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Adoption and usage of ICT in developing countries: Case of Ugandan firms

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Information and Communication Technology (ICT) is regarded as a driver and enabler of economic development is most countries including Uganda. The study examined the extent of adoption and usage of ICT on one hundred and ten firms in Uganda; and established benchmarks that can be utilized in future research and comparison between firms. The results revealed that the adoption and usage of ICT by firms in developing countries follow the same pattern as in developed countries, and they only differ in the level of usage and adoption. Firms do appreciate the contribution of ICT to their performance, but there are various barriers which require governments to adopt appropriate policies to address them. Uganda developed an ICT policy where it regards ICT as a driver and enabler of economic development. This paper is based on a study that was carried out in Uganda with the objective of examining the adoption and usage of ICT in the firms sector, with a focus on computers and the Internet. Specifically, to provide a benchmark that can be used in future research; information which can be used for comparison between firms; and information that can be used by policy makers to support the ICT sector. The paper starts by discussing ICT in Uganda's context; followed by a discussion of the data and methodology, results and lastly the conclusion.
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International Journal of Education and Development using Information and Communication Technology
(IJEDICT), 2007, Vol. 3, Issue 3, pp. xx. (Note: correct pagination will be added later)
Adoption and usage of ICT in developing countries: Case of Ugandan firms
Joseph Ssewanyana
Makerere University, Uganda
Michael Busler
Rowan University, USA
ABSTRACT
Information and Communication Technology (ICT) is regarded as a driver and enabler of
economic development is most countries including Uganda. The study examined the extent of
adoption and usage of ICT on one hundred and ten firms in Uganda; and established
benchmarks that can be utilized in future research and comparison between firms. The results
revealed that the adoption and usage of ICT by firms in developing countries follow the same
pattern as in developed countries, and they only differ in the level of usage and adoption. Firms
do appreciate the contribution of ICT to their performance, but there are various barriers which
require governments to adopt appropriate policies to address them.
Keywords: ICT adoption and usage; ICT and Developing countries; ICT in Uganda; ICT and
Ugandan firms; ICT usage in Africa
1. INTRODUCTION
The adoption and usage of Information and Communication Technology (ICT) is changing
business processes, and the way people live and work. New innovations as a result of ICT are
continuing to emerge. Globally, in the year 2000, 539 million computers were being used with 410
million in USA, European Union and Asia, leaving 129 million in developing countries. The
number of computer usage was projected to grow to one billion by the year 2005. Similarly, the
Internet users were 315 million in 2000, and the number was estimated to grow to 716 million
users by 2005, and the majority of these users were in developed countries (Ngplains 2002). The
Internet usage rate in the developed world was 8 times that of the developing countries, and there
were 22 million Internet users in Africa by 2004 (ITU 2004).
ICT has introduced what is known as the ‘Networked economy’, where successful businesses are
linked with their suppliers, internal manufacturing processes, shippers and customers in real-time.
Businesses are now able to move data and communicate with each other in real time. This has
transformed the way businesses are being done. ICT has the capacity to cut costs of
coordination, communication and information processing and many businesses have taken
advantage of this (Brynjolfsson and Hitt 2000).
Uganda developed an ICT policy where it regards ICT as a driver and enabler of economic
development. This paper is based on a study that was carried out in Uganda with the objective of
examining the adoption and usage of ICT in the firms sector, with a focus on computers and the
Internet. Specifically, to provide a benchmark that can be used in future research; information
which can be used for comparison between firms; and information that can be used by policy
makers to support the ICT sector. The paper starts by discussing ICT in Uganda’s context;
followed by a discussion of the data and methodology, results and lastly the conclusion.
2 IJEDICT
2. GENERAL ICT INDICATORS IN UGANDA’S CONTEXT
As a result of good policies undertaken by the government, among which are the trade
liberalization, privatization, civil service reform, financial sector reform, decentralization among
many others in the last decade, Uganda has had an impressive economic performance with an
average GDP growth of about 6% per annum. In 1996, as part of ICT policy reform process, the
government liberalized the telecommunication sector and opened it for competition by licensing
multiple players. There are now several cellular and mobile telephone networks, mobile radio
communication, paging services, courier services, private radio and television stations, multi-
purpose community tele-centres providing communication services of fax, telephone, e-mail and
Internet, media services, computer services to name a few.
By 1996, Uganda’s telephone density was as low as 0.25 lines per 100 people, and Kampala City
had 2.8 lines per 100 people. The telephone density rose to 2.5 lines per 100 people by 2003 and
to 6.5 lines per 100 people by 2006. The number of Internet Service providers increased from 2 in
1996 to 17 in 2006 (Uganda Communication Commission, 2005). By end of 2003, the Internet
usage was 0.5 per 100 people, which is 125 Internet users (ITU 2004).
3. DATA AND METHODOLOGY
The 2003 survey was based on the information from the Uganda Business Register 2001/02 that
indicated that, there were 160,883 businesses in Uganda with 87% of these businesses falling
under the informal sector that is employing less than five people, and the remaining 13% in the
formal sector.
Uganda like other developing countries, ICT usage is still at an infancy stage, in spite of
Government’s effort to promote it. A sample of 143 firms was purposively selected from a list of
the topmost tax paying businesses in the year 2002, as they were most likely to have invested in
ICT. The choice of the population was based on the fact that the diffusion of ICT and the adoption
of advanced technology are associated with higher labour productivity, higher export intensity,
and large size of firms, (Batelsman et al 1996; Baldwin and Deverty 1995; Gretton et al 2002).
And in Uganda’s case, the topmost tax paying firms were falling under this category.
The questionnaire was pre-tested and revised accordingly. The questionnaire included both
open-ended questions and pre-coded questions in seven sections. The sections included:
general information, computer usage, investment in ICT, IT department, Internet usage, ICT and
firm performance, and information on how government can promote the adoption and usage of
ICT. The questionnaires were administered and data was collected from 110 firms. The largest
coverage was in Manufacturing (35%), followed by Wholesale and Retail trade (31%) Finance
and Insurance 10%), Real estate and Business services (9%), Transport and Communication
(8%), Construction (3%), Utilities (3%) and Hotel, Bars and Restaurants (1%). The data was then
analyzed using Stata.
4. RESULTS AND DISCUSSION
The analysis covered general characteristics, ICT usage, E-commerce, Internet usage and
connectivity, perception on the contribution of ICT to the firm, government policies, and barriers to
ICT access and usage.
Adoption and usage of ICT in developing countries 3
4.1 General characteristics of firms
The general characteristics covered age and ownership by firm size (see Table 1). The majority
of the medium firms were foreign owned, while the large firms were mainly locally and jointly
owned. When one considers firm age and ownership, 33 percent of foreign firms and 8 percent of
the local firms were less than 10 years old; 27 percent of the foreign firms, 15 percent of the local
firms and 17 percent of the joint venture firms were between 10 and 20 years old; 40 percent of
the foreign firms, 77 percent of the local firms and 83 percent of the joint venture firms were more
than 20 years old.
Table 1: General Characteristics of firms (%)
Size of firms
Characteristics Small
6 - 20 people
Medium
21 – 100 people
Large
> 100 people
Age
< 10 years
10 – 20 years
> 20 years
24
29
4
49
38
37
27
33
59
Ownership
Foreign
Local
Joint ventures
-
23
-
67
23
33
33
54
67
4.2 ICT usage
All the firms covered in the survey had computers and Internet access, though only 62 percent
had a web presence on the Internet. This is an indication that size, age together with ownership is
not discriminating factors in acquiring ICT in Uganda. A finding consistent with Dunne (1994), that
young and old firms adopts ICT at more or less the same rate.
While all these firms had access to ICT, it had been acquired at different times. Table 2 presents
the distribution of ICT usage and firm size. There is significant relationship (p-value = 0.005)
between firm size and the duration of computer usage, which is in line with studies carried out
elsewhere (OECD 2003; Gretton et al. 2002). The small firms are faced with limitation of
investment capital, tend to be risk averse and conscious of uncertainties, and are more
responsive to taxation. The results indicate that most small firms started adopting ICT in the last
three years when the government started dropping some taxes. The findings above are in
agreement with other studies (for example Baldwin and Diverty 1995; Baltelsman et al 1996;
Gretton et al 2002) that established that the adoption of ICT increases with firm size; and larger
firms tend to adopt ICT earlier than the smaller firms.
As for the Internet, there is also significant relationship (p-value = 0. 012) between firm size and
the duration of Internet usage. This is in line with some studies (OECD, 2003; Knight and Pollard,
2004) that have established that larger firms due to their capability to have skilled managers and
workforce, advanced business practices are more likely to adopt the Internet more quickly than
other firms.
4 IJEDICT
Table 2: Distribution of ICT usage by firm size (%)
Firm size
Small
6- 20
persons
Medium
21 - 100
persons
Large
>100
persons
Overall
Computer usage
< 3
years
75.0 25.0 0.0 7.3
3 - 5
years
31.8 45.5 22.7 20.0
> 5
years
6.3 41.3 52.5 72.7
Internet usage
< 3
years
33.3 39.4 27.3 30.0
3 - 5
years
10.7 50.0 39.3 25.5
> 5
years
8.2 36.7 55.1 44.6
Overall 16.4 40.9 42.7 100.0
Table 3 illustrate the distribution of ICT usage by the age of the firm. The table indicates that
older firms tend to acquire ICT earlier than other categories of firms. Further analysis indicate
that there is significant relationship between firm age and duration of computer and Internet
usage (p-value = 0. 00 for computer, p-value = 0.06 for Internet).
Adoption and usage of ICT in developing countries 5
Table 3: Distribution of ICT usage by age of the firm (%)
Age of the firm
< 10 years 10 - 20 years > 20 years Overall
Computer usage
< 3 years
100.0 0.0 0.0 7.3
3 - 5 years
72.7 22.7 4.6 20.0
> 5 years
16.3 23.8 60.0 72.7
Internet usage
< 3 years
42.4 27.3 30.3 30.0
3 - 5 years
50.0 3.6 46.4 25.5
> 5 years
18.4 28.6 53.1 44.6
Overall
33.6 21.8 44.6 100.0
With respect to ownership, all the foreign and joint venture firms had computers for more than 5
years, while for the Internet 80 percent of foreign firms and 83 percent of the joint ventures had it
for between 3 and 5 years. While firms with local ownership, 76 percent had computers and 7
percent had the Internet for more than 5 years, 15 percent and 38 percent, respectively between
3 and 5 years. Eight percent had computers and 54 percent had the Internet for less than 3 years.
There is a strong significant relationship (p-value = 0.000) between ownership of the firm and the
duration the institution has been using the Internet, but no significant relationship (p-value =
0.256) when it comes to computers. The findings are in line with studies carried out in other
countries such as OECD (2003), that have established that foreign owned firms tend to adopt the
Internet faster than local firms due to a number of reasons that include appreciation of the
benefits of the Internet, and familiarity with the technology among others.
Figure 1 shows employee access to computers and Internet by employment category. Employees
in the Administration and Finance have more access to computers and the Internet than other
categories. While employees in Marketing/Sales have similar access to computers, they have
less access to the Internet. The results tend to indicate that the marketing/sales employees are
using the Internet to access information rather than as a business tool to support the marketing
and sales functions.
With respect to usage of the computers, the employees in administration and the support staff
use them mainly for word processing, while those in finance for accounting and those in
production, marketing/sales use them for information processing. The secondary usage for these
computers is communication and the Internet. The production department uses them also for
inventory control and storage optimization. The ICT access and usage by employees in these
firms is very low compared to other countries such as the OECD countries where the usage is
more than eighty percent.
6 IJEDICT
0 20406080
Administration
Finance
Production
Marketing/Sales
Support staff
Employment Category
Percentage
Computer Internet
Figure 1: Percentage of employees with access to ICT by employment category
4.3 Internet usage and connectivity
The Internet is found in all firms that were covered during the survey, although only 61 percent of
them had websites. Twenty seven percent of these firms were using their own website hosts,
while 73 percent were using sites managed by third parties. Surprisingly, Figure 2 shows that the
majority of medium and large firms were using high speed Internet connectivity technology of
wireless and leased lines which can be adequately used to connect the websites to the Internet
backbone. This pattern is not very much different from other developing countries. The low
percentage of own websites is a possible indication of few ICT skilled professionals who can
develop, administer and maintain the websites in the country.
0
10
20
30
40
50
60
Dial-up Wireless ISDN Leased line
Technology
Percentage
Small
Medium
Large
Figure 2: Internet Connectivity technology
Adoption and usage of ICT in developing countries 7
The Internet is mainly used for communication, followed by surfing as depicted in Figure 3. The
websites are mainly used for marketing, with the large firms also using them as symbols of status
and to provide information, as illustrated in Figure 4.
0 50 100 150
Communication
Research
Marketing
Training
Surfing Internet
Uses
Percentage
Small Medium Large
Figure 3: Uses of the Internet by size
4.4 E-Commerce
The number of secure web servers provide a good indicator about the infrastructure that can
support E-commerce. Secure servers allow to transmit confidential information over the Internet
for the purchase of goods and services. Only 17 percent of the firms had secure servers that
could be used to transact business over the Internet, but none of these firms were using them to
sell goods and services by the time of the survey. There were 27 percent of the firms that were
using the Internet to purchase goods and services, though the transaction values were very
small. This is an indication that e-commerce hardly exists in this country, though there are some
promising signs that it may be adopted by some firms in future.
Figure 4 illustrates that the medium sized firms have adopted e-commerce better than the large
firms, though still at a low level. The majority of medium sized firms are owned by foreigners,
which emphasizes the point that foreign owned firms tend to adopt ICT faster than the local
owned firms as discussed above.
8 IJEDICT
0 10203040
Marketing
Status
Provision of
Information
E-commerce
Uses
Percentages
Small Medium Large
Figure 4: Uses of the websites by size
4.5 Perceptions on the contribution of ICT to the firm
With respect to the contributions of ICT to the firm, Table 4 illustrates the different perceptions.
The majority of respondents strongly agree that ICT provides increased savings, increased
efficiency, improved service delivery, low transaction costs, and improved market performance to
the organization that invests in ICT. This observation is not different from studies carried out in
other countries (OECD 2003).
Table 4: Respondents’ perception on the contribution of ICT to the organization (%)
Contributions of ICT
Strongl
y
agree Agree
Undeci
ded
Disagre
e
Strongly
Disagree
Increased savings 52 36 12 - -
Increased efficiency 81 19 - - -
Improved Service
delivery 61 33 6 - -
Low transaction costs 47 34 13 6 -
Improved market
performance 38 38 21 3 -
4.6 Government policies
The government has introduced a number of policies on ICT in the past seven years. There are
varying responses as indicated in Table 5. With respect to whether the liberalisation of the radio
and TV spectrum in the country had created an improvement in the firm’s market share, only 31
percent strongly agreed, and 44 percent agreed with the statement. There was a small
Adoption and usage of ICT in developing countries 9
percentage that had not benefited from this policy. This may have to do with the nature of
products and services the firms were involved in.
Table 5: Respondents’ perceptions to policies related to performance of the organization (%)
Government policies
Strongly
agree
Agree Undecided Disagree
Strongly
disagre
e
Expanded coverage of radio and TV in the
country having improved the firm’s market
share 31 44 9 6
9
Increased number of telecom operators has
reduced the firm’s operating costs 19 52 16 10 3
Increased number of telecom operators and
ISPs has enabled firms to invest in the Internet
31 56 6 3 3
Availability of well trained ICT
Personnel will encourage this firm to
Invest in ICT 28 50 19 - 3
With respect to whether the increased number of Telecom operators had reduced the firm’s
operating costs, 52 percent were in agreement, with 19 percent strongly agreeing, and 16 percent
undecided, implying that there were firms that had really benefited from this policy. There were
also some firms that had not benefited from the policy, which may be due to the nature of
business they were carrying out.
With respect to whether the increased number of Telecom operators and Internet service
providers (ISPs) had enabled firms to invest in the Internet, 56 percent were in agreement, with
31 percent strongly agreeing, with a small number not agreeing and undecided. This is an
indication that firms will easily invest in the Internet, when accessibility to the service is opened
up, and there are several players in the Internet business.
With respect to whether the availability of well trained ICT personnel can encourage firms to
invest in ICT, 50 percent were in agreement, 28 percent strongly agreed, and 19 percent were
undecided. This indicates that the availability of ICT professionals in the country is an incentive
for firms to invest in ICT. The above responses do indicate that government policies are working,
and firms are realizing the benefits from these policies.
4.7 Barriers to ICT access and usage
The study examined several barriers to ICT access and usage. Table 6 presents the percentage
of respondents and their perceptions on the various barriers. While the analysis of these
perceived barriers is good for policy makers, it has to be interpreted with caution, as the answers
depend on the respondent, and what he/she feels about the barrier in his/her present
circumstances. For instance, when the firm has been able to employ good ICT professionals, this
would not be a problem, as for another firm which wants to recruit these professionals, but they
cannot afford to pay them. Other than the lack of perceived benefits to the firm, the other barriers
were very important, and the majority of the respondents were in agreement. Therefore, there is
need for Government to formulate policies that address these barriers.
10 IJEDICT
Table 6: Respondents’ perception on barriers of computer and Internet usage in a firm(%)
Barriers to ICT
Stron
gly
agree
Agre
e
Undeci
ded
Disagr
ee
Strongly
Disagree
Expensive hardware 23 44 - 33 -
Expensive software 22 56 11 11 -
Qualified personnel are
expensive 22 45 - 33 -
Lack of perceived
benefits to the firm 11 11 44 34
Taxes are too high on
hardware
and software 13 25 - 62 -
Lack of security on the
Internet
22 33 12 33 -
The Internet connection
fee is too high 44 22 22 12
VAT on Internet service is
high 62 25 13 -
5. CONCLUSION
The results do reveal that while the developing countries are still lagging behind the developed
countries, the adoption and usage of ICT follows the same pattern in all countries. They just differ
in the levels of usage.
The usage of computers and Internet is high in medium and large firms, and especially firms
owned by foreigners. The small firms which are mainly locally owned, have low usage due to the
high cost of required investment, limited knowledge and skills, and being very responsive to
taxation. The findings suggest that there is need to widen ICT training facilities for the local
entrepreneurs to take advantage of opportunities associated with the adoption of ICTs; and to
address taxation on the Internet services and other ICT consumables to lower the cost of
acquisition.
The findings further indicate that the people do appreciate the contribution of ICT to the
performance of their firms, but the various barriers such as high costs of hardware, software,
Internet and ICT professionals among others are an hindrance to their progress. This requires
government to develop policies that are geared towards addressing these barriers and promotion
of ICT adoption and usage.
Note: This research was financed by the African Economic Research Consortium (AERC),
Nairobi, Kenya.
Adoption and usage of ICT in developing countries 11
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Original article at: http://ijedict.dec.uwi.edu//viewarticle.php?id=349&layout=html
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This paper investigates the characteristics of Canadian manufacturing plants that are related to the use of advanced technologies. The data used are taken from the 1989 Survey of Manufacturing Technology and are linked to administrative data taken from the Census of Manufacturers. Technology use is defined first as incidence (whether a technology is used) and second as intensity (the number of technologies used). These variables (incidence and intensity) are then related to a number of characteristics that represent the competencies of the plant reporting technology use -- its size, the size of its owning enterprise, the recent growth of the plant, the number of industries in which its owning enterprise operates, its age, and nationality. The results are then compared to several recent U.S. studies.
ICT and Economic growth, Evidence from OECD countries, industries and firms
OECD, (2003), ICT and Economic growth, Evidence from OECD countries, industries and firms, OECD Uganda Communication Commission (2005), http://www.ucc.co.ug, Accessed on 20/7/06
Advanced Technology use in Canadian Manufacturing Establishments, Working Paper No. 85, Microeconomics Analysis Division
  • J R Baldwin
  • B Diverty
Baldwin, J.R. and B. Diverty (1995), Advanced Technology use in Canadian Manufacturing Establishments, Working Paper No. 85, Microeconomics Analysis Division, Statistics, Canada, Ottawa.
E-commerce Survey of business: Information and Communication Technologies (ICT) adoption and usage
  • J Knight
  • M Pollard
Knight J. and Pollard M (2004), 2003 E-commerce Survey of business: Information and Communication Technologies (ICT) adoption and usage. http://www.statistics.gov.uk/downloads/theme_economy/ecommerce_Nov2004.pdf, accessed October 2005.