This article reports on a small and medium enterprise (SME) survey carried out by the ResearchICTAfrica (RIA) in 14 African countries. It argues that the negative return on investment reported in the literature can be attributed to the failure to distinguish between the formal and informal sectors. This article demonstrates that informal SMEs have a higher profitability than formal ones. It further shows that ICTs are productive input factors and that their use increases labor productivity for informal as well as formal SMEs. The article further argues that there is still demand for fixed-line phones among SMEs but that mobile phones have become the default communications tool because fixed lines are either too expensive or not available. The primary policy recommendation arising out of this is that applications for SMEs need to be developed using mobile phones. (c) 2007 by The Massachusetts Institute of Technology.

With computer and Internet penetration in most countries still very low, the mobile phone is increasingly becoming key entry point for Internet adoption on the continent. This is one of the main findings of the 2011/2012 ICT access and usage household and individual survey which reports that the emergence of Internet enabled mobile phones and lower bandwidth adaptations of applications, particularly social media, is driving the rapid diffusion of mobile internet.

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Purpose – The purpose of this paper is to analyse the extent to which informal businesses employ information and communication technologies (ICTs) in their daily activities and the challenges they face in making use of ICTs. Design/methodology/approach – The study uses nationally representative data for informal businesses in residential and semi-residential areas, as defined by national census sample frames for nine African countries. Findings – The results show that mobile phones remain the most commonly used ICT among informal businesses, while the use of other ICTs, such as fixed-line telephones, computers and the internet remains negligible. Businesses were found to communicate more with their suppliers than with their customers via mobile phone. The lack of use of the different kinds of ICTs was attributed to issues around need, affordability, availability and access. Research limitations/implications – The data are not representative of formal businesses. Practical implications – There is little money to be wasted on gadgetry in the informal sector and only technologies that add value (i.e. bring in money in the short term) will be used. There is the need to be concerned about creating a business environment that allows informal businesses that have the skills and ambition to grow and become formal and sustainable. ICTs, in particular the mobile phone and mobile internet, have the potential to facilitate this. ICTs may allow for a deepening of the distribution and procurement channels of businesses. Doing business over distance could become more affordable through the mobile phone and mobile money. Social implications – Policy makers have many choices in addressing affordability and access to ICTs in the informal sector, ranging from introducing competition and removing import duties on prepaid airtime, to supporting mobile application development for informal businesses in general. Originality/value – This paper uses primary data that allow a better understanding of informal businesses and their use of and access to ICTs. It adds to the literature on the informal sector in which Africa's poor find their livelihood and from which base the formal economy operates.