September 2006

e-Entrepreneurship

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We need to equally look at the existing entrepreneurial spirit rather than only technical conditions before concluding whether ICTs could be successfully integrated within a SME.

‘E’ stands for enterprise
In developing countries, it is usually the informal sector rather than the formal employment sector which is the largest source of livelihoods, investment and government revenue. While several of these developing countries, including India, Indonesia, Malaysia, Pakistan, Peru, Egypt, Argentina may be witnessing a high GDP growth rate of 5 percent and above, and most workers in these countries still find work not in the modern, formal sector but in the informal sector. For instance, in Peru itself (despite a 6.9 percent GDP growth rate), the size of the informal sector has doubled during the last forty years, to incorporate almost half of the workforce
(http://www.clas.ufl.edu/jur/200406/papers/paper_acosta.html).

It comes as no surprise that the informal sector, constituting of small and medium enterprises (SMEs), is where livelihoods and lifeline of a majority of people and especially those who are poor and under-educated is dependent upon. In Asia-Pacific region itself, the SMEs account for between 40 and 80 percent of the total non-agricultural employment.

The most potent concept while talking about SMEs is what the ‘E’ stands for, which is for ‘Enterprise’. It is potent because behind every ‘enterprise’ there is usually an ‘entrepreneur’. And the fact that there are hundreds of thousands of SMEs around us means that there is no dearth of entrepreneurs around us who have identified an opportunity for meeting their ‘livelihoods’ and seized it. They have done this via investing their own savings or by borrowing from the local creditor, or if they are fortunate by taking loans and subsidies provided by banks and NGOs.

But who are these entrepreneurs?  These entrepreneurs are so much woven into the everyday lives of people, living in developing countries, that they co-exist alongside the formal economy without clear distinction. In urban areas, these include the person operating a corner tea and cigarette stall, the owner of food and juice stalls alongside the road, the motor vehicle repair mechanic, the ubiquitous laundry and ironing shop, to those operating home based industries.

The increasing usage of ICTs within developing countries has not left these SMEs unaffected. Several of these entrepreneurs have already seized the new opportunities, provided by this medium to improve and expand their enterprises. These include, vendors in Botswana, who sell fruits and soft drinks on moving buses and who have now started to sell mobile SIM cards, or in Mongolia, where roadside operators hand out wireless in local loop (WLL) enabled handsets on busy intersections to allow people to make local calls, or in India, where the one-person operated bright yellow telephone booths, where people can make local and outstation calls, are a common sight even in the rural areas.

The examples above are the ‘visible’ aspects of integration of ICTs within SMEs. But what is ‘invisible’ is equally profound and far-reaching. The increasing accessibility to ICTs and at a lower cost is allowing SMEs to rethink their business strategy to expand markets for their products and services from local to national and global and sometimes exclusively global, or to provide services which, so far, were difficult or even unthinkable to provide without ICTs. For instance, Mexico and Brazil are seeing rise of entrepreneurs, who are offering Spanish classes to beginners, using Skype. It now does not matter where the learner resides as long as he or she has access to Skype. Home-based centres, run by entrepreneurs, are abound in India, Philippines and South Africa who undertake audio transcription and data entry work for clients, located abroad or elsewhere within the country. Local tourist guides, in Thailand, have started to offer their advisory services online so that the prospective visitors are able to plan their itineraries better based on the local knowledge.

In short, the livelihood enhancement possibilities, which have opened up and could be put into practice, using ICTs, are immense, and are limited not by the technology (as the case is often made out to be), but by the imagination of entrepreneurs and organisations fostering entrepreneurships.

Putting entrepreneurs before ICTs
Unlikely as it may seem, but amidst all the talk of ICTs for development, which resounds in the public domain and events, it is easy to overlook the potential of ICTs and the inroads it is already making in the lives of entrepreneurs. ICTs are looked upon too narrowly and in a pre-conceived manner even by those, who are proponents of ICT for development that the innovative angle to ICT application gets lost and fails to enthuse the entrepreneurs. For instance, a Sri Lankan farmer, belonging to a mushroom cooperative in Warapitya village in Matale district, that is 4 hours away from the capital city of Colombo and located miles away from the highway, not possessing a computer or serviced by a stable electric supply in his village, and without any support for ICT applications, available from the government or local NGOs, would be an unlikely beneficiary of the ICT revolution in our normal wisdom. However, this perception becomes invalid when we focus on the ‘entrepreneurial’ aspect of the SMEs, which, in this case, refers to the mushroom cooperative and the farmers running it, (supported by MREAP project of IFAD).

In this case, two of the farmers, Mr Samatha and his wife Ms Gayani got their business cards, printed replete with their photograph on it. The business cards did not mention any email or website address (as they did not have one) but their mobile phone number and their postal address. The plastic packages in which they sold their mushrooms to the market also mentioned their mobile number, neatly printed on the labels. The mobile phone was purchased by the farmer family through their own savings without resorting to subsidy or support of any kind, and they already feel they have recouped this investment via the enhanced business opportunity for marketing of mushrooms. It is true that now this farmer couple wants to invest in a computer, but not for any Internet-enabled e-Commerce application. Instead they feel the computer would be useful for accounting purposes to keep track of their sales and to manage the customer database and they do not need an Internet connection for this (which is still not available in that village).

This reflects, how focusing the popular thinking about ICTs in terms of integrating desktop computers, customised software and providing Internet connections to existing enterprises sometimes overlooks the entrepreneurial capabilities and the ability of entrepreneurs to use what is available around them. A simple mobile phone equipped with a camera, when used innovatively, offers the same or even more networking and enterprise-expansion capabilities.

The above example is also a reflection of how ‘entrepreneurs’ are integrating ‘e’ into their enterprises and expanding their businesses using locally relevant e-Commerce models. An outsider, given the circumstances, would have dismissed the feasibility of e-Commerce applications in such a scenario. This example reinstates a need to look equally at the existing entrepreneurial spirit rather than only technical conditions, before concluding whether ICTs could be successfully integrated within a SME.

Interestingly, when traditional SMEs transform into ICT-enabled service providers, they themselves become consumers of ICT products and thereby enhance their knowledge and access to the outside world, and often set into motion a virtuous circle of expansion of SMEs where they employ more people to manage the growing business.

The way forward
Some people are ‘born’ entrepreneurs but others (if not all) can be trained to become entrepreneurs. When it comes to developing countries, there are several areas, where local SMEs rather than bigger companies are better placed to fulfill the needs of the people and this also makes sense from the development perspective. Our national educational system needs to be tweaked to foster development of more of such SMEs. In most cases, the education curriculum is geared towards securing a good job for self rather than creating jobs for others. The popular question is still ‘which company or organisation do you work in?’ rather than ‘which company did you start and how many people do your employ?’

To counter this, there is a need to put greater focus on creating and administering ICT/e-Entrepreneurship courses and making them available through vocational training institutions, or via classroom teaching or distance-learning modules. The courses should focus on two aspects: (i) fostering the spirit of e-Entrepreneurship, and (ii) helping the entrepreneur to get started on the e-Entrepreneurship path by providing information about start-up ingredients, including technology, capital and mentors.

Fostering the spirit of entrepreneurship is easier in the
digital age as ICTs have diminished the time and the capital, required to put an entrepreneurial idea into practice. A good idea, thought during the day time, can ideally be put into practice by evening and this should enthuse the mindset of the youth, the entrepreneur and the inspired. Further, the returns on investment are based not only on enhancing the efficiency of existing operations, but through creation of newer services or expanding into newer markets. The opportunities are immense in rural areas, where the markets for SMEs have traditionally been limited to walking distance range of their customers.

The onus for fostering e-Entrepreneurship also lies on national and international government institutions, as well as private and public educational institutions and on entrepreneurship promoting organisations, including Acumen Fund and Ashoka to move more vigorously into this direction. A doctor will not be doing justice to his profession if he knows of a better remedy to cure a disorder but does not prescribe it to his patients. Similarly, academic, government and non-government institutions, who are aware of better ways to generate livelihoods through e-SMEs, but do not incorporate the same in their curriculum or interventions, do not do justice to their constituencies, for whom they are working for.

The road to riches
It needs to make qualitative leaps in our popular wisdom to put greater trust and resources on fostering the spirit of ‘entrepreneurship’ and ‘innovations’ over technology and accepted wisdom. It has a long way to go to achieve that. A simple case to point is the global gathering being organised by the World Bank and the FAO under the aegis of ‘World Congress on Communication for Development (WCCD)’ (http://www.devcomm-congress.org) which seeks submissions of abstracts and proposals to consider innovative and creative ways to present information and share knowledge, using different technologies that encourage dialogue and exchange, consistent with the spirit of the discipline. It then rejects a paper submission simply because ‘the list of references is short and there is no attribution for the sources of the ideas in the diagrams and sketches.’ In effect, innovations by farmers implementing e-SMEs will never find acceptance in such forums, aimed at promoting them simply because they proved successful in an area where there was no precedence and they did not refer to popular literature before embarking on their enterprises. The message being sent out by WCCD is a setback as it fails to comprehend the challenge, it has taken.

There is a need to get excited about the pivotal role ICTs can play in the lives of entrepreneurs and their SMEs, because even in the digital age, they offer the best opportunity for the upward mobility of a majority of people in rural areas and their next generation.

Citizen service: an informative care extended by Pradeep Lokhande
Pradeep Lokhande, a resident of Pune is receiving bulk of letters being addressed to him personally on grievances like lack of information and amenities, a confidence he has developed with his fellow villagers encompassing about seven states, over the last ten years.



Started with a spirit to make a difference to the lives of the majority of Indian population, Lokhande has accumulated a wealth of information from fellow villagers and through his regular visits to village panchayats. The huge mass of database of about 4,000 villages and their demographics and expectations is ultimately surfacing now to take a concrete shape. He sells it to multinational companies, who are keeping watch of rural trends and awareness level for their products. Lokhande liaisons between the villages and large companies through his own company ‘Rural Services’. His services come with a fee, a part of which goes into the improving the conditions of rural life. So far, among many, he has contributed computers to 370 villages, much to the enthusiasm of the villagers. He calls his efforts as an NRV (non resident villager) movement. His business instinct comes with a moral to share the information with his fellow men that inculcates a sense of responsibility as a citizen besides building a platform for improving the material well being of all. For further details visit : http://www.ruralrelations.com/
Source: The Times of India

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