of the wide variation in the technologies used to provide Internet access and in the way Internet providers levy fees [3]. In countries such as Mali

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and Ivory Coast, a modest daily use of the Internet by a small organization costs over $800 per month for 50 pages and about $200 for 10 pages. In contrast, South Africa has Internet rates similar to those of the advanced economies. Thus, for many countries in the region, just a modest daily use of the Internet by a small organization could be very prohibitive [3,26].

5. Opportunities for sub-Saharan African businesses

This section examines the basic uses of the Internet from a business perspective. The Internet offers several opportunities for sub-Saharan African businesses to compete in the global market place. Three types of opportunity areas are explored: commerce, communication, and research.

Commerce. The importance of the Internet for business is being recognized throughout the world. It gives a firm an international presence and has the potential to provide accessibility to huge new markets [23]. The Internet offers a medium for small firms to enter the global marketplace and gives them access to markets with much needed savings in cost and time. It provides a level playing field for the small firm in relation to the large firm in international markets [21] and allows small businesses to (a) exploit the Internet to do business from making contacts and checking prices to displaying goods and entering into contracts and (b) globalize without the associated financial risk by being able to penetrate markets and expand reach quickly. Thus, most of the region’s firms or businesses, which may be classified as small firms in the global arena, stand to gain from an Internet presence. Local entrepreneurs could also entice investment opportunities by marketing on the Internet. With access to international information, technology, and finance, sub-Saharan African companies could improve their competitiveness [14,15].

Companies can sell products and conduct other transactions over the Internet and supplement their traditional means of selling. As a productivity tool, the Internet allows international sales forces to connect to the company’s web site, place orders, download product information, and control distribution through the company’s main database. By using the Internet to provide a sales person direct access to the company’s main database, orders can be placed directly from the road and processed right away [19]. For example, a company can create an online version of its sales brochure, and customers can click on an item to receive information about a product, and click another button to place an order. A company can also produce links to its product database and make sales via online order forms.

Communication. The Internet is the communication medium of choice for much of the world’s business. It allows companies to communicate internally, regardless of which continent a company’s offices are located, and offers customers the opportunity to communicate with companies online [19]. The Internet can expand a firm’s audience without regard to the costs of postage and printing. Instead of the “snail” mail, a company can send messages with or without images, sounds, and computer files to multiple addresses in a matter of seconds. Exchange of messages can occur with savings on long distance and fax charges without worrying about the time differences and busy schedules that sometimes hinder communication with others. For example, a company can send out newsletters via e-mail and communicate using Internet fax service and exchange electronic documents, as well as use the Internet as a voice telephone line.

Research. The Internet offers new opportunities for collecting data from and about the consumer and for testing (a) product concepts, (b) ad copy, and (c) different levels of customer support. It is easier to track individual customer behavior over time. More can be learned about the global consumer through online surveys, bulletin boards, and web visitor tracking. Keeping track of Internet visits generates marketing data. Companies can monitor group discussions in multiple countries simultaneously (i.e., bulletin boards), and use servers to automatically collect data on the path that visitors to the site travel and

W.K. Darley / A business perspective 9

how long they spend at the site and/or on each page (i.e., web visitor tracing). In addition, the linkages between traffic patterns and purchase behavior, as well as between traffic patterns and sales generated by links placed on other sites, can be monitored much more closely. Surveys can also be posted on sites and incentives for participation can be offered. This approach can be cheaper and faster than traditional mail and/or phone surveys [18].

6. Public policy challenges and implications

This section presents several challenges and implications for public policy focused on the business sector of the sub-Saharan region. These challenges or constraints put the region’s businesses at a serious disadvantage. The public policy actions that should be initiated or implemented to create an enabling business environment are discussed.

Challenges. The Leland Initiative of USAID identified several barriers to Internet access and use in sub-Saharan Africa. The barriers for most of the region are: (a) the lack of effective national telecommunications policy, (b) inadequate telecommunications infrastructure, (c) lack of or outdated computers and computer related technologies, (d) lack of adequately trained technicians and lack of good quality technical and Internet training, (e) absence of a competitive Internet service provider industry, and (f) cost and quality of Internet service provider services [22]. Other inhibiting factors are the attendant restrictive regulatory environment, high Internet access charges, and high cost of computer and telecommunications equipment [10].

Bringing the region’s current teledensity of 0.5 (i.e., one telephone per 200 people) to 10 lines per 100 people would require the installation of 50 million new lines and an investment of 50 billion US dollars [10]. For this to be a reality, private sector involvement will be crucial and will have to be solicited. In addition, an attractive regulatory and economic environment will have to be created by the national governments.

A challenge is the shortage of skilled personnel in the computer related industry or information technology industry of sub-Saharan Africa. The high turnover due to technology staff poaching leads to loss of productivity and reluctance of companies to invest in training. In addition, the system is ill equipped to provide the required training suited for the needs of the marketplace [11].

The average cost of a dial-up Internet in sub-Saharan Africa is high compared to that in the developed world. Added to this is the very significant local telephone connect charges. Also, cost of telecom- munications, in general, is prohibitive; profits in the sub-Saharan Africa telecommunications sector per person are among the highest in the world, despite its lowest GDP per capita [11].

Another constraining factor is the substantially higher computer and telecommunications equipment costs that businesses in sub-Saharan Africa face. A basic personal computer is at least 50% more expensive than in the United States – after government import duties and taxes are applied. Adjusting for wage rates, a computer in sub-Saharan Africa is about six times more expensive than in the United States. In GDP per capita terms, the cost of a computer in Zimbabwe is about 10 times its GDP per capita; in the United States, it is about one-tenth of its GDP per capita. This implies a relative cost ratio of about 100 to one [10]. These constraints put the region’s businesses at a serious disadvantage.

Implications. Public policy and conditions within countries in sub-Saharan Africa can create an enabling or difficult environment and thus, has implications for business success and growth. In the subsequent section, I use Porter’s [16] framework to provide insights into and gain an understanding of SSA’s businesses ability or the lack thereof to compete in an Internet and emerging e-commerce era. Porter [16] studied several industries and nations, and came up with the theses that four broad

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attributes of a nation shape the environment in which local businesses compete. These attributes make up a nation’s diamond and promote or impede the creation of competitive advantage for businesses. A nation’s diamond, as Porter [16] terms it, consists of the following attributes:

(a) factor endowments (i.e., a country’s position in factors of production such as skilled labor and the infrastructure necessary to compete in a given industry),

(b) domestic demand conditions (i.e., the nature of home demand for the industry’s product or service), (c) related and supporting industries (i.e., the presence or absence in a nation of supplier industries

and related industries that are internationally competitive), and (d) firm strategy, structure, and rivalry (i.e., the conditions in the nation governing how companies

are created, organized, and managed and the nature of domestic rivalry).

Porter also distinguishes between basic factors (e.g., natural resources, climate, location, and demo- graphics) and advanced factors (e.g., communications infrastructure, sophisticated and skilled labor, research facilities, and technological know-how). He argues that the advanced factors are most sig- nificant for competitive advantage and that firms are most likely to succeed in industries and industry segments where the diamond is most favorable. Porter contends that the government can influence each of the four components of the national “diamond” in important ways, either positively or negatively [9, 16,22].

A government can provide an enabling environment by addressing the advanced factors and can make a big difference in the success or failure of sub-Saharan African businesses’ ability to compete in the global marketplace. The governments of the region, through their (a) financing and constructing of infrastructure, (b) actions, (c) policies, and (d) regulations, can influence the elements of a nation’s attributes and its firm’s international competitiveness [9]. Thus, a firm’s international competitiveness interacts with its environment.

To enhance information infrastructure and facilitate Internet commerce, the national governments and policy makers must address impediments to the introduction of information technology in sub-Saharan Africa. Creating an enabling environment will also require changes in legislation and the dismantling of state controls in key industries, as well as the introduction of a tax regime for information and information technology products and services. Freeing up the telecommunication market and the Internet market, in particular, and providing an enabling market to foster the growth of technology and related industries can only help connectivity.

Improvements in telecommunications infrastructure, investments in computer and computer related technologies, provision of training and education opportunities in Internet technology, and creation of a competitive market environment for Internet service providers will go a long way to enhance access and use of the Internet. Some policy reform with respect to telecommunication and information technology, significant improvements in the telecommunication infrastructure, and investment in Internet infrastructure are required at the macro-level. The number of personal computer owners, the teledensity, and information infrastructure must improve. Removing or lowering import duties and taxes on computer and telecommunication equipment can only help the situation.

A competitive environment seems to force down the cost of user access. The sub-Saharan African countries that are making the most progress with on-line services tend to be those that have opened up their market to the private sector, and have sought outside collaboration. The relatively buoyant Internet access markets in Namibia, Angola, Kenya, and Mauritania may be attributable to their decision to use both private sector initiatives and outside help [15]. This is in line with Porter’s call for encouraging widespread investments by multinational corporations [18].

W.K. Darley / A business perspective 11

Policy makers, at a minimum, must (a) provide training to increase Internet skill level, (b) provide education to raise awareness and interest in the Internet, and (c) require changes in the offerings at the appropriate educational institutions to adequately prepare students for computer-related jobs. These macro-level inputs will provide the right environment to enable businesses to compete in the global marketplace. Governments can increase investment in education, infrastructure, and basic research. It is worth noting that the advanced factors (e.g., communications infrastructure, sophisticated and skilled labor) are most significant for competitive advantages [18]. Governments can also promote strong competition within domestic markets because this would prepare local businesses to participate in global commerce.

Lack of electricity supply, inadequate computing environment, poor telecommunication infrastructure, lack of qualified labor to maintain the installations, and a large illiterate population can be addressed. Ensuring adequate electricity supply, efficient telecommunication infrastructure, and adequate education are a few of the things governments can do [16,25]. Governments can also (a) improve access to global information sources and provide opportunities for Internet knowledge, as well as (b) simplify export documentation through electronic data transfers, and (c) offer on-line export assistance to help enhance export performance [8].

7. Discussion and conclusion

The data presented in this paper has to be treated with caution; however, the data appears to underline and confirm the fact that the socio-economic indicators for many countries in the region are below par. Unless these statistics improve, Internet access and use will continue to be low.

Bringing advanced information technologies to sub-Saharan Africa will enable the region to leapfrog over traditional stages of development at a surprisingly low cost [6]. In a world where information and information technology has become the engine of economic growth, failure to be fully “engaged” at the government level in the Internet and emerging e-commerce puts sub-Saharan African businesses at a serious disadvantage.

The region’s national governments have an important role to play in providing an enabling environment. Provision of an enabling business environment with respect to information and Internet infrastructure takes on an added significance. This new environment would require significant investments and improvements in infrastructure and education. A re-direction of education opportunities to the needs of the marketplace is a sine qua non. An improved information and Internet infrastructure will enhance the ability of local businesses to compete in the global marketplace and to gain access to new markets. Creating an enabling environment for the business community to participate in the Internet phenomenon is good public policy and is good for the society as a whole.


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About the author

Dr. William K. Darley is professor of marketing in the Department of Information Systems, Marketing, E-commerce & Sales, The University of Toledo. He received his M.B.A. from Notre Dame and Ph.D. in Marketing from Indiana University. His research interests include consumer choice processes, consumer response to advertising, research methods, and new media. His work has appeared in the Journal of Marketing, Journal of Business Research, Journal of Consumer Research, Journal of Consumer Affairs, Journal of the Academy of Marketing Science, Psychology and Marketing, Journal of African Business, and elsewhere.

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