THE LIVELIHOOD OUTCOMES OF ICT USE IN ...

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THE LIVELIHOOD OUTCOMES OF ICT USE IN MICROENTERPRISES: THE CASE OF SOUTH AFRICA Frank Makoza University of Cape Town South Africa [email protected]

Wallace Chigona University of Cape Town South Africa [email protected]

ABSTRACT This study is premised on the understanding that microenterprises play an important role in the socio-economic development of developing countries. Using the case of South Africa, this paper reports on a study of the impact of using Information and Communication Technologies (ICT) on the livelihoods of microenterprises in a developing country context. The study used qualitative data gathered through in-depth interviews, observations, documentary review and field notes. The findings of the study confirm that ICT use has a positive impact on the livelihoods of microenterprises. However, it was noted that ICT use in microenterprises is often curtailed by challenges beyond access and ownership of ICT. Chief among the challenges is the lack of awareness of ICT use in business activities. The study also investigated whether embedding ICT support within a business support programme would improve the chances and quality of appropriation. It was noted that the strategy did not always yield positive outcomes. Key words: ICT use, microenterprises, Sustainable Livelihood Approach, South Africa

1. INTRODUCTION There is a burgeoning body of knowledge demonstrating that microenterprises play a significant role in the socio-economic development of developing countries (Richie & Blindley, 2005; Qureshi, 2005). Their role in socio-economic development is noted particularly in areas of job creation, income generation and skills development. Further, microenterprises are perceived to be a means for poverty alleviation in marginalised communities (Chew, Ilavarasan & Levy, 2010). In his 2011 Budget Speech to parliament, the South African Minister of Finance said: “Small businesses are an important source of jobs. Businesses that employ fewer than 50 workers account for 68 per cent of private sector employment. We need to get our small business sector growing” SA Budget Speech (2011). However, microenterprises face a myriad of challenges which may curtail their growth and their survival chances (Rogerson, 2008). Considering the important role of microenterprises, it is imperative to explore means of improving their survival chances as well as their growth. As a contribution towards that end, this study investigates the use and impact of Information and Communication Technology (ICT) on the operations and outcomes microenterprises. The use of ICTs may help microenterprises to remain competitive. There is growing empirical evidence that the use of ICT in microenterprises may result in improved communication, reduced operating costs and improved access to information and knowledge (Wolf, 2001; Moyi, 2003, Southwood, 2004). Furthermore, the use of ICT may lead to empowerment, growth and sustainability of microenterprises (Kamal & Qureshi, 2009). The study was guided by the research question: How does the use of ICT affect the livelihood of microenterprises?

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This study used the Sustainable Livelihood Approach (SLA) as theoretical lens. Livelihoods are described as a means for living by exploiting the capabilities of tangible and intangible assets (Chambers & Conway, 1991). The theoretical framework was selected due to its alignment with the research question. The framework focuses and is applicable to studies dealing with poverty. Since microenterprises are instrumental in alleviating poverty, it is logical that the framework be used to study the livelihood of microenterprises. Further, the understanding of poverty requires consideration of diversity of livelihoods (Carney, 1999). SLA takes into account wider issues for the livelihoods of households and communities beyond technology and income poverty (Carney, 1999; Duncombe, 2006). There is still a paucity of studies on the impact of ICT use on the livelihoods of microenterprises. The majority of studies on the impact of ICT use have focused on Small and Medium Enterprises (SMEs) but not particularly on the microenterprises (Alam & Noor, 2009; Donner, 2006; Kamal & Qureshi, 2009). Due to the uniqueness of microenterprises, the findings on the SMEs may not always be extrapolated to microenterprises. Further, studies conducted in developing countries have focused on technology, productivity and organisation formation (Esselaar et al., 2007; Herselman, 2003; Wolf, 2001) and have paid limited attention to ICT use in relation to social factors in the context of micro organisations. Adam and Wood (2005) also note that the consequences of ICT use in terms of social factors are not well documented. This study is situated in context of South Africa. Based on its apartheid history, the country has a dual economy structure (Berry et al., 2002). On the one hand, the first economy is developed, integrated to the global supply chain and uses advanced technologies. On the other hand, the second economy remains largely under-developed, and communities in the economy experience inequalities and limited opportunities (Ligthelm, 2006). The majority of microenterprises in South Africa operate in the second economy (Esselaar at al., 2007). As part of the attempts of redress the historically-based inequalities, the South African government and numerous development agencies are investing in interventions to grow microenterprises from the second economy to the first economy. An example of such interventions is the Real Enterprise Development (RED) Door program by the Western Cape Provincial Government. RED Door offers services in business start-up support, business skills development, and support in access to finance and business advice. Additionally, the services include internet access and computer support. Using RED Door as a case, this study explores the effectiveness of technology interventions embedded in business support programs on the livelihood of microenterprises. By adding to the body of knowledge on ICT use amongst microenterprises, this study makes a practical contribution. The findings will serve to inform policy makers, especially those involved in business development interventions supporting microenterprises on a wider scope of issues that affect the livelihoods of microenterprises. The rest of the paper is organised as follows: Section 2 reviews literature on the context of microenterprises in South Africa and use of ICT in microenterprises, Section 3 presents the theoretical background to the study, Section 4 discusses the research methodology employed in the study, Section 5 summarises the research findings, and Section 6 discusses the results, followed by the conclusion.

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LITERATURE REVIEW

2.1

Definition and Characteristics of Microenterprises

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There is no universally agreed definition of microenterprises. Microenterprises are defined differently according to regions, countries and contexts; the definitions are based on different attributes such as number of employees, value of assets owned by the business and volume of sales generated over a period of time. We use a definition in the context of South Africa as defined in the National Small Business Amendment Bill Gazette (2003) which says: “[Microenterprises are] enterprises with less than 10 employees with a turnover of R0.2 million (US$26,500) and asset value of R0.1 million (US$13,300)” (South African National small business Amendment Bill Gazette, 2003). Examples of microenterprises in the South African context are spaza shops (hawkers), handcrafters, high street vendors as well as fruit and vegetables sellers. As can be deduced from the definition, microenterprises operate at low scale, have low turn-over, and have a small staff contingent (Donner, 2006; Duncombe, 2006; Mead, 1994). Another characteristic is short-life span, mainly because they are survivalist i.e. established due to lack of employment opportunities and often abandoned when permanent employment is found (ILO, 2002; Mead, 1994). The failure rate of small businesses in South Africa ranges from 70% to 80% (Baard & Ven den Berg, 2004). Further, the majority of microenterprises may not be registered to any authority and operate in the informal sectors of the economy (Esselaar et al., 2007).  2.2

Microenterprises in the South African Context

The role of microenterprises in the economy is not well documented and hence, there is less clarity on the extent to which microenterprises contribute to poverty alleviation and economic growth of the country (Berry et al., 2002). That withstanding, there is growing anecdotal evidence on the role of microenterprises in economic development. Their contribution to socio-economic development is demonstrated in acting as a source of employment, as a source of income, and as a seedbed for skills development, poverty alleviation, selfempowerment and sustainability of marginalised households and communities (Esselaar et al., 2007; Ngassam et al., 2009). The South African government and its development partners recognise the important role microenterprises play in socio-economic development. The government has introduced policies, legislation and regulations for promoting and supporting the growth of SMMEs (Small, Medium and Micro Enterprises). These initiatives try to address the high rates of failure of SMMEs (Rogerson, 2005), and increase the number of microenterprises graduating from the second economy to the first economy (Ngassam et al., 2009). The business support services offered by the government and developing agencies include capital financing, business advice, access to capital and business expansion financing, capacity building and mentoring.   Microenterprises are beset with a wide range of challenges which may have a negative impact on their growth and sustainability (Ludzani & van Vuuren, 2002; Rogerson, 2005). Table 1 summarises the challenges affecting the sustainability and survival chances of microenterprises in South Africa.

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Category

Examples of Challenges

References

Resources

Low income, lack of collateral, lack of Visagie, 1997; Rogerson, infrastructure and premises, and poor working 2008 conditions for employees.

Capacity

Low literacy levels, lack of business skills, lack Chandra et al., 2001; of managerial skills and lack training Luiz, 2002 opportunities.

Regulation Compliance to regulatory and legislative Esselaar et al., 2007; conditions, and to formalisation requirements. Kyobe, 2009. Support

Awareness of support services, lack of access to Luiz, 2002; Mitrovic & advice and lack of acceptance in the communities Bytheway, 2009

Health

Effects HIV/AIDS pandemic, care costs, benefits Fraser et al., 2005; Chao claims and burial fees. et al., 2007 Table 1: Summary of Challenges for Microenterprises in South Africa

2.3

ICT Use in Microenterprises

Due to wide ranging factors including limited financial resources, lack of IT skills and lack of knowledge on the application of ICT in their business activities (Wolcott, Kamal & Qureshi, 2008), microenterprises’ use of ICT is often limited to non-sophisticated technologies such as laptops, cell phones, radios, TVs and fax machines (Duncombe, 2006). In cases where microenterprises cannot afford to acquire ICT, public or communal ICT facilities (e.g. telecenters, internet cafe, public telephones and libraries) are used (Duncombe, 2006; Fourie & McNamara, 2008). Another defining factor of the use of ICT in microenterprise is that due to the lack of separation between business and personal assets; ICT in microenterprises is often used for both personal and business purposes (Donner, 2006; Esselaar et al., 2007). The benefits of ICT use in SMMEs are summarised in Table 2. Benefits of ICT Use

References

Better access to information.

Duncombe & Heeks, 2005

Improved communication.

Moyi, 2003

Empowerment and sustainability.

Kamal & Qureshi, 2009

Reduces administrative costs and time saving.

Donner, 2006

Increased productivity.

Wolf, 2001

Reduced transaction cost and increased market access.

Esselaar et al., 2007

Table 2: Summary of Benefits of ICT Use in SMMEs. The attempts to use and the actual use of ICT in microenterprises are often bedevilled with challenges. The challenges relate to the capabilities of the microenterprises, resources, access, operations, context and attitudes (Wolcott et al., 2008). Capabilities challenges arise The Electronic Journal on Information Systems in Developing Countries http://www.ejisdc.org

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from lack of ICT skills, planning and knowledge to apply ICT to support business activities (Harindranath et al., 2008). Microenterprises lack resources in the form of time, finance and information, leading to a failure to reap the benefits of using ICT (Moyi, 2003). Attitude, such as resistance to technology, also affects the use of ICT in microenterprises, and may affect the confidence of microenterpreneurs to use ICT. Microenterprises which own ICT may also face challenges in terms of support to implement and maintain their ICT (Wolcott et al., 2008). 3.

THEORETICAL BACKGROUND

3.1

Sustainable Livelihood Approach

The Sustainable Livelihood Approach emanated from the policy debate on the Brundtland Commission Report of 1987 (Chambers & Conway, 1991). Since then, the concept of livelihoods has evolved, and SLA has been applied in numerous studies within the development discipline. A livelihood is defined as follows: “A livelihood comprises of assets (natural, physical, human, financial and social), activities, access to these (mediated by institutions and social relations) that together determine the living gained by individuals or households” (Ellis, 2000).

In other words, a livelihood is a means for living utilising capabilities and assets to enhance opportunities (Chambers & Conway, 1991; Ellis, 2000). A livelihood is considered sustainable when it can cope with hardships and support a household to continue operating over a period of time (DFID, 1999). SLA comprises of elements related to poverty reduction and can be used to holistically analyse activities within the livelihood. The elements of the framework are vulnerabilities, assets, structures and processes, strategies and outcomes. Vulnerabilities are external conditions that may lead to hardships and undermine the potential of households. They include natural disasters, conflicts, limited employment opportunities, social exclusion and changes in prices for commodities (DFID, 1999). Assets are resources used by households to attain sustainable livelihoods. Assets are in the forms described below:  Human capital: skills and knowledge used to achieve their livelihoods;  Social capital: the social relations e.g. membership to organisations;  Financial capital: items of value which people use to establish livelihood activities such as savings, cash and access to loans;  Natural capital: natural resources used by households to achieve livelihood goals;  Physical capital: resources created through economic production process e.g. infrastructure such as roads, power lines and telecommunications. Increased access to assets may lead to sustainable livelihoods for households or communities (Ellis, 2000). Structures are organisations and institutions that provide support for livelihoods to households and communities. Examples of organisations are international development agencies, government departments as well as civil society and private sector institutions (DFID, 1999). Institutions may focus on supporting households and communities in areas of legislation and regulations affecting their livelihoods (Carney, 1999), and on supporting households and communities to come up with strategies to reduce livelihood vulnerabilities. Strategies are activities carried out by both structures and households to achieve livelihoods outcomes (Ellis, 2000). Outcomes can be improved well-being, increased income, restored human dignity and reduced vulnerability (Duncombe, 2006). ICT and information can play a significant role in attaining sustainable livelihoods. ICT supports communication of information and knowledge on livelihoods strategies The Electronic Journal on Information Systems in Developing Countries http://www.ejisdc.org

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(Chapman & Slaymaker, 2002). According to Duncombe (2006), information within the SLA model plays both analytical and functional roles. The roles are described as follows:  Analytical role: how data is accessed, assessed and applied to understand livelihoods.  Functional role: use of information to initiate action for livelihoods. Information and ICT can be applied in vulnerability contextual analysis as well as in use of livelihood strengths and capabilities; the latter may be mediated through social relations, institutions and organisations (Duncombe, 2006). Information for long-term decisions for livelihoods of microenterprises is usually communicated through formal means by institutions and organisations. Information for short-term decisions mediated through informal means such as social networks, and the information is used for decisions on immediate needs for households or communities (Duncombe & Heeks, 2005). 3.2

Justification for Using SLA to Assess Impact of ICT Use

There are many frameworks and models besides SLA that could be used to assess the impact of ICT use. Examples of such models include ICT diffusion index (United Nation, 2005) and Input-Output-Outcome (ITU, 2006). Based on the context of the study, SLA was considered ideal because it encompasses a wider scope of poverty-related challenges (Ellis, 2000; Duncombe, 2006) and, as such, is in line with the context of study, since microenterprises are an option for alleviating poverty leading to social and economic empowerment especially in marginalised communities (Parkinson & Ramirez, 2006). Further, the core principles of SLA promote a wider perspective of the analysis of livelihoods. Table 3 summarises some of the core principles of SLA. Principle

Description

References

People-centred

Participation of people or households in livelihood interventions focuses on needs, opportunities and priorities to come up with feasible responses. Consideration of links between lower levels of action and higher level policies and processes, thereby bringing together stakeholders and actors. Change is considered and learning from the change process helps to mitigate negative outcomes. Closing the gap between policy context and peoples’ realities through micro-macro linkages using a bottom-up approach. Partnership between all stakeholders and supporting livelihoods to withstand shock and stress by maintaining long-term productivity of resources.

DFID, 1999; FAO, 2001

Holistic analysis Dynamics

Micro-macro linkages Sustainability

FAO, 2001

McNamara & Gunasekera, 2008 DFID, 1999

Arun et al., 2004

Table 3: Examples of SLA core principles relevant to microenterprises Those who criticise of use of SLA for studying ICT interventions argue that the approach has limited links to information and ICT because of the multiplicity of potential independent and dependent variables (Parkinson & Ramirez, 2006). Nevertheless, there are benefits for using the model such as wider consideration of dimensions of poverty and support awareness in advance of expected and unexpected impacts of development

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interventions. Additionally, the model can be adapted based on the context being assessed and because it supports an understanding of bigger picture of ICT-related development interventions (DFID, 1999; Heeks, 2002; Duncombe, 2006; Singh et al., 2008). 3.3

Conceptual Model for the Study

The study adopted SLA as used by Duncombe (2006). However, while Duncombe (2006) emphasised the analytical and functional role of information and ICT as information handling technologies, this study focused on outcomes conceptualised as change in the livelihood of microenterprises (the result of purposeful use of information, ICT and the different forms of livelihood assets). Additionally, over and above analysing the roles of institutions and organisations supporting microenterprises, the study analysed the role of ICT in the analysis of context of microenterprises; use of assets; facilitation of interactions between microenterprises and structures; and the consequences of the processes. Table 4 illustrates the conceptual model for the study. The arrows depict the flow of information within the model. Vulnerability Context

Livelihood Assets

Structures

Shock Stress

Human Capital Financial Capital Social Capital Physical Capital Natural Capital

Social relations Institutions Organisations

Contextual Analysis

Livelihood strengths

Mediated through

Livelihood Strategies

Livelihood Outcomes More income Increased wellbeing Reduced vulnerability Sustainable use of capital.

Resulting in

Impacting on

Table 4: Proposed Conceptual Model for Sustainable Livelihood Approach 4.

RESEARCH METHODOLOGY

The study employed a qualitative interpretive approach (Myers, 2009). The study drew a large proportion of its sample from RED Door site in Cape Town. RED Door provided business support and advice to SMMEs. The services, among many, included facilitating business start-ups for SMMEs, providing access to non-financial resources and capacity, providing training on business skills and legal advice to SMMEs, facilitating access to finance by service providers; and providing information on market access, procurement and market linkages for SMMEs (RED Door Business Plan, 2004). Purposeful and snowballing sampling techniques were used in the study (Sekaran, 2003). The sample consisted of 11 respondents which consisted of five microenterprises which used RED Door services (called “beneficiary organisations”); four microenterprises which did not use the services for microenterprises and two members of RED Door Management: one manager from head office and another from the Business Advice Centre. A follow-up interview was conducted with the Business Advice Center manager to validate our initial findings. Microenterprises that were not beneficiaries for RED Door were included in the sample to ensure a variety of responses, and to enrich our understanding of phenomenon (Yin, 1994). Table 5 summarises the profile of the respondents. The respondents’ real names have not been used due to ethical reasons. The Electronic Journal on Information Systems in Developing Countries http://www.ejisdc.org

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Empirical data was gathered through in-depth interviews, observations, documentary review as well as field notes. The documents were sourced from RED Door managers. The interviews and observations were conducted on the business premises of the microenterprises. The interviews were audio recorded and later transcribed. Data was collected between October, 2010 and February, 2011. Data analysis involved an iterative process which began with analysing secondary data which was used to understand the context of microenterprises. The study used Thematic Analysis as suggested by Braun and Clarke, (2006). The data analysis process was deductive. SLA conceptual framework (Table 4) was used as a guide for the data analysis. Research objectives were also used to determine the scope of the analysis (Thomas, 2003). ID

RES1

Respondent

Gender

RES3

Male

RES4

Microenterprise

Female

RES5

Microenterprise

Male

High street vendor

No

RES6

Microenterprise

Male

Shoe repair

No

RES7

Microenterprise

Male

Laundry shop

Yes

RES8

Microenterprise

Male

Saloon

Yes

RES9

Microenterprise

Female

Yes

RES10

Microenterprise

Female

Fabric Designer Taxi service

RES11

Microenterprise

Male

Meat seller

Yes

Male

SMME support SMME support High street vendor Spaza shop

Description

Affiliation to RED Door

RED Door Manager RED Door Manager Microenterprise

RES2

Male

Business type

N/A N/A No No

Yes

Manager for RED Door Program Business Center Manager Sells refreshments along a high street. Operates as a hawker and sells a variety of items. Sells refreshments and travel bags along the high street. Repairs shoes and operates outside a train station. Operates a laundry shop and travel agency businesses. Operates a saloon and other businesses. Designs fabrics and operates her own shop. Operates car-hire services, produce training manuals and run catering services. Buys meat from local farmers and sells it to customers.

Table 5: Summary of profiles for respondents 5.

RESEARCH FINDINGS

5.1

Motivation, Business Skills and Financing for Microenterprises

As expected, it was noted that some microentrepreneurs went into business because of lack of employment opportunities. In fact, some engaged in business activities hoping to develop skills which would allow them to enter the formal job market. Some owners of The Electronic Journal on Information Systems in Developing Countries http://www.ejisdc.org

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microenterprises perceived that they earned more income by operating their own businesses than they would earn from low-income jobs which, in most cases, would be the only jobs they would qualify for. This is exemplified in the following statement by one of the respondents: “… the only choice to make money is doing business … I can make more money than working …” (RES5).

Most microentrepreneurs did not have formal training on how to manage a business prior to establishing their business. One respondent said he began with “just try and error and knowledge and skills were developed”. Some microentrepreneurs learnt their business skills from other microenterprises (usually relatives) who acted as role models. Once they had acquired the skills and knowledge, microentrepreneurs were confident enough to start their own businesses. In some cases, microentrepreneurs benefitted from business skills training offered by business support organisations. Consistent with the literature (Parkinson & Ramirez 2006; Rogerson, 2008), we noted that the lack of financial capital was one of the major limiting factors for business start-up in microenterprises. Due to the lack of resources for collateral from formal financial institutions, the majority of the microentrepreneurs used their savings for capital. Microentrepreneurs overcame the challenge of business capital by either developing business models that required small capital or by operating small scale business activities. Income generated from the small scale activities was re-invested in the business to expand business activities and achieve business growth. 5.2

Extent of ICT Use in Microenterprises

The majority of microenterprises used simple ICT. Consistent with other studies (Donner, 2006; Duncombe, 2006), cell phones were used in almost all the cases. Other ICT used were PCs, telephones, the internet and electronic mail, televisions and radios. Public ICT facilities were also used. Usage of ICT was for both business and personal purposes. The main uses of ICT were for communication with customers, suppliers and close relations, as well as for information gathering. To establish extent of use, respondents were asked how often they used ICT and describe how they used ICT. Observations were also used to validate the extent of using ICT recoding details on actors, activity, objects and number of times of occurrence of activity. The extent of use was analysed based on how far the microenterprises used ICT in their business activities using three categories of mediated communication use (Donner, 2006; Duncombe & Heeks, 1999) namely minimal use (not always), moderate (very often) and extensive (often). The results for each case were summarised and then compared with the over cases to establish an overview of extent of using ICT. Table 6 summarises the ICT used by microenterprises. It was also observed that, in some cases, microenterprises did not use ICT for business, despite owning or having access to ICT. Some of the factors that led to non-use of ICT for business activities were lack of IT skills and lack of knowledge on how to apply ICT in the business activities.

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ICT Computers Cell phones Telephones Internet and email Public ICT facilities TV Radio

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Actual use

Extent of use

Preparation of documents e.g. business plans, leaflets and recording business transactions. Communicating with customers, suppliers and members of staff. Also used to communicate with family members. Communication with customers and friends operating microenterprises. Information on tenders and communicating with customers. Checking government tenders on internet and communication with customers. Entertaining customers and source of information. Testing DVDs before they are sold. Entertainment while conducting business and source of information for local news.

Moderate Extensive Moderate Moderate Moderate Extensive Extensive

Table 6: Summary of the Use of ICTs in Microenterprises 5.3

Outcomes of Use of ICT on Assets

Overall, the effects of using ICT were easy communication and time saving when interacting with customers and suppliers. The use of ICT varied across different organisations depending on the nature of the business activities. Use of ICT was related to the type of activities in which the microenterprises were engaged. For instance, RES10 used computers to produce training manuals while RES6 used a cell phone to contact customers when their shoes are ready for collection, and also used the mobile phone number as a guarantee for contact with customers. This is demonstrated in the following statement: “…most of the customers want evidence, guarantee … you must give them your cell phone number and write a little slip, he must have confidence that his shoes are secure... ” (RES6).

In our analysis, we differentiated whether the technology was directly or indirectly used in the acquisition and usage of assets. ICT impacted on the acquisition and use of assets, albeit in a limited way. ICT was used in the acquisition and maintenance of social capital. This involved communication and sharing of information among microenterprises, with suppliers, close relations and, in some cases, institutions and organisations. However, there is limited evidence to indicate that ICT was directly used to acquire other forms of assets (i.e. human, physical and natural capital). On the other hand, it was also noted that ICT was used in activities that indirectly facilitated better usage of assets. For instance, RES11 used a telephone and sometimes a mobile phone to confirm orders from the local farmers to arrange collection of stock. Likewise, RES8 used a mobile phone to check availability of stock.   ICT were important in accessing information that was used for decision making regarding the use of assets such as identifying information needs that influenced decisions on use of different forms of assets. For instance some respondents used the internet at the business center to check tenders on government websites. The information was also used in coordinating the activities for microenterprises. Further, ICT were indirectly affecting the way resources were acquired and used. For instance, use of physical assets, information on

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where to buy and local prices were significant and such information to some extent was obtained using ICT. 5.4

Vulnerabilities Affecting Microenterprises

One of the vulnerabilities noted by the microenterprises was commodity prices fluctuations. Price fluctuations affected the operations of microenterprises; for example, price fluctuations for materials and services affected their production of goods and services. One respondent indicated that information on impending price changes was obtained from the suppliers. When forewarned of an impending increase in price, microenterprises stocked up on raw materials before the price increase, thereby saving.  ICT facilitated better communication between microenterprises and suppliers in this process.  The literature suggests two types of vulnerabilities: shocks (short-term conditions leading to hardships in a livelihood e.g. epidemics, natural disasters and conflicts) and trends (long-term conditions leading to hardships in a livelihood e.g. population decline, poor governance and technology changes). Both are external to a livelihood (DFID, 1999). In this study, we also identified a number of challenges which were internal to the livelihood of the microenterprises. The challenges were business operations challenges, lack of managerial skills and business performance challenges. Operational challenges included the effect on profits of monthly fees paid to the local council for operating in high streets. The respondents perceived the fees as too high. Problems related to managerial skills included lack of confidence and skills in dealing with difficult situations. The microenterprises also faced challenges in operating businesses such as low demand for their commodities. 5.5

Use of ICT to Interact with Institutions and Organisations

Apart from microenterprises which were beneficiaries of the RED Door, the other microenterprises did not interact with organisations providing support to SMMEs, mainly due to the lack of awareness of such organisations. Others did not interact with such organisations because such organisations often required the microenterprises to be formalised and be registered with authorities. The RED Door service manager noted that microenterprises shunned formalisation since they perceived that it would require them to be pay tax and comply with respective standard control regulations. However, most microenterprises interacted with institutions regulating operations for microenterprises such as local council officials when making payments for monthly operating fees. Communication with the officials was face to face. Beneficiaries of the RED Door interacted with the institution using telephones, cell phones as well as face-to-face. Information that was exchanged during the interactions included the status of businesses and details on training programs. 6.

DISCUSSION AND CONCLUSION

The findings, albeit from a small sample, confirm the importance of microenterprises, especially for the segments of the economy which may not be absorbed in the formal economy for various reasons. The potential of microenterprises to create employment and support the livelihoods of the majority of the citizens in the second economy is particularly valuable for South Africa where the unemployment rate is high (Rospabé & Selod, 2006). There is a need, therefore, to support the growth and sustainability of microenterprises. Consistent with earlier studies (Donner, 2006; Duncombe, 2006), this study showed that ICT use had an effect on the livelihoods of microenterprises on use of assets and accessing structures. Livelihood outcomes for the microenterprises as a consequence of using assets and structures using ICT were improved well-being and more income. However, the study also

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noted that the potential of ICT in supporting business was not being fully realized due to wide-ranging factors. The study has shown that microenterprises often use and derive benefits from simple technologies such as cell phones and telephones to obtain and share information. The information was used to come up with strategies that led to effective use of assets and structures leading to sustainable livelihoods (Chapman & Slymaker, 2002). Although ICT may be perceived to be an enabler that could increase the survival chances of microenterprises (Good & Qureshi, 2009; Kamal & Qureshi, 2009), microenterprises faced challenges that inhibited their adoption and use of ICT for business purposes. The challenges included limited resources, capabilities and knowledge. These challenges led to non-use of ICT despite, in some cases, having access and owning ICT. The consequences of ICT support programme embedded in the intervention for supporting microenterprises was also analysed. It was noted that this strategy had limited success. In the first place, consistent with the findings of Duncombe and Heeks (2005), a number of microenterprises were not even aware of the existence of such institutions. Lack of awareness partly resulted from a mismatch in the nature of communication between organisations and institutions on the one hand and microenterprises on the other hand. The problem of lack of awareness of support services by microenterprises is persistent in IS literature as highlighted in a number of studies (Brown & Brown, 2009; Mitrovic et al., 2009; Wolcott et al., 2008). We recommend that alternative strategies should be considered to ensure microenterprises are aware of such services. It was also noted that some microenterprises shunned the institutions which provided support since they feared formalisation, which according to them was financially expensive. There were no notable differences in the use of technology between the RED Door beneficiaries and those who were not. This could suggest that the embedding technology support in the programme did not have a noteworthy impact. This could be because, other than guiding them in how to look for calls for tenders from government departments, RED Door did not provide special training to its beneficiaries on how to use ICT in business. The lack of difference could also be because RED Door focused on providing PC access for the microenterprises while the microenterprises had preferences for mobile phones. The findings of the study are consistent with previous studies (Warschauer, 2003; Soriano, 2007) that physical access to ICT does not necessarily translate into usage and a desirable impact on the users. It can be concluded that for effective use of technology to support the livelihood of microenterprises, there is a need not only for physical access as well as technology literacy, but also for business skills and skills on how to integrate the technology in the business. Emphasis should also be placed on provide technology which is appropriate and accessible to the beneficiaries. ACKNOWLEDGMENT An earlier version of this paper appeared in the Proceedings of ITU Kaleidoscope with the title: ICT Use in South African Microenterprises: An Assessment of Livelihood Outcomes.

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