Document Sample
					Information and Communication Technologies (ICT)
                     in the promotion of

     Economic Development and Employment Promotion

          - Assessing Experiences and Opportunities –

        Abt. 41 Wirtschafts- und Beschäftigungsförderung

                        Susanne Bauer
                     Berlin, den 13.11.2001
Table of Content

1.      INTRODUCTION............................................................................................................ 3

DEVELOPMENT..................................................................................................................... 3
     2.1     ICT DEFINITIONS .......................................................................................................... 3
        2.2.1 E-Readiness for E-Development: E-Commerce? ......................................................... 5
        2.2.2 The Global Information Society: ‘Digital Divides’ and ‘Digital Opportunities’ ............. 6
        2.2.3 ICT-Content in Development Gateways ...................................................................... 8
        2.2.4 International Labour Organisation: Life at Work in the Information Economy .............. 9
AND EMPLOYMENT PROMOTION (EDEP).................................................................... 9
     3.1      AREAS OF ICT APPLICATIONS (AND HOW THEY WORK) ................................................... 9
        3.1.1 Business-related applications .................................................................................. 10
        3.1.2 Learning-related applications .................................................................................. 12
     3.2      EXPERIENCES WITH ICT APPLICATIONS FOR EDEP........................................................ 13
        3.2.1 International and Regional/Country Experience........................................................ 13
        3.2.2 GTZ Experience with ICT in EDEP projects ............................................................. 15
        3.2.3.    Industrialised Countries’ Experience in the Use of ICTs for EDEP ........................ 19
     4.2       CURRENT DEMAND FOR ICT BY SMME ....................................................................... 22
     4.3       READINESS TO PAY FOR ICT-BASED SERVICES .............................................................. 22
5.      CONCLUSIONS............................................................................................................. 23

6.      RECOMMENDATIONS ............................................................................................... 24

I.  ICT-International/development links
II.         Literature on ICT in Development
III.        ICT applications - Country and regional Experience

The present report is compiled in the framework of the GTZ research project “Possibilities for
the use of Information and Communication Technologies (ICT) in the Promotion of Economic
Development and Employment Promotion (EDEP)”.1 The project time frame is 18 months
(09/2001 – 06/2003).

The project aim is to develop GTZ services with regard to the consultancy of small enterprise
promotion organisations aiming at improving their services to small, micro- and medium-
sized enterprises (SMME) by enhancing their use of Internet-based ICT. Activities will be
launched with three selected partners as well as with a wider group of users and providers
(GTZ projects, resource persons, institutions, others) with the aim of developing a respective
product ( consulting-, training modules) .

In parallel, a second research project focuses on the possibilities of ICTs for new forms of
learning and training2. Looking at the two sides of qualification for the use of ICTs, and
qualification through the use of ICTs, the research aims at widening the knowledge base of
selected education and training institutions in the field of innovative forms of qualification for
these areas.

The report documents the first step of activities to assess the possibilities of ICTs in the wider
context of EDEP along the following questions:

•     In what areas and how are Internet-based ICTs used for SMME services, in developed as
      well as in developing countries?
•     For what kind of Internet-based services and how much are SMME ready to pay?
•     What is the tangible/effective use for SMME of Internet-/ICT-based services?
•     Which services are more in demand, and which services are less in demand by SMME?
•     What are the basic conditions for SMME for the use of Internet-/ICT-based services?
•     What are the reasons for insufficient use, until present, of the Internet and ICTs by SMME
      support organisations for the improvement of services? And for the development of fee-
      based ICT-services?
•     What competencies are needed to use ICTs in the above sense?


2.1      ICT Definitions

Several approaches are in use in the context of ICT for development. For the purpose of this
report, we refer to the following definitions:

The German Ministry for Development and Economic Cooperation (BMZ)3 describes ICT as:
 “…all those technical instruments and set-ups that transform all kinds of information
digitally…” through the intelligent linking of hardware, software and transformation nets. ICT
capacity depends on the individual components (bandwith, transfer technology, hardware
  Project Number P.N.2001.9123.9 Contact person: Martina Vahlhaus (
  Project Number P.N.2001.9122.1 Contact person: Klaus-Dieter Przyklenk (
  Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ): Informations- und
Kommunikationstechnologien (IKT) in der Deutschen Entwicklungszusammenarbeit, Juli 2000
capacity, appropriate software etc.) as well on the interaction of these. The interactive
character of ICT distinguishes it from the audio-visual (mass)media, because it is built on an
interactive reciprocal exchange of data and information. According to the BMZ analysis, the
new way of dealing with information and knowledge through ICT-applications has an
impact on the way people and institutions work and function.

For developing countries, connectivity is a decisive factor in bridging the digital divide. The
Internet, based on the telecommunication infrastructure (fixed nets, mobile/satellites)
constitutes the fastest growing technology within ICT. At the same time, the gap between rich
and poor countries is even more pronounced with the use of the Internet than it already is
with the spread of telephones (number of phones; number of Internet hosts). Affordability is
a critical issue here because of high prices due to few providers and slow connections.
Accessibility is another factor, because of the form of communication passing through ICT
(literacy, language, structure).

Currently the BMZ, together with the German members of the G8 DotForce (Genoa Plan of
Action for ICT-enabled social and economic development), is preparing for country studies
on the ICT sector in Vietnam, Laos, Tanzania, Uganda and Peru4.

The UK Department for International Development (DFID)5, in its recent studies on ICTs,
adopts a broad coverage of technologies “…used for the collection, processing and
transmission of information.” It furthermore identifies four functional areas for ICTs and
enterprise operations:
• ICTs as an enterprise output;
• ICTs as a primary processing technology;
• other ICT-related support activities;
• ICTs as a secondary processing technology).

In a series of handbooks6, an integrated approach to ICTs is adopted by DFID that is
information-centered (i.e. “…recognising that the value of ICTs comes from their new
abilities to handle information”). This approach should address “…the full range of
technologies that handle information – not just digital ICTs but also intermediate (radio,
TV, telephone), literate (books, newspapers, manual) and organic (human-based)
technologies.” In order for agencies to pursue this approach, they should also
“…understand the context that shapes enterprises and their information practices,
including their use of ICTs.” For entrepreneurs, ICTs – computers, mobile phones, email and
the Internet – are described as a new challenge for the business community, both for those
with access to new technologies, and those without. Under the rubrique “basic ICT Jargon”,
ICT is defined as “…electronic means of handling digital data.”

The definition of ICT services as developed in the context of a field research in the
Philippines7 focuses on the types of services found in the market:

  BMZ/ZEF: Information and Communication Technologies (ICT) for Development – The German Contribution.
List of Issues for Country Studies, Zentrum für Entwicklungsforschung (ZEF) Bonn, October 2001.
  O. Wakelin/B. Shadrach: Impact assessment of appropriate and innovative technologies in enterprise
development; DFID 2001. Enterprise Development and ICTs: Research on Innovation and Best Practice, draft
report, DFID 2001.
  R. Heeks/R. Duncombe: (1) Information and Communication Technology. A Handbook for Enterpreneurs in
Developing Countries; (2) Information, Technology and Small Enterprise: A Handbook for Enterprise Support
Agencies. Version1, 2001, Institute for Development Policy and Management (IDPM), University of Manchester,
UK. With support from UK DFID.
  Committee of Donor Agencies for Small Enterprise Development (Brazil 1999): How to be Demand-Led:
Lessons for Business Development Service Providers from Information and Communication Services in the
Philippines, by A. Overy Miehlbradt, with contributions from Ronald T. Chua.
•     Basic telecommunications (telephone, fax, message service);
•     Supporting services (telegrams, money transfer, photocopying, typing/word processing);
•     High End Telecommunications (email, data transfer, Internet access);
•     Information Services (business information from the Internet and computerized data

The United Nations’ Human Development Report 2001 looks at the technological
transformation process as part of a new paradigm: the network age. The question of how
people can create and use technologies to expand their opportunities is seen as a key factor
for the outreach and benefit of these transformations in a globalized world. The links between
technology and human development are emphasized in the report, refering to higher levels of
education and better-educated people to create conditions that encourage creative thinking
and enterprising behaviour. Another key element of transformation is the speed of
technological advances, driving down costs and accelerating the means to access and use
ICT for economic purposes.

2.2      ICT for Development: A Review of Programmes and Experiences

There is a very active and resource-rich set of ICT-for-development initiatives to draw on.
According to a recent OECD survey (2001)8, an estimated annual total of US$ 500 million of
private and public support goes to ICT-specific programmes. Their impact and relevance for
enterprise development, however, has not yet been sufficiently assessed.

The overall observed trend, however, seems to indicate an urgent need to concentrate ICT
efforts in the following areas:

(a) networks and partnerships for ICT solutions;
(b) integrated ICT strategies for planned and ongoing EDEP programmes;
(c) research to provide evidence on the type of ICT-applications, as well as on good practice
    cases and the impact of ICT-based services for the private sector (see chapter 3).

In order to get a first picture of ICT for Development programmes and concepts in the
EDEP framework, the following sub-chapters will provide selected information on ICT
activities by a wide range of developing agencies, local partner organisations and the private

Annex 1 provides the necessary links to each of the presented programmes.

2.2.1 E-Readiness for E-Development: E-Commerce?

Within the broader strategy of 'e-readiness' and 'commerce-readiness', e-commerce is
probably the best known and most-referred-to ICT activitiy. For the purpose of this summary,
e-commerce activities are not further expanded here, because it is covered by a specific
research project (, as well as by the extensive list of references
and experiences documented by other agencies (see Annex 1).

E-readiness, in the meantime, has become a major area for investment by international
agencies. Efforts in this direction promote a comprehensive approach towards an electronic-

 OECD 2001: Impact Assessment of Appropriate and Innovative Technologies in Enterprise Development, DFID
2001 (quoted from Oliver Wakelin/Basheer Shadrach: DFID 2001, see Annex 2, list of documents).
enabled development (e-development). Below, brief summaries are given to illustrate efforts
for ICT-for-development (or-e-development):

•   The Asian Development Bank (ADB)

ADB promotes three strategic areas for interventions to "..move quickly and credibly..”
towards ICT-for-development9:

(1) create an enabling environment;
(2) build human resources (ICT-literacy; elearning; awareness programs);
(3) develop ICT applications and information content for ADB-supported projects/activities
(e.g. poverty reduction, good governance).

Complemented by an Action Plan, the ADB strategy looks at implementing its plan in steps,
- initially undertaking E-readiness assessments in selected member countries (where?);
- integrating ICT applications in ADB's activities (projects);
- promoting strategic alliances and partnerships with existing ICT initiatives (PPP);
- and establishing a Center for learning, information, communication, and knowledge for
Asia and the Pacific (dissemination, use of information/ ICT best practices).

The ADB Center for Learning will partly be funded by the newly established Japan Fund for
Information and Communication Technology (JFICT, approximately US$ 10 million),
administered by ADB to support ICT-activities on a grant basis in the following areas: (a)
improving the ICT infrastructure and human resources, and (b) helping to establish a center
for learning, information communication and knowledge for Asia and the Pacific.

• United Nations Development Programme (UNDP)
UNDP’s “ICT for Development Programme” looks at the potential gains of using ICTs for
faster delivery and a more adapted content of technical assistance that reaches out to more
people in hitherto unreached/underserviced areas and sectors. The programme assists in
awareness raising, increased connectivity (access to information), and human and scial
capacity building (training, education). It conducts pilot projects to test feasible ICT-
approaches and tools, and it enters partnerships to put more weight into research and
infrastructure development.

The web site of this programme ( ) is a 'work-in-progress'
resource tool meant to capture activities and trends in the ICT area (UN and non-UN
initiatives). It provides useful links and information on UNDP-launched programs such as the
Technology Access Community Centers (TACCS, see country example Egypt, chapter

2.2.2 The Global Information Society: ‘Digital Divides’ and ‘Digital Opportunities’

The discussion on unequal distribution and society splits in the Global Information Society is
a major concern for development agents and developing countries at large. To this end, the
G8 initiative established, in November 2000, a Digital Opportunity Task Force
( For the German contribution to G8, see chapter 2.1 above.

 ADB 2001: Toward E-development in Asia and developing ICT applications and promoting their extensive use.
The Pacific: A Strategic Approach For ICT" (23 pages, ADB 2001)
Summarizing the main activities in this field, we distinguish below:

•   The “Global Information and Communication Technologies Group”
    ( ) a merger of IFC and Worldbank’s telecommumications groups
    (January 2000), fights digital disparities in a joint effort. One recent initiative is the
    Summit of the Americas (“Bridging the Digital Divide in the Americas”). The website offers
    examples for ICT applications (chapter 3).

•   Global Development Learning Network (GDLN) ( ), run by the
    Worldbank-Institute, connects distance learning centers around the world, promoting
    active information and knowledge sharing based on the latest ICT-based learning tools.
    Online- training, for example, has been conducted in Latin America (10-weeks course on
    urban and city management, 1000 participants), interactive video (e.g. video.conference
    between education policymakers and planners who discuss economic development),
    electronic classrooms, satellite communications and the Internet.

•   The “Bridging the Digital Divide” programme by DFID/UK ( ) was
    launched in recognition of the potentials of ICTs to reach development targets for poverty
    alleviation and enterprise development. It aims to address key barriers to access ICTs
    that keep a great scepticism among policy makers until present. At enterprise level, the
    programme sees many opportunities for small entrepreneurs to gain access to timely and
    valuable information as a key intangible resource (see also DFID country experience,
    chapter 3).

•   The “Digital Divide Network” (DDN) ( ) is a non-profit
    organisation coordinated by the Benton Foundation. Its goal is to look at digital concerns
    from various perspectives: technology access, literacy and learning, content, and
    economic development and international issues. The site offers many links to
    practitioners and experiences.

•   The “Digital Opportunity Task Force” ( ) is the institutional set-up of
    the G8-members, joining forces under the Okinawa Charter on the Global Information
    Society. The ‘Dotforce’ includes members from the public, private and not-for-profit
    sectors and participants from developed and developing countries. Its website is a work-
    in-progress activity that contains all relevant documents and links for ‘digital divide’
    activitists and practitioners. UNDP and the Worldbank provide the Secretariat for the

•   The OECD “Digital Forum” ( ) was organised in
    response to the Digital Opportunity Taskforce (see above) in March, 2001, under the
    theme: Digital Opportunities for Poverty Reduction. Addressing the International
    Digital Divide”. In its 17 points for consideration, the Forum argues that, for example,
    the “full range of technologies must be considered – whatever is simple but effective –
    including posters, newspapers, fixed and mobile telephony, radio, TV, video and audio
    cassettes, CD-ROM, diskettes in addition to the Internet” (point 7); that “local content and
    languages are key to gaining the critical mass for success” (point 9); or that “ICTs offer
    major opportunities for the development of micro-enterprise, via information, improved
    productivity, increased sales to a larger market, and facilitating micro-finance” (point 11).
     OECD also publishes the Science, Technology and Industry (STI) Scoreboard 200110
     that brings together the latest internationally comparable data on trends in the
     knowledge-based economy (160 indicators). Among the newly included indicators, the
     report includes policy issues such as 'international mobility of human capital', skills in the
     information economy, diffusion of the Internet and electronic commerce.

•    The “Digital Opportunity Initiative”11 (DOI) ( ) is a partnership between
     the UNDP, Accenture (a US$10 billion global management and technology consulting
     under the Anderson Group) and the Markle Foundation (a not-for-profit philantrophy
     working on emerging communications media and information technology). DOI has
     compiled a substantial report on ICT for development ("Creating a Development
     Dynamic", July 2001) in which it establishes five key differentials for a dynamic ICT-for-
     development scenario, i.e. infrastructure; human capacity; policy; enterprise; content and

     The “enterprise” area includes improving access to financial capital, facilitating access to
     global and local markets, enforcing appropriate tax and property rights regimes, enabling
     efficient business processes and stimulating domestic demand for ICT. A number of case
     studies illustrate specific interventions and country approaches (Brazil, Costa, Rica,
     Estonia, India, Malaysia, South Africa, Tanzania: see chapter 3/Annex 3). The very
     comprehensive list of consulted documents and relevant web sites constitutes a real
     resource tool for further study.

•    The Global Internet Policy Initiative (GIPI) ( ) promotes an open
     and democratic Internet for developing countries (more than 100 offices around the
     world). It liaises with the UNDP to promote sound Internet and information technology
     policies that can enhance the opportunities of ICTs.

•    The Intermediate Technology for Development Group (ITDG) ( ) is a UK-
     based NGO that has extensive experience with appropriate technology for developing
     countries. It applies the same approach to ICTs, namely that they should be affordable;
     built on exísting capabilities; be sustainable. Furthermore, the capability of the users
     should be considered to enable adaptation to changing circumstances; and the
     assessment of ICTs’ appropriateness requires understanding of the context of the users.

     ITDG runs a number of ICT projects exploring the key questions of (a) whether and how
     the spread of new ICTs could result in the further marginalisation of disadvantaged
     groups; and (b) whether and how new ICTs can be effectively used by low income, small-
     scale producers to improve their productivity and competitiveness in market economies.
     ICT projects have been initiated in Peru, Zimbabwe, Kenya, Sri Lanka and the UK.

2.2.3 ICT-Content in Development Gateways

The Worldbank Group (WBG) has invested a serious amount of work in setting-up the
“Development Gateway” ( ), offering a comprehensive
homepage with many ICT-relevant topics and country information (Country Gateways). It

  OECD: Science, Technology and Industry Scoreboard 2001 (STI), 145 pages, OECD 2001, 4th edition.
  OECD: Science, Technology and Industry Outlook. Drivers of Growth: Information Technology, Innovation and
Entrepreneurship, special edition 2001 (pdf-file).
   Creating a Development Dynamic. Final Report of the Digital Opportunity Initiative, July 2001. UNDP,
accenture/Markle Foundation.
also offers (among others) information on Private Sector Development, financial sector
references (microfinance), gender and development, education and training, besides other
topics. Specific topics are entered in the country gateways (e.g. Russia Country Gateway,
mentioning the number of documents under each rubrique).

Other WBG activities on ICT-for-Development12 focus on e-commerce initiatives (see also
country examples, chapter 3); SME policy (SME Gateway for Governments, Donors and
NGOs, WB/SME Department); information exchange and SME Knowledge Exchange with
regards to project finance (IFC).

The Information Technologies for Development (ITD) ( ) is a joint
Worldbank/WTO project using information technologies to provide developing countries
access to sources of information and training (WTO on-line database; new library of
distance-learning for trade officials, on-line trade policy forums and briefings, other Internet
tools). The web site however, appears not regularly up-dated.

2.2.4 International Labour Organisation: Life at Work in the Information Economy

The ILO’s annual World Employment Report 2001 ( ) focuses on “Life at Work in
the Information Economy”. This substantial report analyses employment challenges and
opportunities with ICT around the world. Shaping the new global economy, it looks at the
effects of ICT on businesses, skills profiles and the importance of education, learning and
training for jobs and incomes. The exclusive character of ICT is described along the disparity
patterns between poor and rich nations, and strategies are laid out for development and
poverty alleviation in the context of IT. On the other hand, provided an encouraging policy
environment is developed to match a dynamic private sector, ICTs are believed to deliver
real tangible benefits to a wide group of users in the developing world.

This research was further expanded by ILO’s InFocus Programme on Boosting Employment
through Small Enterprise Development (IFP/SEED), so as to look at the potentials and
challenges of ICTs for enterprises in developing countries13. While it is acknowledged that
not all ICTs will be easily and quickly accessible to all segments of SME, especially not to the
micro- and rural-based businesses, the paper explores the roles of the private sector in
pushing forward connectivity through commercial infrastructure investments. Low-cost
models are discussed to increase affordability, and special emphasis is put on the idea of
low-margin, high-volume business models e.g. in the mobile telephony. The scope of
innovation is illustrated here by many examples for ICT applications (see chapter 3/Annex 3).


3.1     Areas of ICT Applications (and how they work)

There are many different terms in use for ICT applications, with sometimes flue borders of
what is meant by what type of ICT-based service. At the same time, the use of one rubrique
(e.g. e-finance) can also cross with another rubrique (e.g. online training), as one uses the
other for its service. In the following, we outline in short what the various terms mean, and

  Worldbank: The Internet and SMEs. A presentation on WBG Internet Activities, WB 2001 (?)
  ILO: ICTs and Enterprises in Developing Countries: Hype or Opportunity? by Jim Tanburn/Alwyn Didar Singh,
SEED Working Paper No. 17, International Labour Organisation (ILO) Geneva, 2001.
how they work. Certainly, you will find other explanations and additional terms to add, so
consider this just a starting point.

3.1.1 Business-related applications

ICT-based Business Development Services (BDS) – new BDS products and markets
based on ICTs are progressively being developed, but there is no systematic overview
available to trace these, until present. Under the following sub-headlines we adopted a very
wide range of applications that are conducive to business performance, such as:

• Business Information Systems (BIS) – BIS include all kinds of general business
information (fairs, exhibitions, training, news, international events, contacts with world
chambers of commerce and trade organisations), factual and statistical data (e.g. exchange
rates, import/export figures, taxes and duties) as well as sector-related/industry information.
In general, the information is free of charge. In many cases, if not properly maintained,
information gets easily outdated and of low relevance. Often, international facilitating bodies
(project-based systems; multilateral agencies) act as direct BIS providers, in some instances
even in isolation from national providers (chambers). A more detailed description of BIS is
provided by the GTZ-supported Enterprise Information Project (EIP) in Sri Lanka:

• ICT-Manuals and Toolkits: the new challenge of ICTs for small businesses in
developing countries is taken up by various agencies with the aim to enable entrepreneurs
and communities to actively and efficiently use these new technologies. For example,
“Information and Communication Technology. A Handbook for Entrepreneurs in Developing
Countries” has been put together with the support from DFID by the UK-based Institute for
Development Policy and Management ( ). The UNESCO
has compiled a ‘Cookbook’15 to establish community-based telecenters
( ). IFC and the Worldbank Group have
launched the SMe-Toolkit website so as “…to provide valuable information resources,
facilitate interaction and make transactions accessible to SMEs around the world…”
( ).

• E-Consulting: this service is often based on a mix of standard packages (e.g. business
plan formats; diagnosis tools to download for offline processing) and online consulting (e-
mail; video-conferencing) to work with a consultant in an interactive way. Examples for
distance consulting services are discussed under 16. A private BDS
provider in South Africa provides another very good example for the mix of online- and
offline-consulting: Mbendi South Africa ( ).

The GTZ-supported project SMENET Vietnam has developed specialised services like legal
advice (Question-and-Answer-Service implemented by a local legal consultancy firm) and
business consulting via the Internet ( ). It targets both the BDS provider
side (consulting and training centers, support organisations, private consultants etc.) as well
as SME owners and potential entrepreneurs for the use of its services. The web site receives

   EIP, drawing on its experience, also assists other projects, example: ICT based Business Information Services
(BIS) in Bangladesh. Appraisal Mission report by U. Gärtner/R. Siriniwasa (see list of doc), 2001
   UNESCO: Community Telecentre Cookbook for Africa: Recipes for Self-Sustainability. How to establish a Multi-
Purpose Community Telecentre in Africa, by Mike Jensen/Anriette Esterhuysen, UNESCO Paris, 2001.
   SLU (1998): Distance Consulting: Potentials and Pitfalls in using the Internet to deliver Business Development
Services to SMEs, by Jerome A. Katz/Mary Louise Murray, Saint Lous University (SLU), USA/ Donor Committee
on Small Enterprise Development, 2000 ( ).
a high response (approx. 2000 users/ month) and is continuously expanding its content and

• Online-training as part of the BDS service range is discussed below (see learning-
related applications).

• Electronic Marketplaces (B2B/e-commerce) – also referred to as portals (or sites with
a search engine customized to a specific topic or user group). These marketplaces offer
information on products, technologies etc. with the aim to sell. Partly, they are built as
member-based sites with restricted access on a fee-basis. Horizontal marketplaces (offering
products/services to a broad range of companies, with comparatively low entrance barriers)
are differentiated from vertical marketplaces that organise offer along the vertical value chain
of a particluar industry segment (high entrance barriers, e.g. electronics). Transaction fees
still are the major source of income for e-marketplaces. (For more information on e-
commerce, see ).

• E-finance: the world of development finance is hooked to the net and uses ICTs in its
various forms: online courses through the Internet Training Center for Microfinance (PlaNet
University OnLine), offline offers on CD-ROM (Planet Finance CD-ROM) and information on
field activities worldwide. (For more information on e-finance, see ).

One GTZ project in Thailand is already using online training on risk management (BAAC
GTZ Thailand, contact: ).

• Knowledge Management: although this has become a real buzz word for business as
well as for development and support organisations, ICT-based knowledge management can
be considered a very tangible BDS if it is handled in an appropriate way. The lack of
knowledge management creates annual losses of some 15 billion dollars in the German
economy, for example17.

The effective and efficient use of knowledge is a strategic function in any enterprise, enabling
the right people at the right time to access appropriate information for delivering a task,
grasping an opportunity or, eventually, creating something new. The abundance of literature
in the academic sphere indicates the importance of the matter. For this presentation,
however, we limit ourselves to suggest the online-training on knowledge management
offered on the Global Campus 21 of the Carl Duisberg Gesellschaft (CDG), in cooperation
with the German Foundation for International Development (DSE). The demo version gives
an idea on how the subject can be handled online in a training/consultancy context for
business development: .

Furthermore, the documentation of the “Swiss Meeting on Global Knowledge Sharing and
Information and Communication Technologies”18 provides useful material, see under

• Fundraising and Networks on the Internet: this rubrique refers to the idea of
membership-based organisations or associations to use the Internet for fundraising. The

   R. Eisele, German Confederation of Small and Medium-sized enterprises (BVMW); Knowledge Management
and E-commerce in SMEs: Legal Aspects and Information Networking Platform, in:New Economy – A New
Opportunity for Africa? Challenges for Development Cooperation, 11/2000, Conference, Carl Duisberg
Gesellschaft Köln 2000.
   Helvetas: Knowledge – A Core Resource for Development. Swiss Meeting on Global Knowledge Sharing and
Information and Communication Technologies (ICTs), ed. Katarina Thumheer, May 2001
‘ProMali’ initiative by the National Federation of Malian Artisans and Trades (FNAM) –
assisted by GTZ in this matter – has identified several options to create new sources of
income via the Internet. Currently, web-page production and hosting of web pages for Malian
companies, NGOs, institutions etc. has become a real new activity that demand only little
technical infrastructure (PC/Internet connection; printer and scanner; Web page creation
software). For more information, see

3.1.2 Learning-related applications

• E-learning, in general terms, requires users (learners, participants) to access a computer
and get online. The major advantage is time and cost on the user side, disadvantages are
often assigned to the comparatively low impact or quality of e-learning. For the provider of e-
learning, this means that a thorough methodology, design and content management are
required to reach satisfactory results. The multitude of concepts and approaches is
impressive, both in developed as well as in developing parts of the world.19 Applications
range from virtual universities to distance learning to cyberschools and learning portals,
integrating classroom-based learning situations and online case studies, to quote only some
possibilities. Examples can be traced from various sources (see also country experience,
Annex 3). A first go at e-learning could be for example the search engine:

Secondly, a number of agencies engage in e-learning initiatives with a view to use ICTs for
the purpose of education in a transforming environment. To this end, the GTZ has
commissioned a parallel research project on e-learning that closely cooperates with in the
EDEP approach to ICT-based services (introduced in chapter 1).

Again, the examples listed hereunder can only give some initial orientation for this very active
field of governmental, professional and commercial providers:

The OECD20 ( ) has explored the highly relevant area of public-
private-partnerships needed for managing costs and grasping the complexity of ICT
applications in the sphere of education. It looks at e-learning developments respectively in
the school and the higher education sector in terms of market prospects and partnership
creation in different OECD countries.

The Worldbank Global Development Learning Network ( ) has established a
worldwide exchange of learning activities (se also chapter 2.2.2 and country examples,
Annex 3).

• ICT-based-training: similar to e-learning of which it is part, ICT-based training is usually
referred to as online training structured along a sequence of learning modules offered via the
Internet and/or with offline versions (download possibilities; CD-ROM). The way it is
organised depends on the target group (educational level, demand), the cost and time factor
(who pays for what?) and the users (level of participation in team work/communication).

   The Power of the Internet for Learning: Moving from Promise to Practice. Report of the Web-based Education
Commission, USA, December 2000
   OECD (2001): E-Learning: The Partnership Challenge, available in English and French from the OECD Online
Bookshop (OECD Code 962001061P1), or as PDF E-book.
In BDS, online-training is not yet widely in use, for reasons that need to be further explored
(see chapter 3.2.2 and Annex 3/Country experience). The use of ICT in classroom-training
has been mentioned by one project in Nigeria (GTZ-SME project), assisting the local
chamber in running the first ICT-based enterprise courses for bankers, consultants,
expanding entrepreneurs, based on the CEFE methodology. All materials are done and
distributed via a network of computers, there are no printed handouts. At the end of the
course, participants get a CD-ROM with movies, handouts, e-books, web sites, exercises

To get a taste of some documented material at this point, reference is also made to the
Vietnam/SMENET website mentioned already for e-consulting ( ).
SMENET offers several online training guides on business issues (e.g. accounting, costing,
diagnosis tools, new product development).

• Interactive CD-ROMs: one recent example is a new product by CEFE International: “The
perfect CEFE Facilitator”21). The development of this material has taken a very demanding
conceptual input by CEFE experts and training product developers. The concept takes the
facilitator (user of the CD-ROM) through various real-life training situations in which different
options are presented for facilitation. The advantage of this product is that it can be used
over and again, at one’s individual pace and rhythm, referring to difficult situations and
exploring new possibilities each time. The CD-ROM can also be used in group training with
facilitators which makes it a powerful asset to classroom learning.

3.2     Experiences with ICT applications for EDEP

3.2.1 International and Regional/Country Experience

Best Practice and Impact Assessment:
DFID as one of the leading ICT actors for development criticises the lack of tangible
information on best practice and impact assessment of appropriate and innovative
technologies in enterprise development. In its recent publications on this topic (see Annex 2
List of Documents), DFID also addresses the question of methodology to be applied, opting
for a combination of qualitative, quantitative and participatory methods to assess the link
between ICTs, enterprise development and the reduction of poverty.

Country Experience:
An enormous number of ICT applications can be traced at country level. The present report
cannot describe these in detail, neither does it claim to present a complete coverage of
cases relevant for EDEP. However, for easy reference, applications that we came across
during the search are listed by country, area of application (keyword), implementing
organisation and reference (Annex 3).

For illustration of some applications, the following examples show how wide the possibilities

• The ICT Stories Project run by the Information for Development Programme
InfoDev/Worldbank Group ( ) provides detailed case studies on ICT
applications. One interesting example is the Market Watch tool for Mongolia’s animal
husbandry industries, a multi-media price information and analysis service by the Gobi

   GTZ/CEFE (2001): The perfect CEFE Facilitator. An interactive CD-ROM, available on purchase from CEFE
International (CEFE: Competency-based Economies - Formation of Enterprise, see:
Regional Economic Growth Initiative (USAID). This tools tracks more than 30 commodities in
seven Gobi and two Ulaanbaatar markets on twice-weekly, monthly and quarterly basis.
Herders and traders as well as local wool processing factories, banks and other institutions
use the Market Watch. It is broadcasted nationally and regionally by radio stations and it is
accessible via the Internet. So far, the service is free, but a recent market study has identified
that users are willing and able to pay for the service which is now being transformed into a
for-profit enterprise by 2003.

• DFID in its best practice examples22 describes mostly rural and poverty oriented
applications, among them the Honey Bee Network in India, collecting data on appropriate
technology and encouraging remote access to online multimedia databases. It thereby
fosters product innovation built on local indigenous knowledge. The InfoDes project in Peru
is described as a customized information data base on trade and business issues for people
in rural areas, gaining access to the Internet (internet access tours) and to information
hitherto not known to them. In Zimbabwe, the InfoBus system is a fully mobile set-up
working as information resource centres designed by ITDG for small-scale entrepreneurs
and manufacturers.

• DOI, to give another example, has collected national ICT approaches (Brazil, Costa
Rica, Estonia, India, Malaysia, South Africa, Tanzania) as well as case studies for evidence
on impact. One such case is (besides the repeatedly described village pay phones story of
Grameen Bangladesh, and the case of Pride Africa on Scaling Micro-Finance) the
Infocentros Telecenter Model in El Salvador (based on an in-depth case study prepared by
the World Resource Institute). In view of the fact that less than one percent of the population
in El Salvador uses the Internet, this franchising model aims to build 100 telecenters (at US$
80,000 per center) within 2 years (end of 2002). Profitability should be reached within 27
months. Besides the infrastructure aspect, its strategy is to build an 'infostructure' of local
content, ICT-based training and e-commerce.

• The IFC refers to two major web-enabled info-mediaries,
( ) and ( ) that is has helped
to establish. Both provide e-platforms for SME links to industries (B2B-approach).

• Employment-creating ICT jobs: electronic conversion is an important provider of jobs
especially in Asia – the work entails the transformation of text data into digital information,
often done by unskilled labour for big text volumes (libraries, data bases etc.). In Cambodia,
for example, the initiative “Follow your Dream” provides ITC-based jobs for physically
handicapped people (for more information, contact Ms. Ulrike Roesler, GTZ Thailand, at
ITID/ESCAP Bangkok).

• Private-sector association and non-governmental activities include ICT-services run
by local chambers, often with support from donors via international chambers. In Egypt, the
German-Arab Chamber of Industry and Commerce has built a marketplace for Middle
Eastern and European industries and services to meet clients ( ). It lists
over 10,000 companies and provides ICT-expertise on a fee-basis. Another interesting
example is provided by the Federation of Cambodian Rice Millers Associations, supported by
the non-governmental group “Enterprise Development Cambodia”. Having trained regional
staff and having equipped each provincial association office with a computer, it now links
remote rice mills through the Internet (Khmer- and English-language Web site www.rice- ) for information exchange and international marketing.

     DFID (20001): Impact Assessment of Appropriate and Innovative ICTs in Enterprise Development, op.cit., p.5 -
• Commercial BDS: the South African company Mbendi Information Services/Consultants
offers private sector companies assistance in developing their own internet strategy. A
handbook on how to draw up a “Corporate Internet Strategy” as well as a number of useful
case studies and examples help in doing a proper assessment for ICT applications at firm
level ( ).

3.2.2 GTZ Experience with ICT in EDEP projects

The GTZ has a number of ongoing research projects and pilot activities to promote the use of
ICTs in partner countries. Also, in-house competencies for the use of ICTs are being built-up
so as to strengthen the service capacity of GTZ technical departments At EDEP project level,
the e-commerce project has already been referred to at several instances. This project also
cooperates with four partner countries and projects on ICT-based activities (Argentine, El
Salvador, Vietnam). In addition, a recent assessment by GTZ on new ICTs in the context of
rural development in Peru23 highlights the possibilities and the interests of project partners as
well as a number of interesting pilot experiences (telecentres, ICT-based schools and
training initiatives, agricultural information system etc., see also Annex 3).

The assessment presented herewith represents the first in a series of research activities
planned in the framework of EDEP. Based on a short questionnaire sent out to all EDEP
projects24 in August 2001, a survey was compiled with a view to assess the current use of
ICTs, and to get an idea of potential ICT applications for further development. In line with the
overall research task as introduced in chapter 1, the questions captured the following

(1) the use of ICT by project partners (Internet presence; access to information; clients’
reach; use of ICT for product development; online services; other);
(2) potential areas of intervention for the use of ICTs (in the short- and medium term);
(3) basic conditions for the effective use of ICT in the project context;
(4) demand by small, micro and medium-sized enterprises (SMME) or by users of training
institutions (which products/services are most in demand, which less, and for what services
are clients ready to pay?);
(5) knowledge of other donors in EDEP, using ICTs (and if so, how?).

The return of project answers (approximately one third of all projects replied) provides
sufficient ground for a preliminary analysis: among the 31 responding projects, SME
development projects take the larger share (19 of 31), followed by vocational training projects
(8), financial systems (1) and self-help organisations (1). Two of 31 answers could not be
validated, unfortunately.

The synthesis presented in the tables (table 1-3, below) reflects a grouping and summary of
answers with more than one element per answer provided by a single respondent. From a
methodological point of view, this is due to the open-question approach which allowed for a
variety of ideas and qualitative responses rather than assessing the answers along a
simplified multiple choice pattern. You will therefore find more than 100% per question group.

Looking at the use of the Internet and ICT-based services until present, the following can
be observed (see table 1):

   GTZ (2001): Potentiale der neuen Informations- und Kommunikationstechnologien als Instrument der
Ländlichen Entwicklung in Peru. Bericht über Erfahrungsauswertung, von Peter Wolf, Februar 2001.
   There are at present approx. 100 projects active in EDEP with GTZ support
        1       2      3      4       5      6       7

1 = no use of ICTs
2 = Internet presence
3 = Access to information
4 = Clients' Reach
5 = Product Development
6 = Online BDS
7 = e-learning

Table 1:       ICT in use by GTZ – EDEP projects and partners

⇒ Internet use and presence: almost all partner organisations effectively use the Internet
and are present with their own Web sites.

⇒ Access to information: projects/partner organisations use the Internet for access to
information. Sometimes, in case of difficulties in infrastructure and Internet access, projects
act as intermediaries by searching, selecting and compiling the information on CD-ROM for
easy use by local partners.

⇒ Clients' reach: ICTs are used by projects/partner organisations to keep in touch with
clients. This, however, is mostly limited to email exchange. There is little experience with
question/answer services, mailing lists or online chats, according to the project answers.

⇒ Product Development: partners start using ICTs for product development, but on a very
modest scale until present.

⇒ Online BDS (online-training/-consulting) have already been introduced by a few
projects as new service areas.

⇒ E-learning has not yet reached a significant scale. This is partly due to the small number
of projects in this assessment for which this topic is of particular relevance (i.e. vocational
training projects). At the same time, it is worthwhile highlighting that in the area of ICT-
potentials, e-learning tools get a high score (see below, table 2).

As an overall observation, the importance of the Internet and the use of ICTs has not yet
gained sufficient attention at project level. As a consequence, the knowledge base for
practical experience and best practice cases of ICTs is weak, accompanied sometimes by a
diffuse attitude of scepticism by GTZ project staff who express their doubts concerning the
usefulness of ICT activities at a larger scale.
On the other hand, many projects indicate their firm interest for ICTs, for which they stress
the need to get assistance in order to be able to explore the possibilities for using ICTs with,
for and by their partner organisations. Therefore, further training on ICTs for BDS is
suggested for the staff of projects and partners (see also chapter 5/ recommendations).

Looking at the potentials of ICT, the projects have come up with very many important ideas
and suggestions as shown in table 2 below:






         1    2     3     4     5     6    7     8     9

1 = Access to Information
2 = Knowledge Management
3 = Learning Tool/e-learning
4 = Networking&Info-Sharing
5 = Business Development Services
6 = Electronic Commerce
7 = Technology Transfer
8 = Marketing
9 = ICT-based jobs

Tab. 2: Potentials for ICT Use

⇒ Access to Information hits the highest score in the view of project partners, followed by
the potential for ICTs as learning tools, including e-learning. Projects stress the fact that
they consider these areas still under-utilized, despite the relatively advanced situation of
hardware/IT equipment in a good number of projects (see below, table 3 including

⇒ Networking & Info-Sharing as well as Electronic Commerce were mentioned as high
potentials by about 30% of the respondents each. This is hardly surprising for e-commerce
which is a high interest subject especially for partner organizations such as chambers. The
theme of information sharing and networking came up more with respondents from self-help
organizations and multiple partner structures. At the same time, the relatively modest overall
response for these two areas acknowledges the complex preconditions to be fulfilled before
entering these areas.

⇒ Marketing has received a promising position as well for the use of ICTs in the context of
EDEP, be it for the promotion of BDS (including news/events sections on web sites), or for
attracting new clients and introducing fee-based services on or via the Internet.
⇒ Knowledge Management and Business Development Services have been mentioned
by 5 projects each, suggesting still largely unexplored set of ICT-based activities for the

⇒ Technology Transfer was brought in by only one project as a future area for ICTs.
Another project highlighted the potential for ICT-based jobs which had already occurred
outside the project (see chapter 3.2.1 Country Experience: Employment-creating ICT jobs).

        1      2       3      4       5       6      7

1 = Hardware/Server/Net
2 = Sustainable Set-Up (Local Partner; provider)
3 = Qualified Human Resources/ICT culture
4 = Simple Access (open systems; local language)
5 = Client-focused/local acceptance/affordability
6 = policy environment
7 = awareness

Table 3: Basic Conditions for ICT Use

A third area of investigation addressed by the questionnaire was the basic framework
conditions needed for the use of ICTs in the project context. Here, the respondents
highlighted the following criteria for success or respectively the problem areas (table 3):

⇒ hardware/server/net: obviously, this entry figures very high among respondents (40% of
the answers), referring to the necessary infrastructure for ICT-based services. Interestingly
enough, this is however not as high a priority as qualified human resources (HR) and a
good ICT culture, both being mentioned either in parallel or as one (HR) enabling the other
(cultural readiness through ICT-qualified staff).

⇒ simple access and a client-focused approach are considered important for introducing
ICTs in the developing context by about 25 % of the interviewees each. This includes the
design of ICT-based structures as 'open systems' (making the flow of information as wide
and unrestricted as possible, as opposed to closed systems in an organizational set-up, for
example the Intranet); the use of local language and local context to lower the entry barrier
for the application of ICTs; and the aspect of affordability that appears crucial for very small
and micro-enterprises - as one respondent from Zambia put it: "affordability is of the
⇒ A sustainable set-up through local partners and service providers as well as awareness
about the potential benefits of ICTs are judged essential prerequisites for the introduction
and the long-term use of ICT-based services in EDEP by approximately 10% of the

⇒ A conducive policy environment was added by one project partner, indicating problems
about the free flow of information and the restriction of Internet service providers (providers;
Internet coffee shops). However, this does not seem to be a major concern in other countries
and projects

In summary, the results of the questionnaire indicate a high interest by projects and partner
organisations to work with ICTs, promote the use of ICTs and broaden the service range for
EDEP. It also confirms the urgent need for conceptualisation, guidance and training on ICTs
for project staff and partner organisations.

3.2.3. Industrialised Countries’ Experience in the Use of ICTs for EDEP

The relevance of ICTs in and for developing countries has been further accelerated by the
speed of innovation and the spread of ICT use in the developed world. The policy concerns
to narrow the digital divide in the era of globalisation are now being accentuated by a call for
concrete action in the field of economic and employment promotion. It is acknowledged that
the basic framework conditions do not allow for a simple copy-and-paste strategy of
successful ICT-concepts and instruments implemented in industrialised countries.
Nevertheless, a selection of some interesting information and successful experiences
presented hereunder will give a taste of what is worth to be known and considered when
designing ICTs-for-development in the EDEP context:

•   Internet Users and ICT Facilities in Industrialised Countries: recent figures for the
    USA and Switzerland show a high density of fixed telephone lines (70/72 per 100
    inhabitants), mobile phones (37/67 per 100 inhabitants), hardware (60/57 per 100
    inhabitants) and Internet access (48/36 per 100 inhabitants)25. The use of ICTs in SMEs
    is described high as well for some areas (e.g. use of email: USA 85%; CH 70%; use of
    Internet to get information: USA 60%; CH 50%. In other areas, SME in developed
    countries are also still in the process of establishing ICT-based services (e.g. e-
    commerce/selling products over the Internet: USA 20%; CH 10%; own company web site:
    USA 60%; CH 45%).

    There are approximately 500 million internet users worldwide (60% outside the USA). The
    number of users will more than double by the year 2005.

    The highest growth rate of internet users in the next decade will probably take place in
    South America and the Asia Pacific region, according to the same source quoted here
    (Mellow GmbH Switzerland, for Swisscontact).

•   Government support for business development services: Germany has a long
    tradition in promoting and subsidising business development services for SMEs. In the
    field of ICTs, the German Ministry for Education and Research (Bundesminsiterium für
    Bildung und Forschung, BMBF), for example, has launched a research initiative on

   source: Mellow GmbH Switzerland: the Role of ICT in SME Promotion. A Study on ICT in Indonesia and Sri
Lanka, commissioned by Swisscontact, November 2001.
    Internet and software technology worth 123 million DM. Young researchers and
    business people can access funding for IT-development projects in order to open new
    markets for ICT-based products and services. One special area of interest looks at
    innovative applications and user-friendly services (inter-activity, simple access). For more
    information, see the Ministry's web site under

    The German Ministry for Economy (Bundesministerium für Wirtschaft, BMWi) has
    established an Online-Academy for Business Start-Ups and young entrepreneurs. In
    cooperation with a German business journal (Focus), the web site contains relevant
    information on all start-up phases up to financing the business (checklists, addresses,
    sample contracts etc.). For more information, see

    Some regional initiatives in Germany promote e-business for SME. One example is the
    Land Brandenburg that provides financial assistance to SME for the use of ICTs in
    marketing regional products and services, and for the use of electronic communication at
    business level (for more information, see

    Reaching out to the Government, a very recent initiative on e-learning has been
    launched under the "Initiative D21", involving some 300 private companies in Germany.
    The aim is an increased cooperation between the private sector, policy actors and public
    administration in order to join forces that help advance the new information society.
    Reduced costs could represent up to 30 percent of current expenditure for continuous
    education and training, according to the D21-initiative. This would mean potential savings
    of up to 5 billion DM annually, and time reduction for learning of approximately 20
    percent, if e-learning was introduced in a more coherent way. For more information, see

•   Specialised ICT-Products by Local Research Institutes: the Gesellschaft für
    angewandte Kommunalforschung mbH (GEFAK, Germany, Company for applied
    research in local government affairs), is already known to a number of GTZ projects
    applying GEFAK's main ICT-product, the KWIS software, in developing countries. KWIS
    for Windows is described by GEFAK as a "multi-purpose tool for all requirements of
    enterprise and economic promotion". It contains a data base tool for the compilation,
    processing and presentation of relevant data, as well as a supporting tool for the
    management of promotion projects related to enterprises or economic regions. It can also
    be used for communication (data exchange, Internet), or as a working tool for day-to-day
    operations. For more information on the experience with KWIS applied in GTZ/EDEP
    projects, please contact Martina Vahlhaus (email: GEFAK's
    web site is at

    The University of Mannheim, Institut für Mittelstandsforschung (Institute for Medium-
    Sized Enterprise/Small Business Research), has developed competencies in the field of
    e-commerce that it believes to be of relevance also in the context of developing
    countries, especially in terms of employee training and electronic market places (Internet
    portals, bidding procedures, auctions, catalogues). As one example for application, the
    web site can be viewed. Currently, the Institute works
    with 15 pilot companies on sector-specific ICT applications for e-commerce. It cooperates
    closely with the Marketing department of Mannheim University, and with the e-
    commerce-center of the regional chamber (IHK Rhein-Neckar). Project outputs will
    include curricula for e-commerce and training-of.trainers for e-commerce consultants. For
    more information, please contact Martina Vahlhaus (email:
    The Institute's web site is at
•     ICTs and the Private Sector: End-to-End E-Business: the future of e-commerce
      applications developed by highly specialised ICT-providers is now framed as "End-to-
      End E-Business"26 that can be divided into three phases:

      - phase 1: ICTs cover PR and marketing; the applications are e-marketing and
      - phase 2::ICTs cover sales and services (applications: e-commerce; front-of-pipe-
      solutions). In this phase, success depends on the "4-C-concept" of contact (market;
      positioning; marketing mix; user interests); content (added value in service features and
      application features; corporate information, product information, promotion); commerce
      (product data, product presentation, product information; logistics; payment); and
      customer service (customer response; online support/help desk; local services; after
      - phase 3: ICT covers the complete value chain; this is called 'End-to-End-Business', fully
      integrating all company processes including supply chain management with suppliers and

      It is assumed that most small businesses in developing countries will find it difficult
      reaching phase two, given the resources available (scope) and the size of companies
      and commerce (scale).

Another example is the DIALEGO Online Market Research GmbH, a 1999 German start-up
company that uses Internet and multimedia for market research. The company sells services
under the heading 'market research in and about the Internet', and produces software and
hardware systems for online-research (SMAN system). For more information on this and
other IT-business pioneers in Nordrhein-Westfalia, the regional Centre for Innovation and
Technology (ZENIT, Zentrum für Innovation und Technik in NRW) has produced success
stories that can be searched at www.zenit.de27


4.1      Needs, Uses and Benefits of ICTs by SMME

The need and demand side of SMME for ICT-based services has been put into focus by a
number of research and pilot projects in recent years. The studies discuss cultural, social,
geographical and language criteria, they distinguish between the size of enterprises, and
they look at customer behaviour in relation to delivery mechanisms.

ICT/BDS-studies have been commissioned by GTZ projects in Bangladesh, Macedonia, Sri
Lanka, Thailand and Vietnam, among others (see Annex 2, list of documents, and Annex 3
for country examples). The Macedonian example shows that traditional sources of
information are still mainly being used by SME today (press, TV, business friends, informal
networks). In addition, supply-oriented business support agencies offer their services
including ICT-based information, but there still seems to be a wide gap between needs
perceived and services provided (mostly free of charge).

In Vietnam, according to SMENET, an estimated number of 60 000 SMEs have access to the
Internet, the readiness for the use of ICT-based services is therefore deemed high

   source: Pixelpark AG Germany: Die Zukunft des Internet: End-to-End E-Business. Powerpoint Presentation
2001, for internal use only (Pixelpark AG, Berlin, Germany, web site:
   ZENIT, Zentrum für Innovation und Technik in NRW: Start-Ups in Nordrhein-Westfalen. Business-Pioniere und
ihre Erfolgsstories. Jungunternehmer aus dem "GO!"-Pool motivieren zur Selbständigkeit.
(information on technology, purchasing channels, customers, product design). On the other
hand, the importance of local language and local content is an impeding factor for the quick
development of quality-services. Also, this number has to be put into perspective with only 1
per cent of local businesses to have e-mail addresses, as indicated by another source28.

Drawing from these and other examples, some uncertainty seems to govern the needs-
discussion on:

- how to produce added value through the use of ICTs at enterprise level?
- how to measure impact so that satisfaction of needs could be demonstrated?
- whether the need for ICT-based services and applications is more pronounced in terms of
profit increases or in terms of cost-cutting prospects?

This unclear picture is fully understandable given the lack of data at micro-level, e.g. on the
evidence of ICT use and its impact for business growth. On the other hand, the 'digital divide'
and 'digital opportunities' initiatives presented above show a clear picture of the correlation
between highly developed infrastructures and wealth creation through the Internet - and vice
versa. It is therefore important to produce data that would demonstrate the positive effect of
ICTs on the user side of small businesses in developing countries.

4.2     Current Demand for ICT by SMME

On the demand side for ICTs and ICT-based services, the question on what type of ICT-
based services would be potentially in demand by what type of SMME has not been
sufficiently well addressed by many projects. A survey done by ILO/FIT on MSE demand for
business services in Ghana mentions a number of ICT-based services for which a high
degree of awareness can be assessed (e.g. business communication centres, telephone
boots/phone cards, advertising, mobile phones)29.

Other examples refer to the demand in human resource development to upgrade
competencies for ICTs at business level as well as in business support organisations. The
CDG training programme on Information Technology in African Business30 reflects this

4.3     Readiness to pay for ICT-based services

Most research indicates a basic readiness by MSE to pay for BDS including ICT-based
services. This has also been confirmed by the GTZ survey presented in this report (chapter
3). In reality, however, the prevailing supply-orientation of government - or donor-related
MSE support services still works in contradiction to the development of fee-based service
markets along the not so new paradigm of BDS delivery. This has been extensively
discussed and reviewed under the Guiding Principles for BDS by the Committee of Donor
Agencies for Small Enterprise Development31.

   ILO/SEED (2001): ICTs and Enterprises in Developing Countries…op.cit., p.8.
   ILO/FIT (2001): MSE Demand for Commercial Non-Financial Business Services in Ghana, by Sandeep
Ghosh/Aly Miehlbradt, based on a quantitative survey on 400 MSEs done by a local consultancy firm.
   CDG (2001): Information Technology in African Business (IT@AB), a training programme offered by the Carl
Duisber Gesellschaft (CDG) in Germany for African multiplier institutions involved in IT and SME business training
in the SADC region ( or
31, and
The question really is for many practitioners how to get there, in concrete terms, and for
ICTs, how to make best use of modern technology and the Internet and go for
commercialisation and profit provision at the same time?

It appears that ICTs for SME development and EDEP in partner countries as well as in
industrialised countries are still mainly provided on a subsidized basis. The scope for
introducing relevant business services via the Internet and/or by designing pragmatic
solutions to overcome the deficiency side of infrastructure has not yet been well grasped by
service providers and accompanying projects. In addition, the role of private sector
investment in developing countries has not yet received the attention of venture capital
agents that it would have deserved.

Therefore, in summary, the readiness to pay for services can be assumed for ICT-based
services as well as for any other business service based on client demand. Affordability of
these services is certainly a crucial point here, but it cannot be used to argue against ICTs
for very much longer. Low-cost innovative solutions have been demonstrated in many
different ways (see country examples, Annex 3), and the rapid cost reductions in the use of
the Internet (with an enormous mushrooming of Internet Cafés in even remote places of this
world) speak for themselves.


There is growing attention by governments, development agents and service providers that
ICTs can play a decisively positive role for private sector development in developing
countries. Recent initiatives such as the G8 Action Plan consider the bridging of digital
divides and the fostering of digital opportunities a priority in future research and project

The knowledge base for ICTs in the field of economic development and employment
promotion (EDEP) is rich and varied, providing a very wide range of possible applications
and real country experience. This is true both for ICT-applications by international and
regional agencies as well as for a number of GTZ projects and the respective partner
organisations. The GTZ survey showed not only a good response and high interest in the
ICT subject, but it also revealed new ideas for potential areas of ICT applications in EDEP
projects. The answers do not provide, however, sufficient basis for identifying or choosing
potential areas at this stage (see recommendations). At the same time, it is worth
considering the basic conditions to be fulfilled in order to use ICTs efficiently for product
development, and in the project context.

At present, there is still insufficient use of ICTs by projects and agencies for the delivery and
the improvement of Business Development Services (BDS). Despite the above mentioned
general interest in ICTs, factors of uncertainty, too little exposure to good practice cases and
insufficient technical awareness obviously keep expectations low. As a consequence, project
staff - at least from a GTZ internal perspective - has not yet been very self-initiative or
entrepreneurial in putting the ICT-issue on top of the agenda, neither is it being regarded as
an integrating and cross-cutting theme for development work.

The user perspective regarding need and demand for ICT-based services has been validated
by an increasing number of projects - especially in the field of private sector promotion - over
the past one to two years. This gives scope for joining forces with some of these projects in
promoting ICT-based product development that would benefit a wider group of projects.
Experience from industrialised countries can contribute and facilitate access to tools and
information on ICT-applications.

Finally, the need for awareness raising and ICT-training has become evident from the
answers provided by project staff and partner organisations.


Based on the above conclusions, it is recommended to proceed with the research project by
undertaking the following steps:

(a) conduct a technical workshop on ICT-based Business Development Services for
SMEs in developed and in developing countries.

Intended Outputs:
- overview on ICT-based applications and services for SME (the present report could serve
as discussion paper);
- demonstration of selected ICT applications (2 German, 2 project examples);
- selection of pilot countries and types of ICT-based services to be developed in these
countries (in total: 3). This step can only be taken on a participatory basis that involves the
active projects in the selection.

Location: GTZ Eschborn
Duration: one full day
Timing: between January - February, 2002
•    resource persons from the German private sector, research institutions, and consulting companies
     (GEFAK; IT-Pro/Spelleken; IFM/Universität Mannheim; ZEF Bonn; Dialego Marktforschung; ZENIT
     NRW; BMWi; BMBF; regionale/Landesbehörden etc.).
•    GTZ project staff from EDEP projects in selected partner countries - excluding countries already
     covered under the e-commerce research project (J. Prey). Preferably, contacts should be made
     with those projects that responded to the questionnaire and that have indicated their interest in the
     subject. Among those, the selection of 3 - 4 projects could be based on the state of advancement
     on ICT-knowledge (e.g. projects that have already conducted ICT/BDS studies such as PSP
     Macedonia; EIP Sri Lanka or Bangladesh; projects using KWIS).
•    GTZ headquarter staff (P+E, OE 4111: not more than 3 - 4 participants).
•    In addition, resource persons from high-potential countries with accelerated ICT-development (e.g.
     Brazil; Estonia) could be invited if contacts and resources allow for.

Practical steps: consultant of this report (S. Bauer) can join either as resource person, or as
facilitator to the workshop (workshop preparation; documentation etc.: 5 - 6 work days
suggested, depending on workshop content and outline to be agreed upon).

(b) Prepare for assignment of short-term consultants (based on the workshop results for
selection of countries and services to be developed); possible field missions in March/April

         Intended outputs:
         - new products developed for ICT-based BDS (conceptual design and test run for
         - increased knowledge on the feasibility of ICT-based BDS.
(c) Elaborate a concept paper for an integrated approach to ICT within ongoing GTZ
projects and programmes in EDEP.

This could also be in follow-up to the workshop, and should be done in parallel to (b).

       Intended outputs:
       - dissemination of the workshop outputs to a wider group of projects beyond the
       selected pilot areas;
       - increased awareness of project staff on the importance of ICTs and the range of
       possibilities for their application and integration at project level;
       - increased integration of ICTs within ongoing GTZ projects.

(d) Design a training module on ICT-based BDS for GTZ project staff and partners, in the
form of an online course provided on a fee-basis.

       Intended outputs:

       - qualified human resources/project staff on ICT-application in the SME context;
       - test application of a training module delivered via the Internet to project staff (cost
       consideration; staff time for training inputs reduced).

Practical steps to consider:
- the experience of CDG/Denkmodell on course design and training delivery should be
tapped (for more information, have a look at the demo versions on Knowledge Management
and Consultancy as a Professional Option: ongoing, until November 27, 2001).

- As background material for the design of this course, the various ICT/BDS studies
commissioned by GTZ-projects and other programmes mentioned in this report could be
explored in more detail.

- A course outline can be prepared by the consultant of this report (S. Bauer: 3 work days
ANNEX I:          ICT-International/development links            Development Gateway Foundation (Worldbank)                       Department for International Development (DFID),
                                      Enterprise Development Department                        Deutsches Institut für Entwicklungspolitik (DIE)
                                      (German Development Institute: GDI)          Digital Divide Network (DDN) UN Economic and Social Council/ IT Forum                          Global Development Learning Network (GDLN)
                                      (Worldbank Initiative)    GDLN Online Resources                   Global Internet Policy Initiative (GIPI)                German Technical Cooperation agency (GTZ)
                                      (research project on e-business)        Inter-American Development Bank                     Institute for Development Studies (IDS)   International Finance Corporation (IFC; Worldbank Group)
                                      hereunder: SME Toolkit                         World Employment Report 2001: Life at work in the
                                    Information Economy (ILO) (resource bank and knowledge bank,
                                           DFID programmes)                       Global Multi-Donor Grant Program on Information
                                      Development (start: 1995), managed by the Worldbank
                                      (see also entry to “The ICT Stories project”)                           Information Technologies for Development (ITD)               Intermediate Technology for Development Group (ITDG)               International Telecommunication Union
                                      ECDC: Electronic Commerce for Developing Countries         Institute for Development Policy and Management (IDPM),
                                      University of Manchester
(see also: )              Organisation for Economic Co-operation and
                                      Development (OECD)                      Digital Opportunity Initiative (DOI)                        UNDP/ICTs for Sustainable Development Networking                         South Lousiana University (SLU), USA (on: e-consulting)           United Nations Development Programme (UNDP),
                                         Info21 “IT for development” programme.       United Nations Economic and Social Commission
                                                forAsia and the Pacific (UNESCAP)           UNESCO (Cookbook Telecenters)          United Nations Research Institute for Social
                                                (information on donors that are active in ICTs)                Worldbank
ANNEX II:        Literature on ICT in Development

ADB (2001): “Towards E-development in Asia and The Pacific: A Strategic Approach For ICT". Asian
Development Bank (ADB) 2001.

Allafrica (link) (2001): "Ghana - Rapid Growth in the Internet Use despite Cost Constraints", Accra Mail, October
2, 2001, by Kwami Ahiabenu

BMZ (2000): Informations- und Kommunikationstechnologien (IKT) in der Deutschen Entwicklungs-
zusammenarbeit, Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, Juli 2000

BMZ/ZEF (2001): Information and Communication Technologies (ICT) for Development – The German
Contribution. List of Issues for Country Studies, Zentrum für Entwicklungsforschung (ZEF Bonn), October 2001.

CDG/SERCOTEC (1999): Aprendizaje Institutional: Asesoría Empresarial y Planificación de Proyectos
Asociativos, CD_ROM, Servicio de Cooperacion Tecnica (SERCOTEC) Chile

CDG (2000): New Economy – A New Opportunity for Africa? Challenges for Development Cooperation, berlin,
November 14 – 15, 2000, Conference Documentation. Carl Duisberg Gesellschaft e.V. (CDG) Köln.

(therein, for example: R. Eisele, German Confederation of Small and Medium-sized enterprises (BVMW):
Knowledge Management and E-Commerce in SMEs: Legal Aspects and Information Networking Platform).

CDG (2001): Information Technology in African Business. International Training and Cooperation Initiative. CDG

DIE (2001): Eine globale IKT-Kompetenzoffensive zur Überwindung der digitalen Kluft zwischen Nord und Süd.
Analysen und Stellungnahmen, 2/2001, Deutsches Institut für Entwicklungspolitik (DIE) Bonn.

DIE (2000): Stamm, A. et al.: Ansatzpunkte für nachholende Technologieentwicklung in den fortgeschrittenen
Ländern Lateinamerikas: das Beispiel der Softwareindustrie von Argentinien, 2000, DIE Bonn.

DFID/IDPM (2001): Richard Heeks/Richard Duncombe: (1) Information and Communication Technology. A
Handbook for Enterpreneurs in Developing Countries; (2) Information, Technology and Small Enterprise: A
Handbook for Enterprise Support Agencies. Version1, 2001, Institute for Development Policy and Management
(IDPM), University of Manchester, UK. With support from UK DFID.

DFID (2001): Oliver Wakelin/Basheer Shadrach: Impact Assessment of Appropriate and Innovative Technologies
in Enterprise Development, DFID 2001

DFID (2001): Enterprise Development and ICTs: Research on Innovation and Best Practice. Strategy Paper by
the Enterprise Development Department of DFID (draft report), 2001.

DOI (2001): Creating a Development Dynamic: Final Report of the Digital Opportunbity Initiative, July 2001.

EU (2000): Le développement d’Internet dans les pays méditerranéens et la coopération avec l’union

EU (2001): Bericht über Informations- und Kommunikationstechnologien (IKT) und Entwicklungsländer
(2000/2327 (INI), Europäisches Parlament, Ausschuß für Entwicklungszusammenarbeit, Berichterstatter Lone
Dybkjaer, 30. Mai 2001

Frankfurter Rundschau (2001): Die Globalisierung bietet Entwicklungsländern enorme Chancen. Beitrag
von Siegmar Mosdorf, 18.10.2001 (p. 7)

GTZ (2000): ICT-based Business Information for regional Economies. Contribution to the BDS Conference in
Hanoi, Vietnam, by the team of the Sri Lankan-German Enterprise Information Project (EIP), Sri Lanka (Udo
Gärtner, Rashanith Siriwansa).

GTZ (2001): Analysis of Information Demand and Supply for the Business Sector in Macedonia, with
recommendations to Build an Internet based Information System. Final report by Edwin Brunner, with asssistance
from Saso Risteski, Aleksandar Karaev, Skopje, April 2001 (on behalf of Ministry of Economy of the Republic of
Macedonia, commissioned by GTZ under the Private Sector Promotion Project (PSP)
GTZ (2001): Research on the Market for Internet-based Information Services for Private SMEs, by Taylor Nelson
Sofres for SMENET Vietnam, commissioned by GTZ under the Promotion of Small and Medium Enterprises

GTZ (2001): ICT-based Business Information Services (BIS) in Bangladesh (based on the proposal “Information
Centre and Data Bank” submitted by the FBCCI), Appraisal Mission report, by Udo Gärtner, Roshanjith
Siriniwasa, Martina Vahlhaus, Shafiquer Rahman.

GTZ/CEFE (2001): The perfect CEFE Faciitator. Interactive CD-ROM, available in English/Spanish, CEFE
International, GTZ Eschborn 2001.

Helvetas (2001): Knowledge – A Core Resource for Development. Swiss Meeting on Global Knowledge Sharing
and Information and Communication Technologies (ICTs), ed. Katarina Thumheer, May 2001

IDS (2001): E-Commerce: Accelerator of Development? IDS Policy Briefing, issue 14/September 2001, Institute
for Development Studies.

ILO (2001): World Employment Report 2001: Life at Work in the Information Economy (371 pp.).

ILO (2001): ICTs and Enterprises in developing Countries: Hype or Opportunity?, by Jim Tanburn and Alwyn
Didar Singh, SEED Working Paper No. 17, International Labour Organisation (ILO) Geneva, 2001.

Le Monde (2001): Le Web à la rescousse des entrepreneurs. Le Monde Interactif, 24 Octobre 2001 (p.6)

OECD (2001): Science, Technology and Industry Scoreboard 2001 (STI), 145 pages, OECD 2001, 4th edition.

OECD (2001): Science, Technology and Industry Outlook. Drivers of Growth: Information Technology, Innovation
and Entrepreneurship, special edition 2001 (pdf-file).

SLU (2000): Distance Consulting: Potentials and Pitfalls in using the Internet to deliver Business Development
Services to SMEs, by Jerome A. Katz, Saint Lous University (SLU), USA 2000 (ppt presentation).

SWISSCONTACT (2001): The role of ICT in SME promotion (case studies Sri Lanka and Indonesia), for
Swisscontact by Mellows GmbH Switzerland, November 2001

UN (2001): United Nations Human Development Report 2001 (chapter 2: Today’s technological transformations –
creating the network age), U.N. New York, 2001, p. 27 - ..

UNDP/DOI (2001): see DOI publication “Creating a Development Dynamic (…)”.

UNESCO (2001): Community Telecentre Cookbook for Africa: Recipes for Self-Sustainability. How to establish a
Multi-Purpose Community Telecentre in Africa, by Mike Jensen/Anriette Esterhuysen, UNESCO Paris, 2001.

US Government (2000): The Power of the Internet for Learning: Moving from Promise to Practice. Report of the
Web-based Education Commission, USA, December 2000

ZEF (2001): see BMZ/ZEF (2001) – above.
ANNEX III: ICT applications - Country and regional Experience

Keyword           Country/Region Implementing                   link

Africa/Middle East
Ecofarming        Africa/general     Network for Ecofrming in
                  Network Africa     Africa, sponsered by
online-           Africa/general     German Development
coaching                             Foundation (DSE)         www.dse.zd
Partnership       Africa/general     Partnership for ICTs in
for ICT in                           Africa (PICTA), African
Africa                               Information Society
                                     Initiative (AISI)
IT in African     Africa/general     Carl Duisberg     or
Business                             Gesellschaft (CDG)
ICT for           Africa/general     Project implemented
Development:                         Trade&Development
Wiring Up                            Centre (ITD), for
Africa                               WTO/World Bank
ICT for           Africa/general     ETradeAFRica     
Technology        Egypt              TACC (Technology Access
                                     Community Center)
Growth in         Ghana              Allafrica      or
Internet Use                                       

Rural radio &     Mali               FAO              
Digital Divide/   Niger              Worldspace Foundation or
Community                                              (ICT Stories Project)
Internet for      Nigeria            Global Technology
Universities                         Corps
Internet          South Africa       Mbendi Information
strategy                             Services/Consultants
Women’s Net       South Africa       Women’s Net, part of the
                                     Association for
                                     Communications’ Africa
                                     regional Programme
Online            Southern Africa    Southern African Non-
development                          Governmental
Information                          Organisation Network
Service                              (SangoNet)
Digital Video     South Africa       Global Technology
Broadcasting                         Corps
(training for
National ICT      Tanzania, South    Digital Opportunity
approaches        Africa             Initiative (UNDP etal)
ISP/PoP           Uganda             African Technology Forum or
Resource          Southern Africa,   Intermediate Technology
Centre; ICTs      Zimbabwe           for Development Group
ICT policies     Asia/general         ADB                  
ICT Funding      Japan/ADB            JFICT (Japan Fund for
                                      Information &
ICT Inventory    Asia/UNESCAP         ESCAP               
Information      Cambodia             Federation of Cambodian
exchange                              Rice Millers Associations
ICT Case         Indonesia & Sri      SWISSCONTACT, studies
Studies          Lanka                done by Mellow GmbH
National ICT     India, Malaysia      Digital Opportunity 
approaches                            Initiative (UNDP etal)
Simple           India                Simputer Trust (non-profit) or
mobile PC
IT/PC for slum   India                Indian Government   
IT               India – Bangalore    Bangalore IT (local 
                                      Government page)
ICT & training   Vietnam              IFC/ Mekong Project 
product                               Development Facility/
development                           Open Learning Agency
Latin America
Low-Cost         Brazil               Benton Foundation   
Internet         Brazil               Emarketer Consulting
Dicas de         Brazil                                   
National ICT     Brazil, Costa Rica   Digital Opportunity 
approaches                            Initiative (UNDP etal)
Information      Peru                 Intermediate Technology
Systems for                           for Development Group
Eastern Europe/CIS countries
National ICT     Eustonia             Digital Opportunity 
approaches                            Initiative (UNDP etal)
Internet         Mongolia             Soros Foundation    
Price            Mongolia             Gobi Regional Growth or under
Information                           Initiative, USAID    (ICT Stories Project)
Women and        “It’s a Woman’s      Mediametrix         
WWW              World Wide Web”
Worldwide        “Half a billion      WashingtonPost or
Online Survey    People online”                   
ICTs for         Global Program       InfoDev – Worldbank
Development                                                 (hereunder: related Initiatives: links to 21 major ICT
                                                            programs worldwide)
ICT Country      Many countries       Worldbank/Development
Gateways       can be searched    Gateway
               under their own
UN-            “UN Inter-Agency   UNDP - Enterprise
interagency-   Resource Guide     Development Unit
SME            for Small
development    Enterprise
               (online guide)