ABSTRACT The economic growth of any country depends, to a certain degree, on the ability of the countrys business community

to maximize their growth potential. One of the biggest contributors from the business community of any nation, to the nations economic development, is the small and medium sized enterprise (SME) sector. Studies have shown that SMEs and indeed, large and multi-national organizations can improve their productive capacity by using the benefits of the Information and Communications Technology (ICT). In this paper, we explore how the Small and Medium Sized Enterprises (SMEs) in the developing economies can achieve their own growth through the adoption of information and communication technology.

CHAPTER ONE 1.0 INTRODUCTION:

The Small Scale and Medium Sized Enterprises (SMEs) have been credited with enormous Contribution to the growth of the developed economies of the world. In the same vein, the Information and Communications Technologies (ICT), and particularly the Internet have played their own part in those economies. The Small Scale and Medium Sized Enterprises provide the cornerstones on which any countrys economic growth and stability rests for example, American economy, the largest economy in the world, depends largely on the success of Small Scale and Medium Sized Enterprises for innovation, productivity, job growth and stability.

Generally, small business owners are less likely to embrace innovations in Information and Communication Technology and less likely to have a well-defined business strategy. Yet for companies to grow and continue to be successful, Information and Communications Technologies is critical. Given the importance of this sector there is a need for governments and policy makers to understand innovation in small business particularly in terms of Information and Communications Technologies implementation and use in order to formulate appropriate programs and policies. The contributions of Information and Communications Technologies to enterprise development have been recognized and various local and international organizations have called on developing countries to develop policies that will integrate Information and Communications development. Technologies into enterprise

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WHAT IS ICT?

ICT (information and communications technology - or technologies) is an umbrella term that includes any communication device or application, encompassing: radio, television, cellular phones, computer and network hardware and software, satellite systems and so on, as well as the various services and applications associated with them, such as videoconferencing and distance learning. ICTs are often spoken of in a particular context, such as ICTs in education, health care, or libraries etc. A good way to think about ICT is to consider all the uses of digital technology that already exist to help individuals, businesses and organizations use information. ICT covers any product that will store, retrieve, manipulate, transmit or receive information electronically in a digital form. For example, personal computers, digital television, email, robots. So ICT is concerned with the storage, retrieval, manipulation, transmission or receipt of digital data. Importantly, it is also concerned with the way these different uses can work with each other. In business, ICT is often categorized into two broad types of product: (1) The traditional computer-based technologies (things you can typically do on a personal computer or using computers at home or at work); and (2) The more recent, and fast-growing range of digital communication technologies (which allow people and organizations to communicate and share information digitally) Small and Medium Businesses(SME) are companies whose headcount or turnover falls below certain limits.

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WHAT IS SMALL AND MEDIUM SCALE ENTERPRISE (SME)?

Small and Medium Businesses (SME) are companies whose headcount or turnover falls below certain limits. However, what exactly an SME or Small to Medium Enterprise is depends on whos doing the defining. What might therefore be defined as SME in a developed country can be regarded as a large scale enterprise in a developing country using partners as fixed investment and employment of the labour force. It might seem difficult to obtain a precise definition of small and Medium Enterprise. Several writers have propounded various definitions and explanations as to what Small and Medium Enterprises are. Some have defined SMEs based on the characteristics of the business, such as size, level of operations, type of industry, assets employed, and number of employees, turnover, market, management or control of the business or several others. The abbreviation SME occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations and the WTO. The term small and mediumsized businesses or SMBs has become more standard in a few other countries. EU Member States traditionally had their own definition of what constitutes an SME, for example the traditional definition in Germany had a limit of 500 employees, while, for example, in Belgium it could have been 100. But now the EU has started to standardize the concept. Its current definition categorizes companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium. By contrast, in the United States, when small business is defined by the number of employees, it often refers to those with less than 100 employees, while mediumsized business often refers to those with less than 500 employees. However, the most widely used American definition of micro-business by the number of employees is the same of that of European Union: less than 10 employees. As of 2005, Germany will use the definition of the European Commission.
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CHAPTER TWO 2.0 ICT AS AN SME TOOL

Small Scale and Medium Sized Enterprises are often the main driver for a countrys economic growth. However, as the number of Small Scale and Medium Sized Enterprises increases, competition increases, which then results in a decrease in prices, customer base, or both. This in turn will reduce existing profits and creating less incentive for people to start Small Scale and Medium Sized Enterprises. To counter the increasing competition, firms can lower prices, increase promotion of their product, improve their product, add new distribution channels, and/or improve their internal processes. To achieve all these, the use of information and communication technology is needed. This information and communication technology challenge is to be adopted when the firm still has the financial resources to do so. Otherwise, once the pressure of competition sufficiently reduce the SMEs profits, it will no longer have resources to counter the competition and will have to exit the market. Foreign firms in both the import and export markets further add to competitive pressures, especially if they react faster to improve their product, process, promotion, or distribution channels. This is the problem of the Digital Divide. When firms in developed countries adopt ICT, firms in developing countries will lose out on the competition. This in turn can slow the growth rate of SMEs and hurt the economy as a whole. ICT can thus play a very important role because it can help SMEs both create business opportunities and combat pressures from competition. Appropriate ICT can help SMEs cut costs by improving their internal processes, improving their product through faster communication with their customers, and better promoting and distributing their products through online
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presence. In fact, ICT has the potential to improve the core business of SMEs in every step of the business process.

2.1

BENEFITS OF ICT TOOLS

In countries where SMEs are only starting to adopt basic ICT, obtaining a fixed or mobile phone line can help their business. It can replace the time and costs necessary for face-to-face communication. In countries where SMEs already have basic ICT, adopting more advanced ICT still brings enormous benefits. Advanced communication technologies such as email can help firms communicate faster and cheaper with both its suppliers and clients. In 2000, an organization that uses paper took on average 7.4 days to move a purchase from request to approval, but if done electronically, only took 1.5 days.12 Advanced ITs such as ERP software can capture cost savings (see Figure 8). Beyond cost savings, SCM software can also help increase productivity, efficiency of inventory controls, and increase sales through closer relationships and faster delivery times.

CHAPTER THREE: 3.0 APPLICATION OF ICT TO SMALL AND MEDIUM ENTERPRISE

Information and communication technology (ICT) is very widespread in businesses of all sizes. As is the case with all technologies, small businesses are slower than large ones to adopt new ICTs. Potential small business benefits and firm and sector-specific strategies drive the adoption and use of ICTs. Furthermore, sectors are increasingly global and dominated by large firms and the structure of their values chains and operations shape opportunities for small and medium size enterprises (SMEs). Principal reasons for non-adoption are lack of applicability and little incentive to change business models when returns are unclear. SMEs also face generic barriers to adoption including trust and transaction security and IPR concerns, and challenges in areas of management skills, technological capabilities, productivity and competitiveness. The issues for governments are to foster appropriate business environments for e-business and ICT uptake (e.g. to diffuse broadband, enhance competition), and target programmes to overcome market failures to the extent that they are needed in particular areas (e.g. skill formation, specialized information). Governments have a range of SME e-business and Internet use programmes. However commercial considerations and potential returns are the principal drivers of small business adoption and profitable use. The areas of small and medium enterprise (SMEs) ICT can be applicable are summarized below.

Business environment A healthy business environment is fundamental for firms to thrive and benefit from ICTs. This includes a transparent, open and competitive business framework, clear independent rule of law for all firms, easy set up and dissolution of businesses, transparent, simple and accessible corporate regulation, and equal and stable legal treatment for national and cross-border transactions. Network infrastructure Encourage rollout and use of quality infrastructure at affordable prices. Broadband connectivity is a key component in ICT development, adoption and use. It accelerates the contribution of ICTs to economic growth, facilitates innovation, and promotes efficiency, network effects and positive externalities. The development of broadband markets, efficient and innovative supply arrangements, and effective use of broadband services require policies that: promote effective competition and continued to stress liberalization in infrastructure, network services and applications across different technological platforms; encourage investment in new technological infrastructure, content and applications; and technology neutrality among competing and developing technologies to encourage interoperability, innovation and expand choice. Public financial assistance to expand coverage for under-served groups and remote areas could complement private investment where appropriate, provided it does not pre-empt private sector initiative or inhibit competition. Digital products and information services These are an increasingly significant part of economic activity and they offer important opportunities to small firms. Government and the private sector have key

roles in facilitating content availability across all platforms and encouraging local development of new content, including content from public sources. Skill upgrading Lack of ICT skills and business skills are widespread impediments to effective uptake once adoption decisions are made. Governments have major roles in providing basic ICT skills in compulsory schooling, and an important role in conjunction with education institutions, business, and individuals in providing the framework to encourage ICT skill formation at higher levels, in vocational training and in ongoing lifelong learning. Intangible investments and assets Firms increasingly rely on intangible investments and assets (skills, organisation, software, networks) for competitiveness and growth. However common frameworks to identify measure and report intangible investments and assets still need to be developed and be widely accepted. There is a significant role for governments in conjunction with business associations and accounting bodies to encourage business to develop and use systems which recognise and report intangibles in ways that can be reliably used by investors, valued by capital markets and guide better management practices. Information Small firms may lack objective information regarding the benefits and costs of adoption of ICT. The private sector (e.g. business associations) and government have a role, and can provide information about service available and when necessary improve coordination of government information on the benefits of

adoption and use of ICT, for example case studies and good-practice demonstrations to tackle market failures in information supply.

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CHAPTER FOUR: 4.0 SUMMARY

The adoption and use of ICT in small and medium enterprises depend on sector characteristics. The products of services like tourism, which are intangible in nature and have a high information content, are well-suited for purchase over the Internet. In addition, in sectors such as tourism and parts of retail and finance, where firms perceive a higher level of market opportunities, they tend to commit more resources to e-commerce. In sectors such as textiles and automobiles, where the relationship between firms along supply chains is very close, on-line transaction systems are seen as a strategic necessity for streamlining B2B transactions. Barriers to Internet commerce also vary among sectors. In tourism, incompatibility of systems and the dominance of relatively small agents with less capability impedes efficient Internet transactions along the supply chain, especially for B2B transactions. In the retail sector, the problem of confidence building seems more crucial. In manufacturing sectors, such as textiles and automobiles, established closed EDI systems with high installation costs structure the use of electronic commerce by SMEs. 4.1 CONCLUSION

The contributions of SMEs to employment and wealth creation as well as poverty reduction are pronounced. This is buttressed by the fact that industrial and business sector in most countries is usually dominated by SMEs, especially the small enterprises. To propel SMEs to play meaningful roles in the socioeconomic development of the country requires the adoption and use of ICTs to organize supplies, link customers,

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employees, acquire market information including prices and customer preferences, among others. It is believed that these small firms can easily propel growth in the economy than the large ones due to their numbers and niches they occupy in the national economy. Therefore, the effective development of SMEs has become paramount and should feature prominently on governments development agenda. The government should develop a national policy on ICT development with the general objective of encouraging its usage by the SMEs.

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REFERENCES Ariyo, D. (2000). Small Firms are the Backbone of the Nigerian Economy. African Economic Analysis. Retrieved from http://www.afbis.com/analysis/small.htm C. Avgerou & L. R. La Rovere (Eds.), Information Systems and the Economics of Innovation(33-52). Cornford, T., & Smithson, S. (1996). Project Research in Information Systems: A Students Guide. ODPM (2005). Small Business Friendly Concordat: Good Practice Guidance. A joint document produced by the Office of the Deputy Prime Minister, Department of Trade and Industry and Local Government Association. UK: ODPM Publications. Daft, R. L. (1998). Organization Theory and Design. International Thomas Publishing. DEIS (Developing Employment in the Information Society). (1998). Report on SMEs and the Information Society in Wales. Retrieved from http://www.toucanerurope. co.uk/deis/docs/docu1.html DTI, (1996). The Information Society Initiative Report on Market Review and Consultation. London: HMSO. Earl, M. H. (1988). Information Management, Clarendon Press, 1988. Grameen Communications (1998). Grameen Village Internet Programme. Bangladesh: Grameen Bank. Khalil, M. (2003). The Wireless Internet Opportunity for Developing Countries. The Wireless Internet Institute, 1-4.

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Kimble, C., & McLoughlin, K. (1995, March). Computer based Information Systems and Managers Work. New Technology, Work and Employment, 10(1), 56-67. Madon, S. (2000). The Internet and Socio-economic Development: Exploring the Interaction. Information Technology and People, 13(2), 85-101.

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