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Int. J. Management Practice, Vol. 6, No. 1, 2013
Issues of ICT adoption amongst SMEs in Nigeria Idisemi Apulu*, Ann Latham and Robert Moreton School of Technology, University of Wolverhampton, Wulfruna Street, Wolverhampton, WV1 1LY, UK E-mail:
[email protected] E-mail:
[email protected] E-mail:
[email protected] *Corresponding author Abstract: In today’s global economy Information and Communication Technology (ICT) is often regarded as a strategic tool for achieving success and competitiveness in organisations. In recent times, ICT has had significant impact on the way organisations operate, as it offers tremendous opportunities such as storing, processing, retrieving, disseminating and sharing of information. Organisations, including Small and Medium Enterprises (SMEs), are constantly searching for new ways of creating and delivering value to customers. In Nigeria, SMEs play a vital role in the economy and substantially contribute to the country’s industrial development. Nevertheless, despite the increasing potential of technology in all aspect of lives, there seems to be a number of issues that limit Nigerian SMEs from adopting ICT. This paper presents findings of a research project that is mainly qualitative in nature but also includes simple statistical analysis of data obtained from a survey which concentrates mainly on the reasons for the non-adoption of ICT in a number of SMEs in Nigeria. Keywords: SMEs; small and medium enterprises; ICT; information and communication technology; issues; non-adoption; Nigeria. Reference to this paper should be made as follows: Apulu, I., Latham, A. and Moreton, R. (2013) ‘Issues of ICT adoption amongst SMEs in Nigeria’, Int. J. Management Practice, Vol. 6, No. 1, pp.58–76. Biographical notes: Idisemi Apulu obtained both her PhD and MSc in Information Systems from the University of Wolverhampton, UK. She also holds a BSc in Computer Science from the University of Abuja, Nigeria. Her current research interests include the adoption and use of information and communication technology in businesses, e-commerce and e-business in organisations and strategic management issues. She is a member of the Association for Information Systems. Ann Latham is an Associate Dean in the School of Technology at the University of Wolverhampton. She has been an academic at the University for over 25 years, and prior to this had experience working in IT in commercial organisations, designing and developing computer systems. She has extensive experience in the field of Information Systems Management and has carried out considerable research into the needs of the IT industry. She has published many journal articles and conference papers, and has spoken at several international
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conferences. She is a board member of the UK Academy for Information Systems and a council member of the Institute for the Management of Information Systems. Robert Moreton’s area of expertise is in the evaluation of methods and management approaches for information systems/ICT developments. A common theme of his work is the tracking and evaluation of developments in information technology and forecasting the potential impact of these on organisations. He has written several books on the topic in addition to many journal papers and presentations at international conferences. His first publication, Transforming The Business: The IT Contribution, co-authored with Myrvin Chester, was widely used as a student text. He has acted as a consultant for many organisations including the European Commission, major utility companies, food retailers, and national communication companies. In recent years much of his work has focused on software and systems quality assurance and has involved working with colleagues at the University of Applied Sciences, Lueneburg, Germany. He is a Fellow of the British Computer Society and the Higher Education Academy. He is also a member of both the Conference for Heads and Professors of Computing and the Conference for Information Systems Professors.
1
Introduction
Small and Medium sized Enterprises (SMEs) play a very important role in the economy of many countries and they are essential components for the economic development in Nigeria, a developing country in sub-Saharan Africa. Therefore, it is vital for issues to be addressed to ensure measures are put in place that would assist in their development. It is essential that Nigerian SMEs work towards the successful adoption and effective utilisation of Information and Communication Technology (ICT) which has become an indispensable management tool for large enterprises as well as SMEs. Despite the increasing potential of technology in all aspect of lives, there are a number of Nigerian SMEs that are yet to adopt ICT as a result of some unresolved issues militating against them. This in turn affects the economic development of the country, as a result of their role in economic development. Like many others, Nigeria’s economy depends to a large extent on SMEs which constitute about 97% of total businesses in the manufacturing, commerce and service sectors and contribute immensely to the employment of its citizens. As the business environment becomes more complex, there is a need for SMEs to adopt tools that would assist in ‘coping’ with the complexities and yet stay competitive (Teo and Tan, 1998). Therefore, there is an increasing need for SMEs to deploy ICT-based systems in their daily business operations to help produce, market and service their products. The use of ICTs can potentially improve communication between individuals and groups in organisations. For Nigerian SMEs to become more advanced, it is imperative they leverage ICT-based systems to facilitate global communications with their suppliers, customers and distributors. According to Teo and Tan (1998), the role of ICT in enabling business transformation is crucial as organisations are able to streamline and coordinate the massive flow of information by redesigning or reengineering their business processes in
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order to improve productivity and enhance competitiveness. Dyerson et al. (2009), state that the adoption and use of ICT is widely seen as critical for the competitiveness of all SMEs in the emerging global market. This paper is based on a survey that explores issues behind the non-adoption of ICT by a number of SMEs in Lagos, Nigeria. The key research question addressed in this study is “what are the key issues inhibiting Nigerian SMEs from adopting and utilising ICT?” A total of 200 questionnaires were distributed to SMEs in Lagos. The study forms part of a PhD research programme and aims to suggest approaches which could be applied to help resolve the existing issues facing Nigerian SMEs. The findings of this study aim to provide valuable information to SME owner-managers, policy makers and researchers.
2
The role of SMEs in economic development
The role of SMEs in national and economic development is well documented. SMEs are recognised as potential engines for economic and social growth all over the world (Ndiwalana and Tusubira, 2006). While figures may vary, SMEs account for the majority of firms and a corresponding share of employment within developing economies. Ndiwalana and Tusubira (2006) advocate that the SME sector largely exceeds the average economic growth of national economies in many developing countries and contributes significantly to employment creation. In Nigeria, SMEs employ an average of 50% of the working population and contribute about 50% to Nigeria’s industrial output (Ihua, 2009; Apulu et al., 2011). Similarly, Aina (2007), states that about 10% of the total manufacturing output and 70% of the industrial employment in Nigeria are by SMEs. Accordingly, governments and development partners alike have recognised the important role that the SME sector plays in the overall development of Nigeria. The popular definition of SME is a firm with 0–250 employees; small being less than 50 employees and medium sized between 50 and 249 (Harindranath et al., 2008). However, the Small and Medium Sized Development Agency of Nigeria (SMEDAN) defines SMEs based on the following criteria: a micro enterprise as a business with less than ten people with an annual turnover of less than five million Naira, a small enterprise as a business with 10–49 people with an annual turnover of 5–49 million Naira and a medium enterprise as a business with 50–199 people with an annual turnover of 50–499 million Naira, all excluding land and building. According to Adebambo and Toyin (2011), business environments have been undergoing unprecedented changes and many companies are seeking new ways to compete and maintain their competitive advantage. In today’s highly competitive global marketplace, the pressure on organisations to find new ways of creating and delivering value to customers is growing stronger. Currently, ICT is being applied in many organisations in a wide range of areas.
3
The use of ICT by SMEs
ICT is fast becoming one of the main drivers of change in organisations (Adebambo and Toyin, 2011). As technology advances with high pace, Turan and Ürkmez (2010) argue that new ICTs especially the internet, have become a major investment area for small and
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large organisations alike. ICT is constantly evolving, therefore it could be difficult sometimes to keep up with the changes (Turan and Ürkmez, 2010). ICT here simply refers to a wide range of computerised technologies. Ritchie and Brindley (2005) define ICT as “the array of primarily digital technologies designed to collect, organise, store, process and communicate information within and outside an organisation”. Whereas Barba-Sánchez et al. (2007) view ICT as a collective term for a wide range of software, hardware, telecommunications and information management techniques, applications and devices, that could be used to create, produce, analyse, process, package, distribute, receive, retrieve, store and transform information. Davenport (1993) simply describes ICT as an enabler of organisational change. In contrast, Apulu and Latham (2009) describe ICT as a tool that brings about competitive advantage which in turn, helps to deliver business value in organisations. In business, ICT is often classified into two broad types of product: the traditional computer-based technologies and the sophisticated/advanced or more recent and fast-growing range of digital communication technologies that allow people and organisations to communicate and share information digitally (Dai, 2009). Apulu and Latham (2011) advocate that the rapid development of ICT has changed the conventional way of conducting business in many organisations. In recent years the increasing use of ICT has helped SMEs, especially in developed countries, to share and exchange information more efficiently. Adopting new technologies is very important in initiating the movement for a higher quality and competitiveness in the world of SMEs (Turan and Ürkmez, 2010). More recent technologies enable organisations to share and disseminate information between various users simultaneously, customise functionality and achieve higher levels of interactivity (Maneche and Schoensleben, 2004). Furthermore, recent technologies are more sophisticated and help organisations to reduce their operational costs, enhance customer service levels and satisfaction, hence providing higher quality of information for better decision making by managers. According to Turan and Ürkmez (2010), organisations have developed new means of communications and information flow among their partners and customers resulting in a total paradigm shift in their organisations. ICT can fulfil a number of business needs such as strategic, operational and marketing needs or a combination of all of them (Modimogale and Kroeze, 2009). In addition, the use of ICT in enabling SMEs to partake in the knowledge economy offers enormous opportunities to narrow social and economic inequalities and thus help in achieving broader development goals (United Nations, 2007). Maneche and Schoensleben (2004) state that ICT is vital for a company’s external relationships, particularly cross-company workflow. The use of ICTs can provide several significant benefits to SMEs as identified by United Nations (2007), which range from increasing productivity in the production process to connecting SMEs more easily and cheaply to external contacts, whether locally or globally amongst others. Moreover, Ashrafi and Murtarza (2010) identified that ICT helps SMEs to enter new markets, supply new products and services, increase its added value, change business processes, increase performance and productivity of the organisation, employ new business channels and provide rapid response to competitors’ activities. In spite of the increasing use of technology in all aspect of lives, some SMEs in Nigeria appear to have ignored the relevance of ICT in doing business, hence are yet to reap the benefits that ICT has to offer. A recent study conducted by Apulu et al. (2011) ascertained that many Nigerian SMEs that have successfully adopted ICT mainly utilise
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traditional-based technologies such as standard office applications and user-friendly tools which include telephone and fax. On the other hand, it was identified that only a limited number of these SMEs make use of sophisticated communication technologies that can allow people and organisations to communicate and share information digitally. However, the internet is an exception which the majority of the SMEs’ make use of and the service is characterised by very slow transmission due to the poor services provided by the different Internet Service Providers (ISPs) in Nigeria (Apulu et al., 2011).
4
ICT adoption in developing countries
A developing country can be described as a one in which most people have a low income and low standards of living with less access to goods and services as compared to most people in higher-income countries (Leslie and Gaskill, 2006). Developing countries face almost insurmountable barriers to accessing the electronic highway (Kapurubandara and Lawson, 2008). ICT can help developing countries tackle a wide range of problems such as health, social and economic problems as ICT can assist in improving access to information and enabling communication (Parliamentary Office of Science and Technology, 2006). ICT can also assist in eliminating poverty, achieving universal primary education and gender equality in developing countries most especially in Africa. Yet, the benefits of ICT are still not fully realised in many developing countries due to so many unresolved issues. Terero and von Braun (2005) observe that although the use of ICT remains concentrated largely in the developed countries, ICT diffusion is beginning to reach developing countries including the poor rural areas, bringing with it high hopes of positive development outcomes. In Nigeria, ICT is often out of reach to the poor and those mostly in the rural areas. While, technological innovations such as mobile phones and wireless broadband access are playing an important role in accelerating the take-up of ICT, strong inequality still remains. Developing countries in general are still well behind developed countries in terms of their access to ICT (Terero and von Braun, 2005). According to Ihua (2009), developing countries are lagging behind, probably because the developed nations produce the technology, while the developing nations import it. Mouelhi (2009) advocates that the adoption of ICTs, such as internet, mobile telephony and broadband networks, in many developed countries has been found to have a positive effect on organisations’ performance, yet not all countries are taking advantage of the revolution in the same way and at the same pace. Obijiofor et al. (2005) perceive ICT to be a major tool for kick-starting ailing economies and consequently in assisting developing societies to ‘catch up’ with the developed world. Similarly, Golding et al. (2008) affirm that there is a digital divide which shows that ICT adoptions vary between developed and developing countries with developing countries adopting ICT at a slower rate due to several issues militating against them.
5
ICT adoption issues in developing countries
Issues affecting the adoption of ICT in developing countries are enormous. They range from skills deficiency, economic constraints, lack of infrastructure, lack of funds,
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confidentiality and security concerns, low level of internet penetration and bandwidth, to inappropriate ICT policies amongst others (e.g., Kapurubandara and Lawson, 2006; Lawrence and Tar, 2010; Omary et al., 2010). Weiner and Rumiany (2007) note that the implementation of ICT in the developing world is often inhibited because the infrastructure, human capital development and financial resources that are necessary to implement ICT effectively, are either absent or of a poor quality. They argue that ICT policies adopted in developing countries have the ability to increase (rather than decrease) the digital divide within countries, and in so doing make it even more difficult for businesses in rural areas to compete. Weiner and Rumiany (2007) further justify this point by arguing that when new technology is introduced in developing countries, it is usually made available in urban areas that have the required infrastructure and market, thereby making those areas become more competitive. With the rapid advances in technology there is a growing fear that rural areas, which are already hampered by large distances from markets and plagued with poorer quality infrastructure, will be further disadvantaged by their lack of ICT (Kew and Herrington, 2009). According to Kari (2007) the developing world still lacks the most basic forms of information and communication infrastructure unlike developed countries, where ICT has been used to change the manner in which businesses are conducted, in order to attain some forms of strategic advantage. Prasad (2009) also asserts that lack of scholarly focus tends to hinder the development and use of ICT in developing countries since businesses lack the vital information that could provide directions for the successful use of it. This paper concentrates mainly on issues surrounding the non-adoption of ICT amongst SMEs based on a survey conducted in Lagos, the centre of commerce in Nigeria.
6
Research method
The survey research method was chosen for this study as it presents a snapshot of how things are at a specific time (Kelley et al., 2003). A survey was conducted from December 2009 to February 2010 and a total of 200 questionnaires were distributed to owners/managers of SMEs in Lagos state. The self-administered method was chosen for data collection due to the poor postal system in Nigeria. Besides, there are unclear and insufficient addresses of SMEs available from the various governmental associations. Therefore, in order to avoid delays, it was decided by the researchers to locate the SMEs in person. Although the self-administered method is expensive and time consuming, it does ensure a high response rate and enables the researcher to explain in detail the aims and objectives of the research as well as clarify unclear questions. The questionnaire was designed based on the review of current literatures to assist in identifying SMEs that have successfully adopted ICT as well as SMEs that are non-adopters of ICT within the region. From the 200 questionnaires distributed, a total 105 completed questionnaires were returned, representing a 52.5% response rate. Of these 39 (37.1%) were unfilled or had some missing key information and 66 (62.9%) were fully completed. Therefore for this paper the total number of companies considered will be 66. Reasons for the partially completed questionnaires were either due to company policy of not completing questionnaires or in some situations the companies were reluctant to complete the questionnaire due to reasons related to data protection.
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The non-adopters of ICT were given the opportunity to express their reasons for non-adoption in their various SMEs. Current adopters or users of ICT were requested to specify the various types of technologies that were being utilised in their organisations. Notwithstanding, the study only identifies issues behind the non-adoption of ICT within a number of SMEs in the region. Data from the questionnaires was analysed and a number of tables and charts were constructed to reflect basic details of the dataset.
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Findings
In this section, some of the key findings from the survey are presented. Respondents came from a wide variety of backgrounds as indicated below.
7.1 Position in company Table 1 provides an overview of the respondents that participated in the survey and fully completed the questionnaire. The majority of the respondents were in management roles such as business managers, general managers, managing directors and chief executive officers representing 83% of the total sample population while 4.5% were either IT professionals or heads of departments. 10.6% accounted for other roles such as supervisors, chief accountants, secretaries and so on. Results of the analysis show that the majority of the respondents were in managerial positions in their companies as shown in Table 1. Table 1
Position in company
Position
No.
Percentage
Manager/General Manager
36
54.5
Director/Managing Director
14
21.2
IT Officer/Head of Department
3
4.5
Chief Executive Officer
6
9
Others
7
10.6
7.2 Size of SMEs in terms of workforce In the first section of the questionnaire the number of employees in each participating SME was identified and these were classified based on their size using the definition of SMEs in Nigeria as defined by SMEDAN (2005). Of the 66 SMEs that fully completed the questionnaire, 88% can be classified as small enterprises (between 10 and 49 employees) and 12% medium sized enterprises (between 50 and 199 employees) as shown in Table 2. Table 2
Size of SMEs in terms of workforce No. of employees
Percentage
11–49 employees
58
88
50–199 employees
8
12
Size
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7.3 Average level of education Respondents were requested to indicate the average level of education amongst their employees. Of the 66 questionnaires that were fully completed, it was observed that employees who had masters’ degrees were all in managerial positions. It was also identified that one of the managers had a PhD. Table 3 provides information on the average level of education amongst responding companies. Table 3
Average level of education
Level of education
No.
Percentage
3
4.5
Secondary School
28
42.4
Technical College
33
50
Bachelor’s Degree
Primary School
32
48.5
Master’s Degree
5
7.5
Doctoral Degree
1
1.5
7.4 Industry sectors of participants The result shows that respondents emerged from a large number of industry sectors. Table 4 presents details of the types of sectors that fully participated in the survey. The highest numbers of SMEs participating in the study were transport/haulage/freight companies with 16.6%, which probably results from the inclusion of firms around the Apapa sea port (the largest sea port in Nigeria). Table 4
Industry sectors of participants
Industries/Sectors of participants (SMEs)
No.
Engineering
4
6
Hospitality/Grocery/Food processing
8
12.1
Financial service/Stock brooking/Risk management
7
10.6
Whole sale/Retail
6
9
Construction/Real estate
1
1.5
Medical/Pharmaceutical
2
3
Telecommunications/Communication
4
6
Oil and gas
9
14
Education
1
1.5
Legal practice
1
1.5
Manufacturing Transport/Haulage/Freight Others
Percentage
8
12.1
11
16.6
4
6
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7.5 Number of ICT users Respondents were asked to indicate if they were ICT users by simply selecting a ‘yes’ or ‘no’ answer. Of the 66 SMEs responding, 43 SMEs (65%) were ICT users and 23 SMEs (35%) were non-users. The result shows that the majority of the SMEs in the region are ICT users as described in Figure 1. Figure 1
ICT users (see online version for colours)
7.6 Number of computers in companies 32% of SMEs had between one and five computers (such as desktop and lap top computers) while 14% had between six and ten computers. Twenty three SMEs were identified as non-users of ICT which represented 35% and is indicated as ‘none’ in Table 5, which provides full detail of the number of computers in the companies. Table 5
Number of computers in companies
No. of computers
No. of SMEs
Percentage
1–5 computers
21
32
6–10 computers
9
13.5
11–15 computers
3
4.5
16–20 computers
2
3
21–25 computers
3
4.5
26–30 computers
3
4.5
31–35 computers
0
0
36–40 computers
1
2
41–45 computers
0
0
1
1.5
23
35
46–50 computers None
7.7 Types of ICT applications in SMEs Figure 2 provides an overview of the different types of ICT applications that are being used by the SMEs in the study. 14% of the surveyed SMEs use only software applications while 8% of the SMEs use mainly communication applications. 43% of the respondents indicated that they use both software and communication applications.
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One SME that did not specify the type of technology that is used in their company. The statistics suggests that more than half of the SMEs have some form of ICT applications or solutions. Examples of software used in these firms include: primeria for disc publishing or duplicating CDs and DVDs, Symbols which is used to type documents in any language, Peach tree accounting software, Vessel Tracker, Business Soft, ERP, Microsoft Package, Data Management Software (DMS) and AutoCad. Communication applications that are used mainly include mobile phones with no internet connection, telephone and fax, broadband for internet service and a few had intranet and LAN (Local Area Network). In addition, one company indicated that they have a computer but did not specify other types of applications they had in place. Furthermore, three SMEs indicated that Internet and Intranet service were currently being used in their companies. However, none of the SMEs had extranet or WAN (Wide Area Network), neither did any SME indicate the use of video conferencing in their company. Figure 2
Types of ICT applications in SMEs (see online version for colours)
7.8 Business reliance on ICT Four SMEs identified to be ICT users and have some types of technologies in place indicated that their businesses could still survive/function without the use of ICT. For example, two transport companies indicated that they use ICT and both had between 1–5 computers respectively in their organisation. Furthermore, both companies had internet service but were of the opinion that their businesses could still function successfully without relying on ICT. A financial service company with 11–15 computers that uses some software but has no internet service also had a similar opinion. Finally, a sales company with 28 computers and equipped with some types of softwares and internet access was also identified to be non-ICT reliant. In addition, 20 of the SMEs made no indication whether or not their businesses relied on ICT, since they had no form of technology in place. In summary, they were all convinced that their businesses could flourish or function effectively without any form of ICT. Twenty SMEs did not to respond to the question. However, it was observed that most of the SMEs that did not respond to the above question were those companies that had no form of ICT in place. Interestingly, a maritime company accepted that their business was not ICT reliant but, indicated that their business required ICT for growth and that due to financial constraints they could not afford it (Table 6).
68 Table 6
I. Apulu et al. Business reliance on ICT
Business reliance
No. of SMEs
Percentage
Yes
39
59
No
7
11
None of the above
20
30
7.9 Reasons for non-adoption of ICT The questionnaire also sought to identify reasons for non-adoption of ICT amongst responding SMEs. Respondents who had not adopted ICT provided reasons for their non-adoption. Of the 23 SMEs, 22 gave several reasons for their inability to adopt any form of ICT as described in Table 7 and Figure 3. There were 14 issues identified amongst the entire SMEs however, it was observed that the cost for ICT implementation was not a key reason rather; many SMEs indicated that the lack of electricity and lack of skills were the major factors behind their non-adoption. Figure 3
Table 7
Reasons for non-adoption of ICT (see online version for colours)
Reasons for non-adoption of ICT
Rank
Reasons for non-adoption
1 2 3 4 5
Lack of power Lack of skills Lack of knowledge Training cost Cost
No. of SMEs
Percentage
11 10 7 6 5
48 44 30 26 22
Issues of ICT adoption amongst SMEs in Nigeria Table 7
Reasons for non-adoption of ICT (continued)
Rank
Reasons for non-adoption
6 7 8 9 10 11 12 13 14
Maintenance Lack of awareness ISP providers Lack of support from banks Governmental policies Bank regulations Corruption Tax Fraud
8
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No. of SMEs
Percentage
4 3 3 2 2 2 2 2 1
17 13 13 9 9 9 9 9 4
Discussion
Key issues facing SMEs in Lagos, Nigeria Whilst the results from the survey indicate that many SMEs in the region tend to have adopted ICT (either basic or sophisticated), the results also identify a number of issues limiting some other SMEs from successfully benefitting from the adoption and use of ICT. The survey results indicate that some SMEs in Lagos are inhibited by a number of key issues. The majority of the non-adopters surveyed, were concerned about the electricity constraints in the country as well lack of skills amongst their employees. These issues were ranked 1st and 2nd respectively. A discussion on the various issues identified by the SMEs is presented below.
8.1 Lack of electricity The poor state electricity supply discourages some Nigerian SMEs from attempting to adopt ICT. Although Nigeria is known to be the largest producer of oil in Africa and holds approximately one third of the proven gas reserves but, lack of electricity supply has continued to be a major problem in the country (Baker, 2008) which in turn affects the adoption of ICT. Nigeria has tremendous energy resources in the form of abundant gas, water and mineral resources, yet it is highly energy deficient (Tallapragada, 2009). Also, Akpan-Obong (2009) states that in many rural areas there are no electricity supplies; while in the towns and cities where there is electricity, the supply is limited. In Nigeria, the cost associated with provision of electricity is very high and it is rare to live for a day without uninterrupted power supply.
8.2 Lack of skills With regards to the skills issue, MacGregor et al. (1996) advocate that SMEs tend to avoid the use of ICT in their businesses, if it is seen as complex. Alam and Noor (2009) also identify the lack of suitable technical and managerial staff with sufficient ICT expertise as a major barrier for SMEs in terms of adopting ICT and conclude that SMEs usually lack skills amongst their workforce. Similarly, Apulu et al. (2011) in their
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research involving 25 SMEs, identified that skills deficiencies is a contributing factor affecting a number of SMEs that have successfully adopted ICT from further adopting more sophisticated ICT solutions. Therefore, the skills of employees in SMEs are crucial to the successful adoption of ICT. Lack of skills can affect the effective utilisation of ICT even amongst SMEs that have successfully adopted ICT. In addition, Reynolds et al. (1994) states that SMEs owner-managers are unlikely to adopt technologies if they lack the requisite skills.
8.3 Lack of knowledge Lack of knowledge was considered to be another issue. Although most of the non-adopters had a positive view concerning the use of ICT, they indicated that their lack of knowledge on how to use computers remains the major issue for non-adoption. A number of respondents expressed their desires to learn how to use computers and the internet, if given the opportunity to do so. According to Costello et al. (2007), lack of knowledge on how to use technology and low computer literacy are factors that can affect the adoption of ICT. Similarly, Lee and Kim (2004) advocate that lack of technological knowledge amongst employees and their management capability can be a barrier to the adoption and extension of information systems. The authors highlighted in their research, that some SME managers are concerned about the introduction of ICT because of the fear that their employees might be not familiar with it.
8.4 Cost Some respondents identified issues such as training cost (26%), overall cost (22%) and maintenance cost (17%) as the reason for non-adoption of ICT. Even in the SMEs that are already utilising ICT, cost remains a critical issue. Lee and Kim (2004) state, that even the adopters of ICT are unwilling to upgrade their information systems or to adopt other advanced ICT service applications as a result of the high adoption cost. The cost of training employees has continued to be a key issue in SMEs. Besides, SMEs do not develop training plans. In most Nigerian SMEs, there is reluctance amongst owner-managers to invest in training their employees because they are afraid of losing their employees to large companies upon their completion of such trainings, when qualifications are increased (Arendt, 2008). Meanwhile, some SME managers are of the opinion that maintaining ICT infrastructures requires a substantial amount of money.
8.5 Owner-manager’s lack of awareness The non-adoption of ICT has also been attributed to lack of awareness. A number of SME owner-managers in Nigeria are not familiar with the conceptual basis and potential benefits of adopting ICT (Apulu and Latham, 2009). Chibelushi and Costello (2009) also state that lack of awareness could hinder SMEs from understanding the potential benefits that are associated with new technologies which could enhance their efficiency and increase productivity. Awareness has a positive influence on organisation inclination to consider new ICT (Tarafdar and Vaidya, 2006). Moreover, owner-managers’ personal characteristics are very important in technology adoption (Costello et al., 2007). This implies that an owner’s enthusiasm for technology is a major motivator in the adoption of ICT. According to Levy et al. (2002), the major factor in increasing
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investment in IS/IT is the owner’s enthusiasm. Also, Apulu and Latham (2009) suggest the need for owner-managers to conduct training sessions for staff as this will assist in creating awareness on the benefits associated with adopting ICT in organisations.
8.6 Internet Service Providers There is also an issue with Internet Service Providers (ISPs). Although the SMEs in question are yet to adopt ICT, it was identified that the majority of these SMEs were aware of the poor services provided by ISPs in Nigeria and were not ready to waste their resources. Research by Apulu et al. (2011) identified the poor services of ISPs as an issue for non-utilisation of sophisticated ICTs amongst 25 SMEs that had successfully adopted basic/traditional-based ICTs. The researchers identified that the services provided by ISPs in Nigeria were inefficient and usually characterised by very low bandwidth, frequent disconnections and high subscription rates. Interestingly, Kapurubandara and Lawson (2006) also identified that poor internet connectivity affects the adoption of e-commerce in Sri Lanka.
8.7 Lack of government policies Lack of government policies for SMEs is ranked 8th. In Nigeria the policies that support SMEs are not properly implemented, and in most cases are inconsistent. Alam and Noor (2009) advocate that government support has a significant and strong positive relation to ICT adoption. According to the authors, both industry and government bodies have a role to play in promoting and supporting small business networking and ICT. Tan and Teo (2000) note that government policies are meant to assist SMEs in increasing their competitiveness and also, enable them to have greater influence in terms of ICT use. There is a need for the Nigerian government to establish programmes that would encourage Nigerian SMEs to adopt ICT as this will lead to the further development of the nation’s economy.
8.8 Lack of support from banks and regulations The lack of support from banks and their regulations are also issues behind the non-adoption of ICT in a number of Nigerian SMEs. Owoseye (2010) ascertains that many Nigerian banks do not give loans to SMEs except for the Agricultural Development Banks (ADB), which usually require collateral such as landed properties, shares and capital. The majority of Nigerian SMEs are unable to meet their demands however; there are some on-going efforts to revive the SME sector in Nigeria. For example, in 2010 the Governor of the Central Bank of Nigeria (CBN) disclosed that over 130 billion naira had been released to the Bank of Industries (BOI) for onward disbursement to SMEs via some designated banks (Thisday Live, 2011). Nevertheless, the inability of most SMEs to present the required collateral remains a major deterrent and in turn could inhibit them from adopting ICT.
8.9 Tax Two respondents indicated that SMEs pay too many taxes which somehow affect their decision to adopt ICT, as SMEs generally are characterised by limited funds. Ihua (2009)
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notes that multiple and high taxes are to a certain extent, considered to be a significant factor that causes SME failure in Nigeria. Consequently, Opara and Ituen (2009) suggest that there is the need for incentives like tax rebate for SMEs in Nigeria amongst others.
8.10 Fraud Finally, one respondent indicated that their company was scared of fraud hence; they are reluctant to adopt ICT. This may be attributed to the company’s lack of knowledge on the benefits associated with the use of ICT in SMEs. Similarly, a survey conducted by UNCTAD in 2004, confirmed that 71% of the countries that were involved in the study listed security concerns like fraud, as a major barrier impeding the use of ICT and e-commerce by customers. Li and Suomi (2007) also identified inhibitors to e-service adoption as security risks comprising the fear of fraud and risk of loss.
9
Conclusion and recommendations
The survey was based on a sample of 66 SMEs and the result shows that there are several issues inhibiting Nigerian SMEs from adopting ICT. Although the study confirms that quite a number of SMEs in Lagos are ICT users, there are some SMEs in the region that are yet to adopt ICT. For example, the lack of power as well as the lack of skills were identified as the two major barriers deterring the adoption of ICT amongst non-adopters in the region. A number of respondents indicated that lack of knowledge (30%) was a barrier which could be linked to their lack of skills. Meanwhile for the adopters or users of ICT, it was identified that the majority use Microsoft packages (in terms of software applications) and the internet (in terms of communication applications). SMEs are vital to the Nigerian economy; hence there is a need for the government to assist in resolving the issues’ affecting them since, ICT has become indispensable for all kinds of businesses. There is also a need for more focus and concerted efforts on increasing awareness amongst SMEs, especially with regards to the benefits of ICT adoption, in order for all SMEs to actively participate in the present era of globalisation and furthermore to stay competitive. The government needs to create better awareness programmes that will assist in increasing the rate of ICT adoption amongst SMEs. This could be achieved by organising seminars or induction sessions. Likewise, the government should enforce standardised, consistent and uniform policies that would help to develop the SME sector and, offer relevant professional advice to SMEs thus, assisting non-users to adopt ICT. Owners of SMEs should set good examples in acquiring ICT knowledge and skills and endeavour to motivate their employees to do the same. ICT proficiency is essential for all companies, in order to effectively participate and engage in the modern society. Efforts should also be made to reposition the power sector, to improve electricity supply in Nigeria. ISPs need to lower their tariffs and provide a more efficient service in order to encourage more SMEs to adopt some forms of technology. Banks should also review their regulations and implement new strategies to support SMEs rather than requesting for collaterals, since many SMEs are unable to meet their demands. Given the importance of ICT adoption and the low level of utilisation, especially sophisticated ICTs amongst Nigerian SMEs, there is need for more understanding of the issues relating to the non-adoption and use of ICT, which this study has attempted to
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examine. The findings of this study have important implications for policy makers as it would require the government, for instance, to review its policies and introduce more initiatives that will promote ICT adoption within the SME sector in Nigeria. The findings also have implications for owner-managers interested in expanding their businesses and generating more revenue with the help of ICT. Finally, the findings have implications for researchers as it provides useful information on factors behind the non-adoption of ICT by SMEs in Nigeria and can serve as a guide for further research in other developing countries. The limitation of this study is that the survey was conducted using a sample size of 66 SMEs in a particular of Nigeria. The study can further be strengthened by increasing the sample size and including participants in other geographical areas.
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