Digital Technology uses among Microenterprises: Why is Productive use so Low across Sub-Saharan Africa?

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Digital divides among microenterprises: Evidence from sub‐Saharan Africa

“…To this end, we provide extensive descriptive evidence on the use of digital technologies by informal businesses in Africa, considering three main functions: external coordination, financial transaction and internal management (Berrou et al, 2020; Eekhout et al, 2022). Moreover, compared with existing empirical evidence, which mainly considers socio‐demographic traits of users to explain usage disparities among informal firms (Atiyas & Dutz, 2023; Eekhout et al, 2022), we also account for firm‐level characteristics that are likely to explain disparities in opportunities and willingness to use digital technologies. Second, this study provides the first evidence that digital inequalities are rooted in the vertical heterogeneity of informal sectors (Dasgupta & Lloyd‐Jones, 2018), meaning that the most successful firms use these new technologies to a greater extent than subsistence and constrained entrepreneurs (Grimm et al, 2012).…”