Throughout East Africa, many SMEs struggle with record-keeping, processing large requests, and consequently, attracting foreign investment.  OII’s study aims to measure the economic consequences for SMEs when they pay for and regularly use Broadband Internet.

In an interview, Dr. Graham explained the study questions to me in more detail.  First, is paying for broadband Internet connections worth the cost for SMEs?  Second, how do Internet connections change companies’ business practices?  Dr. Graham and his research team have observed SMEs in both the tourism and business processing operations (BPO) sectors.  They found that nearly all businesses have some sort of Internet connection, since, as Dr. Graham explained, “it would be difficult to compete with your rivals, who would all have connections, if you aren’t connected yourself.”   Furthermore, “almost every type of business seems to be investing in connectivity, from one-person entrepreneurs to large companies.”

Whether these investments lead businesses to increase profits and to what degree, however, is still unknown.  The results are highly anticipated, as many have speculated regarding the impact of broadband connectivity, but few studies have shown its impact, and none have focused specifically on SMEs.

In an applied effort to help SMEs utilize the Internet for their advantage, USAID funded the West Africa Trade Hub.  The Trade Hub operates under the mission statement and ideal that “with appropriate software and hardware solutions, companies can track their operations and activity much more effectively.”  In their own research and experience assisting SMEs in West Africa (see a case study video from Ghana here), the Trade Hub finds that foreign business owners investing in the West African BPO sector want to be able to monitor where their product is and when it will be finished.  They need updates—are the materials in the sewing process, packaging, or shipping processes?  Chinese factories, on the other hand, historically have Internet access and the human capacity to keep the online systems updated, so many investors turn to China and not Africa.

Without high-speed Internet connections, many African businesses are unable to process large orders from foreign investors, leading to “lost” products.  And western businesses prefer to make agreements with BPO agencies that have their own domain name; they are less likely to trust anyone using a gmail or yahoo account, for example.

These findings are explained and applied in the SME Toolkit Africa, produced by the West Africa Trade Hub.  The toolkit is available as open-source advice for Africa businesses, and contains guides such as the how-to set up online websites, email accounts, computer accounting programs, and other business-oriented items.

Both the efforts of West African Trade Hub and the Oxford Internet Institute are important to evaluate the level of impact broadband connectivity has on SMEs in East Africa.  As fiber optic cable networks expand and nations push for increased connectivity, Internet connections will be progressively more influential for economic growth throughout the region.