Introduction
In End of Millennium, Castells (1998) situates Africa in the ‘Fourth World’ and argues that most of the region's people are socially excluded from the benefits of informational capitalism whilst its abundant natural resources are devalued and extracted to fuel First World economies. While clearly an Afro-pessimistic view, Castells’ (1996) ideas about the network society implicitly provided greater hope for the region, assuming its economies could become more globally oriented and deeply integrated into financial, knowledge, commodity and production networks ‘powered by’ new information and communication technologies (ICTs) such as mobile phones, computers and the Internet. For some, new ICTs would help to transform Africa not simply through an expansion and quickening of the scope and pace of (globalised) communications, but as tools to enable the radical reorganisation of economies and deeper and more progressive (i.e. less exploitative) forms of integration into the global information economy (GIE) (UNCTAD 2005).
For many, the promise of informational capitalism in Africa appears to be playing out, as the region hosted six out of the top ten fastest-growing economies in the world over the past decade, while simultaneously experiencing the explosive diffusion of mobile phones, computers and Internet use. There are now an estimated 700 million mobile phone subscriptions in Africa and Internet usage, largely through cheap smartphones, is growing at 500% a year (GSMA 2011). Beyond the significant personal and social implications of improved communications, new ICTs are seen by many as crucial ingredients in Africa's rapid industrial transformation or leapfrogging toward service-oriented economies:
Building ICT skills across society (both in high-end and basic skills) will help prepare labour markets for a gradual evolution to a service-oriented, ICT-enabled Information Society. The development of ICTs and ICT-enabled industries is an integral part of a transition to the New Economy through export of services over the internet, and through the growth in trade in services. (World Bank, 2010, 11)
This paper engages critically with claims about the transformative potential of new ICTs through an empirical emphasis on their contribution to industrial development in South Africa and Tanzania. Our analysis focuses on two key economic sectors in both countries, wood products and tourism, and interrogates the nature and quality of the region's information-technology ‘revolution’ from the perspective of small, medium and micro-scale enterprises (SMMEs). The goal is to assess whether ICT diffusion is enabling industrial transformations through ‘deeper’ forms of information management that help firms improve their products/services and upgrade their capabilities such that they can capture greater value from domestic and international markets.
The findings suggest that new ICTs are enhancing the productivity of SMMEs in the wood products and tourism industries through improved communication practices. However, deeper transformations to business networks and information access, processing and management capabilities are not occurring to the same extent and the knowledge and innovation benefits from ICT use remain limited at the present time. This ‘thin’ integration – thintegration – of new ICTs as communication devices, rather than information management and processing technologies, has done little to ameliorate the challenges facing African SMMEs (e.g. hypercompetitive markets, increasing levels of import penetration, and human capital limitations). In some cases new ICTs are even strengthening the power of foreign capital vis-à-vis local industries. In sum, the findings show that the prospects for the radical informationalisation of South Africa's and Tanzania's economies/industries seem, at best, highly nascent at this point as the ‘usual suspects’ of socioeconomic development – basic infrastructure, institutions, politics, access to capital, and (other) technological capabilities – will continue to be major obstacles in the short and medium term. In the absence of significant transformations/reforms in these areas, it is unrealistic to expect that thicker forms of ICT integration will emerge in African countries and industrial sectors facing similar challenges.
The remainder of the paper is organised as follows. We first briefly trace the contours of the GIE, critically engage with narratives about the transformative power of ICTs and situate Africa within this new phase of capitalism. We then conceptualise what an informational transformation to African economies might consist of, drawing on the contrasts between what we term ‘thin’ and ‘thick’ forms of ICT integration. Following a brief discussion of our research contexts and methods, we then empirically examine the role of ICTs in the development of SMMEs and the wood processing and tourism industries in South Africa and Tanzania. The paper concludes with some remarks about the wider implications of new ICTs and the GIE for Africa's development in the coming years.
Situating Africa in the global information economy
The global information economy arguably constitutes a new phase of capitalism, one where the productivity and competitiveness of firms and economies are largely dependent on the ability of states and other economic actors to generate, access and apply what Castells (1996, 1998) calls ‘knowledge-based information’. The underlying basis of Castells' understanding of the GIE is the (global) network society – a digitally enabled ‘space of flows’, or network of networks, within which information, people, capital and knowledge flow through globalised relationships between individuals, markets, firms, states and communities (Castells 1996, 2004). Successful integration into the global network society, and hence the GIE, depends in large part on the ability of individuals, firms and regions to build connections to the flows of knowledge, information, capital and labour that support innovation, drive economic growth and facilitate inclusive or distributive forms of socioeconomic development. ICTs, such as mobile phones, computers and the Internet, are crucial contributors to this integration process provided they can be used effectively to manage, recombine and process information in ways that enhance the value of products and services while increasing the flexibility and responsiveness of local firms and industries to international competition (Castells 2004).
Moving forward from this characterisation of the GIE, Castells (2005, 18) has argued for an ‘informational model of development’, one that is enabled by the diffusion of ICTs, appropriate human resources and ‘the distribution of the capacity to generate knowledge and manage information’. Achieving development in this manner will require a massive international effort, manifest today in the ICT4D (ICT for Development) community of donors, practitioners, firms, entrepreneurs and state agencies.1 In the broadest sense, some proponents of ICT4D have declared that informational capitalism would ‘flatten’ the earth, ‘lighten’ the global economy or mean ‘the death of distance’ (Cairncross 1997; Quah 1999; Friedman 2007), while others (e.g. Ericsson 2012) have postulated a new kind of (technologically deterministic) developmentalism, where a city's or region's increasing use of ICTs would necessarily and positively correlate to economic growth, decreases in inequality and environmentally sustainable forms of development. More commonly, ICT4D practitioners and scholars maintain a less grandiose but optimistic perspective, viewing mobile phones, computers and the Internet as general-purpose technologies that can transform SMMEs and reposition industries within the GIE through improvements to their productivity, innovativeness and market access (Carbonara 2005; UNDP 2005; ITU and UNCTAD 2007; WBCSD 2007; Muto and Yamano 2009; Aker and Mbiti 2010). Moreover, ICTs may help boost ‘invisible’ service exports through the creation of new industries (e.g. call centres), enable the productive insertion of firms into global value chains and contribute to the development of national or regional innovation systems (Marcelle 2003; Benner 2006; Broadman 2007).
Beyond these sometimes boosterist perspectives, others, including Castells (2004), have been more sceptical, arguing instead that the networked society and the global information ‘revolution’ are hierarchically organised and that the GIE also produces spaces of exclusion and marginalisation. For some, the ICT4D discourse often equates technology with development as it ignores many of the structural factors that sustain and reproduce poverty in the Global South (Alden 2003; Alzouma 2005; Leye 2007). Others have observed sharpening geographical inequalities in the distribution of cyber-infrastructure and information control, processing and modelling capabilities (Wade 2002). Such digital divides are equally visible within cities and regions as access to ICTs and the GIE is highly unevenly distributed or ‘splintered’ along class, gender and racial lines (Graham 2002; Crang, Crosbie, and Graham 2006). Finally, some view new ICTs as technologies that create new dependencies and forms of ‘electronic imperialism’ as they assimilate, but not deeply integrate, the periphery into an uneven (informational) world system (Y'au 2004; Zembylas and Vrasidas 2005; Leye 2007).
Debates aside, Africa has been a central concern of the ICT4D community and the explosive diffusion of mobile phones throughout the continent in recent years has given hope to some that the region can mobilise ICTs to overcome the historical legacies, material limitations and institutional challenges which have situated the region peripherally within the GIE.2 At present, the region's connectivity to the GIE is manifest principally in three ways.3 First, African markets have become an important source of profits for manufacturers mainly in Asia through the exportation of ICT products and services, particularly in the context of the ‘Great Recession’ in the West. These shifting trade relations are having mixed impacts in Africa, facilitating growth through commodity demand (Asche 2011), while also making domestic manufacture more difficult and fostering a shift toward commercial, mainly resale and trading, activities (Gebre-Egziabher 2007; Lyons and Brown 2010). Second, parts of Africa function as vital suppliers of raw materials to the ICT revolution. The Democratic Republic of the Congo, for example, is a primary producer of coltan, an elementary component of mobile phones (Nest 2011; Carmody 2012). Third, Africa has become an important way-station in the life-cycle of ICT artefacts as a creator, recipient and recycler of electronic waste (e-waste) generated within and outside the region (Lepawsky and McNabb 2010). While the transformation and recycling of e-waste are creating new economic activities and supporting some livelihoods (Pejout 2010), the significant health and environmental issues that accompany these activities are of increasing concern and raise questions about the sustainability of ICT diffusion in the region.
A central promise of ICTs for African economies lies with their potential to support new forms of development that enable firms, workers, communities and states to capture more value from the GIE through upgrading and innovation. While a few small-scale, ICT-driven innovation clusters exist presently (e.g. the i-Hub in Nairobi, AfriLabs and Cape Town's digital media industry), larger-scale and deeper forms of informational capitalism remain beyond the material means and technological capabilities of most firms and industrial sectors. Some ICT4D optimists might disregard such concerns, arguing that Africa's information revolution is just beginning and that the widening and deepening of ICT diffusion will necessarily reposition the region in the global economy once firms and industries adopt the technologies and develop the right capabilities.4 But is such a dynamic of progressive (informational) development inevitable or even likely in the context of neoliberal economic policies, shifting geopolitical relations (e.g. China's engagement with Africa) and/or the centralised, splintered or spiky nature of economic development within the GIE? This is the broad question guiding the remainder of this paper, one we explore through an analysis of the uptake of ICTs in two industries (wood products, tourism) in South Africa and Tanzania. The goal is to assess whether or not the seeds for Africa's informational transformation are being sown as new ICTs are diffused in these sectors, or if the use of ICTs is doing little to challenge the factors and forces that have limited the development of African firms and industries.
Thin and thick forms of ICT integration: a conceptual framing
Before examining empirically whether new ICTs are complicit in significant economic and industrial changes in South Africa and Tanzania, it is necessary to clarify our conceptual framing of the potential role that ICTs can play in industrial transformation. We do so by drawing an heuristic distinction between ‘thin’ and ‘thick’ forms of ICT integration. This distinction draws initially on Carmody's (2010) notion of ‘thintegration’: the idea that Africa's engagement with the GIE has been limited to, as noted earlier, activities and roles that do little relatively to enhance the value of products and services or provide widespread, distributed forms of socioeconomic development. Here we take the concept one step further by specifying what ‘thin’ and ‘thick’ forms of ICT integration look like at the firm and industry scale in order to assess whether there are signs that shifts toward informational capitalism are ongoing within SMMEs and industries in South Africa and Tanzania. Table 1 summarises the distinction between thin and thick forms of ICT integration and their implications for economic and industrial development.
| Thin forms of ICT integration (Thintegration) | Thick forms of ICT integration | |
|---|---|---|
| Characteristics of ICT-enabled communications and information access | Discrete and codified (e.g. numbers, sizes, prices, dates, locations) information that can be communicated easily via voice or text. Information must be manually transferred into processing and management programs (e.g. accounting software). | More complex and diverse forms of information accessed, controlled, processed and used (e.g. through Internet cookies, shop-floor management systems) that go beyond basic one-on-one communication exchanges. This information is processed (e.g. through algorithms or software packages) and the resulting knowledge fed back into the development of product and process innovations. Real-time tracking of trends and automated transfer of information into processing and management systems. |
| Value of ICT-enabled communications and information access | ICT-enabled communication and information access used in largely responsive or reactive ways, to meet customer needs, resolve immediate problems or keep apace with the competition through imitation. Deeper forms of ICT-enabled information processing are absent. | Information is a proactive and strategic resource that is managed through ICTs in ways that create knowledge rents through new products, production efficiencies and marketing strategies. ICT capabilities deeply integrated into innovation processes and production/service provisioning systems. |
| Life-span of information accessed or exchanged | Mainly of short-term utility in the context of daily needs or a particular project or customer. | A continuous, long-term process of accumulating and processing information to facilitate product, process and marketing innovations. |
| Implications for innovation and industrial development | ICTs can increase productivity, visibility (e.g. through webpages, social media) and market responsiveness through improved communications and greater access to non-local sources of information. ICTs help firms keep pace with or adjust to shifting market conditions but do not enable them to profitably exploit these dynamics through information-driven forms of innovation. | Upgrading possibilities and new value-creating activities identified through intensive forms of information management. ICT provided a crucial means to stay ahead of the competition through quality, price and productivity improvements and to identify emerging market trends in both domestic and international markets. |
| Implications for the firm, industry or region's positionality in the global information economy | ICTs are necessary, ubiquitous technology for the everyday performance and survival of firms but their thin use precludes dramatic changes to industries or a region's positonality in the GIE. | Firms and industries are able to develop the needed capabilities to capture greater value from international markets through knowledge rents generated in the GIE. Innovation, inward investment and long-run growth can be sustained through ICT-empowered clusters of innovative firms and regional innovation systems. |
| Key limitations on this form of ICT integration | Thintegration does not significantly challenge or transform the power relations and structures that sustain extraversion and underdevelopment. | The quality of products, services, infrastructures, labour, socioeconomic institutions and political systems remain critical factors in determining if the benefits of thick informationalism can be translated into wider development outcomes. The ‘basics’ still matter. |
Thin forms of ICT integration occur when firms rely on these technologies primarily for communications associated with day-to-day, real-time activities such as logistics, labour management, customer service, supplier chain coordination and basic marketing activities. Thin ICT use typically involves exchanges of discrete bits of information – e.g. prices, dimensions, arrival or delivery dates/times, product colours or styles, or locations – which are vital for the everyday operations or success of the enterprise. This form of information communication is valued largely because it enables businesspeople to conduct transactions or respond more quickly to customer needs or immediate business problems and/or to keep track of changes in the marketplace (e.g. input prices, product designs). As such, the information involved generally has a short ‘shelf life’, limited to the context of a single day, project, order and/or marketing cycle unless it is manually transferred into a database or accounting program for review or processing at a later date.
All firms rely on this kind of information for their everyday activities and its management is crucial for their ability to create value and generate profits in the markets they serve. However, if this is the only kind of information accessed, used and/or processed through the use of ICTs, it may have, at best, a limited or erratic significance for longer-term processes of value creation, upgrading and innovation in the firm. In a wider sense, the thin use of ICTs within firms may do little or nothing to challenge or reform the power relations, hierarchies and structures governing African industries and positioning the region peripherally in the GIE. This is because thin ICT integration will not lead to significant transformations of the routines, relationships, rules and practices that determine how information is valued, accessed, used and deployed by the firm, transformations that can increase the pace or depth of the knowledge-creation processes and induce innovations to help firms and industries overcome capital constraints, infrastructure limitations, institutional obstacles and/or international market entry barriers.
In contrast, ‘thick’ forms of ICT integration create the potential for transformative industrial development as communication and information management capabilities become central factors driving performance. Beyond communications that are enabled by mobile phones, the Internet and computers, firms use software programs, websites, databases and algorithms to continuously manage information about customers, market trends, inventories, logistics, supply chains, workers and production systems in order to track performance, identify market opportunities and increase productivity through process innovations. Information access and processing may be highly automated, and advanced ICT capabilities are core competencies that firms rely on to continuously create knowledge rents (i.e. profit-inducing, knowledge-based innovations). In this context, information is not simply an input to respond or react to but rather a strategic resource that is combined, recombined, tracked and invested in proactively for the development of new products, markets, leaner supply chains and more efficient systems of production and service delivery.
The industrial and regional development implications of the thick use of ICTs are significant given that production, service delivery, marketing and supply-chain management systems can be transformed profoundly as new rules, routines, institutions and practices emerge in response to the need to access, process and manage information (e.g. the shift to flexible production systems and just-in-time manufacturing). New industries and labour markets may also develop in response to the need for information management services and capabilities and these can contribute significantly to employment generation, livelihoods and local economic growth. In the broadest sense, thick forms of ICT integration can reposition African firms and industries within the GIE through increases in the value of their products and services, and by attracting (less extractive) complementary, high-tech investments into the region. While such outcomes remain highly dependent on non-ICT-specific drivers of industrial and economic development – transportation and energy systems, basic education, public services and amenities, industrial policies, political systems, geopolitics and the state – successful (thick) integration of ICTs at the firm and industry scale, and its implications for socioeconomic development, can provide a powerful incentive to reform and restructure these systems.
Although we heuristically conceptualise ICT integration into a region or industrial context as being thin, thick or somewhere in between, we do not presume that there is a necessary or inevitable (developmentalist) evolution from thin to thick integration as ICT diffusion progresses. This is because the ‘frontier’ of informational capitalism is constantly and unpredictably shifting as a result of new technological developments and changes in the dynamics and structure of the GIE. If African industries and economies are to benefit significantly from the GIE they will need to do much more than simply ‘catch up’ with core and emerging countries with respect to the distribution and use of ICTs. Institutions, domestic markets, production systems and the state's role in industrial development will need to be transformed to support and productively guide relationships to the GIE such that emerging forms of global market integration facilitate widespread socioeconomic development, not simply new forms of extraversion and unequal exchange. Moreover, businesspeople and firms need to develop the ICT- and non-ICT-specific managerial skills necessary to strategically integrate new technologies into the practices of supply-chain management, information management and customer relations. For example, customer relation capabilities can be enhanced by developing databases which track changing consumer preferences or which provide real-time tracking of product shipments (Brynjolfsson and Hitt 2000). However, initiatives such as these will come about only if business owners and workers are trained in information management techniques and technologies, if they understand the strategic value of such forms of information management and, most importantly, if the markets their firms serve reward the innovations that can come about through the leveraging of such capabilities. Such structural and capability-specific changes are hard to envisage at present by existing path dependencies, but the hope is that the explosive diffusion of new ICTs in the region is sparking significant changes to the productivity and everyday practices of firms. The remainder of the paper assesses the progress thus far through an examination of the use of new ICTs in South Africa's and Tanzania's wood products and tourism industries.
Contextualising this study: ICTs and industrial change in South Africa and Tanzania
The findings presented below draw on evidence gleaned from more than 200 interviews conducted during 2010–2012 with small, medium and micro-scale enterprises in the Tanzanian and South African wood processing and tourism sectors. The goal of these interviews and analysis was to assess whether, how and to what extent ICTs have contributed (or not) to innovation, performance and structural changes in these industries. In general terms, South Africa and Tanzania represent significant contrasts in terms of their national locations within the GIE. South Africa is a middle-income country that accounts for roughly a third of sub-Saharan Africa's Gross Domestic Product, has a highly developed telecommunications infrastructure and ranks highly on the DOI (Digital Opportunity Index) compared with other African countries (ITU and UNCTAD 2007).5 In contrast, Tanzania is a low-income country with a DOI score of about one-third of South Africa's.
Beyond broad national indicators, the comparison is compelling at the industrial scale as it enables us to understand if and how ICTs influence the development of industries having dramatically different kinds of products, production systems and information communication needs. Wood products is a traditional manufacturing sector that generally operates through linear value chains and few points of contact between manufacturers and consumers (Kaplinsky et al. 2003; Melville and Ramirez 2008). Tourism, in contrast, is a service industry whose providers rely on a diverse array of relationships organised more as a ‘value web’ of goods, services, spaces and experiences rather than a linear chain (Debbage and Daniels 1998; Crouch and Ritchie 1999; Judd 2006). Wood products and tourism require different kinds of technological and organisational capabilities and the comparison can help us understand if and how ICTs differentially influence learning and knowledge development processes in manufacturing and service industries. In a more concrete sense, the choice of industries is significant since both generate foreign exchange and investment while being labour-intensive industries constituted by a diverse range of firm sizes and types, from one-person, informal micro-enterprises to large-scale, capital-intensive operations (Kaplinsky, Morris, and Readman 2002; Murphy 2006, 2007; WTTC 2006; United Republic of Tanzania 2007; WTO 2007; ITC 2012). Moreover, these sectors were well established prior to the introduction of new ICTs and thus they provide a valuable vantage point from which to observe the general significance of ICT use beyond those industrial activities (e.g. software development, digital media) whose existence is premised upon ICT access and use.
When considered in relation to concepts of thick and thin forms of integration, we view the extent and depth of ICT usage in these sectors to be a demand-driven process, one where information-processing capabilities are developed in direct response to the information requirements facing SMMEs (Melville and Ramirez 2008). From this perspective, new ICT integration is driven by the complexity and speed of the processes through which production, marketing, service provision and innovation are expected to occur in an industry. In the wood products and furniture industries, the information-processing capabilities of manufacturers have traditionally been relatively low given that product designs, customer demands and raw material needs change slowly over time and within particular markets (Melville and Ramirez 2008). However, the industry's information communication needs are changing in the context of the GIE as supply chains become more fragmented, specialised, globalised and governed through just-in-time and mass customisation manufacturing strategies that rely increasingly on the use of ICTs (Apostolou, Sakkas, and Mentzas 1999; Lihra, Buehlmann, and Beauregard 2008; Walcott 2011). ICTs can also play a key role in enabling firms to implement cost-minimisation strategies through the use of accounting software, to increase the flexibility of their products through design software and to transition to e-commerce techniques for marketing and sales (Moodley 2003; Quesada-Pineda 2010). We view these kinds of innovations as indicators of ‘thicker’ forms of ICT integration, ones that can enable firms to progressively reposition themselves in global markets marked by intense competition and a shift toward the outsourcing of jobs to places like China, Malaysia and Indonesia (Kaplinsky, Morris, and Readman 2002; Walcott 2011).
In contrast to wood products, tourism has always been a more communication- and information-intensive service industry and one where new ICTs have played a significant role for the past decade. For most consumers, ICTs, especially the Internet, are essential for information gathering (e.g. about destinations and prices) and are often used to conduct transactions (e.g. ticket purchases, accommodation bookings) (UNCTAD 2005; Buhalis and Law 2008). ICTs enable tourists to create their own itineraries and demand-driven forms of ‘mass customisation’ are becoming a common trend in the industry (Racherla, Hu, and Hyun 2008). The Internet also provides a mechanism through which tourists can give feedback regarding the quality of a service experience and websites such as Trip Advisor and Lonely Planet are important peer-to-peer sources of information about attractions, hotels and other destination-related services. On the supply side, ICTs can serve a critical role in helping destinations to manage the industry such that local firms can create and capture more value from markets. For example, Internet-based destination management systems can be important in this regard, serving as key points of virtual contact between foreign tourists and local firms (UNCTAD 2005). Through these webpages, consumers can gather information, obtain quotes, make bookings, provide feedback and communicate directly with local SMMEs, thus reducing the need for intermediaries such as foreign tour operators. The effective use of such systems requires far more than the diffusion of mobile phones, computers and the Internet as success depends on the ability to organise, integrate and network SMMEs through common software, compatible hardware and a desire to collectively create and share knowledge about the destination and tourist services (Buhalis and Law 2008; Racherla, Hu, and Hyun 2008). All told, ‘thicker’ forms of ICT integration might result in industrial reorganisation and an increased ability for firms to use these technologies to manage customers in a more direct, interactive, flexible and real-time manner such that they are able to capture more value from global markets and, ideally, reposition Africa's tourist industry in the GIE.
SMME owners and managers in both industries were interviewed at length to assess the extent, depth and significance of their use of mobile phones, computers and the Internet for their businesses. For wood products, Tanzanian SMMEs were sampled from the large wood products market/cluster in the Keko ward and other areas of Dar es Salaam, while in South Africa, firms were sampled in KwaZulu-Natal province, with an emphasis on Durban. Sampling for the tourism studies took place in two continentally significant tourism centres – Western Cape Province/Cape Town, South Africa and Zanzibar, Tanzania – and focused on the work of travel agents, tour operators, tour guides and hoteliers. In each site, 45–60 business owners were interviewed as were key informants in industry promotion agencies, government ministries, universities and relevant non-governmental and aid organisations. Given the number of respondents, the geographical locations of firms and our focus on SMMEs participating in similar market segments – mainly furniture-makers, tour operators, hoteliers – we are confident of the sample's representativeness in relation to these city-regions' industrial landscapes.
Interview questions focused on the marketing, service provision and management practices of firms and the role that ICTs play in these activities. In addition, respondents were asked about trends in the industry and the key market, material and institutional challenges that they are facing at present. The goal of the interviews was to first develop a detailed understanding of the everyday business practices associated with critical SMME functions (e.g. marketing, production, service provision and product development) and to then identify the specific roles that new ICTs play in these activities. We structured the initial conversations such that the topic of ICTs and ICT use emerged indirectly in the context of discussions about how the firm operates. In doing so, our goal was to gather data regarding the specific ways in which new ICTs are embedded in the operations of firms, rather than simply, for example, determining if a business owner used a computer or the Internet.
The interview data from both field sites were then compiled together using qualitative data analysis software (QSR NVIVO 9.0), where they were analysed through a thematic coding process. The goal was to assess whether there is evidence for ‘thick’ forms of ICT integration and to determine if ICTs are empowering SMMEs vis-à-vis the structural and material challenges that have generally limited their abilities to create and capture more value from wood products and tourism markets. While we recognise that the data presented below may lack the specificity or detail some readers might prefer, the goal here is to deploy our findings in support of general arguments regarding the depth of ICT integration and its political-economic significance in South Africa, Tanzania and other African countries. As such, our objective is to broadly assess whether informational capitalism is taking hold in manufacturing and service sectors and to determine if there are signs that ICTs can facilitate a progressive transformation of Africa's structural ties to the GIE. The discussion below first highlights the general findings in relation to thick and thin forms of integration. We then broadly assess the significance of ICT adoption for Africa's positionality in the GIE.
Thin or thick integration? ICT uptake in Tanzania and South Africa
Mobile phones are ubiquitous technologies throughout Tanzania and over the past decade they have become part of everyday activities in both the wood products and tourism sectors. Smart phone use is generally on the rise and computers and the Internet are mixed in terms of their diffusion; common in most tourism SMMEs, but very rarely used in the wood products sector with the exception of larger and more formalised firms. While both sectors have seen firm-level benefits from the uptake of new ICTs, they do not appear to be playing a transformative role as manifest in transformations to business practices or the role and value of information in firms.
For wood products and furniture-making SMMEs, mobile phones have provided significant communication benefits and have enabled firms to spatially reorganise their production and marketing activities such that they are better able to serve new and emerging markets within Dar es Salaam. Specifically, some SMMEs use mobile phones to manage production facilities from a distance, whilst locating their main retail/sales offices closer to higher-end markets. This enables these firms to access higher-value markets and indirectly contributes to product innovation when such clients place orders for high-quality custom-made furnishings. Otherwise, mobile phones are highly useful for all kinds of everyday communication and most SMME owners cannot imagine running their business without them.
Beyond these localised communication and spatial mobilisation gains, mobile phones are not facilitating, for the most part, industry-wide changes to the structure of local markets, the quality and accessibility of outside sources of information (e.g. on technologies) and/or the abilities of SMMEs to access finance. Moreover, mobile voice communication does not substitute for the need to conduct the most important business through face-to-face (F2F) interactions, especially where relationships have yet to be developed. Market structures are much the same as they were a decade ago (see Murphy 2006, 2007); hyper-competitive with SMMEs operating with very thin profit margins, seasonally inconsistent demand and domestic consumers who prioritise price over the quality and durability of furnishings. New industry-relevant information continues to be accessed in the old ways – imitating others' work, copying imported products, reading about or seeing new designs in furniture catalogues, through personal experiences and custom work with clientele and by participating in F2F conversations with other SMMEs. Capital constraints continue to plague the sector and only one or two of the firms sampled used mobile banking (m-banking). Even in the case of those SMMEs who have successfully sold to clients from foreign markets (e.g. Comoros), these are still cash-for-goods exchanges arranged principally through face-to-face meetings. Finally, and perhaps most significantly, ICTs have done little to enable Tanzanian SMMEs to stem the tidal wave of cheap wood furniture imports from Asia (especially China), now ubiquitous even in lower-end markets.
In tourism, computers and Internet use are much more common and most surveyed firms have websites and use email or Skype regularly. On the surface, SMME websites seem to be a significant development, but in practice tend to be uninformative about prices, passive (e.g. they typically only provide an email request for information form) and similar in terms of design and the products offered. Consequently, most websites do little to distinguish one SMME from another and serve as secondary marketing strategies when compared to travel guide books, personal recommendations and references, and walk-in clientele. In addition to individual websites, several hotels advertise and sell accommodations through Expedia or other third-party websites and some SMMEs market their services through social media and/or online chat rooms and other cyber-fora related to African travel. For many tour operators, direct email marketing to foreign tour operators is also used to drum up clients although many observed that response rates to these emails were extremely low. Otherwise, new ICTs are, at best and in only a few cases, serving other needs such as information management, innovation development, and accounting and/or budgeting activities. In fact, given Zanzibar's inconsistent power supply, the vast majority of tour operators still use paper ledgers to organise their day-to-day activities. Like the wood products sector, ICT uptake in the tourism industry is primarily about communication improvements, albeit ones that facilitate both local and trans-local forms of marketing and service coordination.
Although ICT diffusion has been a positive development, other, more conventional, obstacles are preventing more radical transformations to SMMEs and the Zanzibari tourism industry. Zanzibar has chronic infrastructure limitations – road, water supply and waste management systems – and the entire island was without electricity for three months from December 2009 to March 2010, reinforcing reliance on paper ledgers. Moreover, the industry has been flooded with foreign investment and most local firms struggle to compete with increasing numbers of large resorts and hotels offering package deals. These large firms are better connected to source markets for tourists (e.g. Italy) and comfortable with credit card payments in their home countries. In contrast, local firms have great difficulty building direct ties to source markets and operate primarily through a cash-only business or, if absolutely necessary, take credit cards, but often only in person. At present, and because of Tanzania's financial institutions and banking regulations, online credit card transactions with Tanzanian SMMEs remain almost impossible to conduct unless one is purchasing through a website such as Expedia. This means that local firms are at a significant disadvantage with respect to their ability to secure clients and guarantee hotel rooms a priori (unless they use wire transfers – a system that costs money and with which many tourists – especially from North America – may be unfamiliar). As a result, several tour operators and hoteliers complained about business lost to tourists who change their plans after arriving in Zanzibar.
South Africa
Many of the same trends are evident in South Africa as in Tanzania, but some of the specific implications are different because of the higher level of ICT development in the country and its overall geo-economic position. In the wood processing industry, ICTs have helped some firms to improve marketing capabilities, delivery times, time–space management, management of labour, and the sourcing of raw materials, inputs and designs. However, ICTs have had relatively limited applications in actual production and have thus not contributed substantially to a rise in manufacturing productivity (see Carmody 2011). Furthermore, while computers allow for improvements in production planning, accounting and communications, such as emailing of designs to sub-contractors and computer-numerically-controlled (CNC) cutting, smart phones are more limited in their applications. Consequently, many firms in the wood products sector view new ICTs as ancillary or infrastructural, rather than core technologies that can significantly increase an SMME's profits and power.
The evidence suggests that new ICTs have facilitated some innovation and greater value capture for many wood products firms, mostly in local and regional markets, but not substantial forward and upward connection to global markets which would spur more widespread economic development. Rather, the findings show that many SMMEs are finding it increasingly more difficult to upgrade their activities or enhance the value of their products in international markets, unless they already have extensive technological capabilities and/or well-established positions in high-end market niches or global value chains. Moreover, ICTs are facilitating increased imports, enabling consumers turn to foreign websites to purchase wood products and helping to shift income overseas as manufacturers increasingly source raw materials from abroad. The net result is what one manufacturer described as a ‘cut-throat [domestic] market’ and a significant decline in export opportunities as Asian (in particular) firms increasingly dominate global markets for wood products.
In the tourism sector the Internet, in particular, has helped many SMMEs to organise their booking and reservation systems more efficiently, while being able to react much more flexibly to requests from potential clients. Many firms noted that it was very important to have their own website so that potential customers could look at the accommodations or tours online. The Web's importance extended to the fact that tourism operators negotiate distantiated booking arrangements on a daily basis. Many guest houses have developed the capability to integrate an instant booking and confirmation tool directly into their own website utilising the South African-designed software Nightsbridge. With this technology potential customers no longer need to send an email inquiry for reservation requests. That said, however, when it came to actually booking online, customers often preferred to use large booking reservation sites such as Booking or Expedia (foreign-owned corporations) because they trusted them, rather than releasing their financial data to unknown hotel operators.
Almost all tour operators and guest house owners expressed their satisfaction with ICTs and many said that they could no longer imagine doing business without them. The technologies have helped South African firms to access markets in Europe and North America, as well as new ones in the Asia–Pacific region, the Middle East and Latin America. However, some tour operators have observed a devaluation to their services as tourists increasingly organise their itineraries independently, with the help of the Internet. Many hotel and guest house owners also noted that they receive the majority of their bookings through third-party booking sites, conferring substantial commissions (often 15%) and power on the companies that own them. One boutique hotel operator in Cape Town noted that ‘you can't negotiate with Expedia, you just do as you are told.’
While ICT integration has been an extremely important development for hoteliers, many tour operators and so-called ground handlers still depend to a significant degree on personal networks and face-to-face interactions with ‘walk in’ clients. This is because tour operators often offer customised products and need more personal contact with either a client or a third-party intermediary (e.g. foreign tour operator) in order to market these effectively. In this context, building trusting, personal ties to international markets for tourists and foreign tour operators requires more than simply a good Internet connection and business success often depends on the ability of its owner to travel to trade fairs and/or visit with intermediaries based in key markets. ICTs can help maintain these relationships once established, but their initiation normally requires much deeper and more extensive forms of personal interaction or shared, successful business experiences.
All told, ICTs are having significant implications for the productivity of SMMEs in both industries but are playing a more important role in the development of South Africa's tourism sector. This is because computers and the Internet have become core technologies in tourism, particularly with regard to marketing and administrative activities such as reservation management, while they remain somewhat ancillary or secondary to the production and sale of wood products. As a result, Cape Town's tourism sector seems to have benefited more significantly although the value of ICTs remains limited to basic productivity improvements and enhanced mobilities, rather than intensive forms of information processing and knowledge creation. Most troubling perhaps is the observation that in both sectors managers and owners noted that mobile phones in particular have made it much easier and more efficient to manage staff on a real-time basis through phone calls to check on a worker's progress or to ask them to do new tasks. While these changes in labour force management capabilities may help to bring about ‘lean’ production or service delivery systems (Womack et al. 1990), important questions remain unanswered regarding their cost in terms of workers’ rights.
Thintegration, (neo)intermediation and devaluation
The empirical findings reveal three general trends that are indicative of ICT integration into Tanzanian and South African industries. First, at present, evidence of thicker forms of ICT use and informational capitalism are hard to find in these sectors as mobile phones, computers and the Internet are primarily used to facilitate discrete forms of communication between individuals who already typically know one another. While this thintegration can create efficiencies and enhance the spatial mobility of SMME owners in local markets, it cannot be expected to make these African firms and industries dramatically more competitive in the GIE. Moreover, ICTs have not supplanted the need for F2F interactions to establish the trust necessary for businesspeople to participate in long-term exchange relations – particularly in instances where financial resources are highly constrained (wood products), or where reputation can be damaged through negative reviews that become available globally through the Internet (tourism). For those seeking to build ties to international markets, the ability to arrange F2F meetings with foreign customers is often a must before a relationship can begin and being able to do so is a function of the firm's available capital. As such, larger and already successful firms are far more likely to develop these ties and the odds are stacked significantly against new or lower-tier SMMEs, even if they have computers and Internet connections.
Second, and contrary to what ICTs are meant to do, market intermediation – i.e. the phenomenon of commercial middle men and women – is on the rise even as new ICTs become more commonplace. Intermediation occurs both in spite of ICTs and as a result of ICTs, manifest in the first case most significantly in Tanzania where street brokers (madalali in the wood products sector, papasi in tourism) direct clients to particular workshops or tourist operations and then expect to receive commissions.6 By most accounts, the phenomenon has increased in significance and it can be linked to wider factors that have created a large pool of underemployed labour in cities (especially import liberalisation and its impact on domestic markets, urban population growth and marginalisation of rural livelihoods). Moreover, intermediation reflects the trend toward trade/commerce, rather than production, as a primary source of income for many African businesspeople (see Lyons and Brown 2010). While ICTs have had little impact on these activities, they have enabled new kinds of intermediation as foreign or non-local firms, particularly in the case of tourism, are acting increasingly as virtual go-betweens linking buyers (e.g. tourists) to the manufacturers and service providers we surveyed. In South Africa, consumers can use intermediaries such as Nevada Furniture (http://www.nevadafurniture.co.za/) should they want to directly purchase and import foreign-made furnishings from companies like Ikea. In Zanzibar and Cape Town, tourists can book and pay for all of their costs through foreign tour operators or third-party website owners who are now better able, through the use of the Internet and mobile phones, to manage the real-time quality of the tourism experience in the context of an outsourcing or subcontracting arrangement. The wider point is that, in spite of their promise to promote disintermediation, ICTs are facilitating new forms of intermediation – (neo)intermediation – that limit the ability of African SMMEs to create and capture more value from local and international markets.7
Third, many SMMEs in these sectors are experiencing a significant devaluation of their goods and services manifest principally in product downgrading and pressure on profit margins. For example, in Tanzania hardwood furnishings are often replaced by less durable and cheaper products made of multi-density fibreboard or surplus (pallet) wood which can be painted, finished or upholstered in ways that belie the short lifespan of these products. In the case of tourism, devaluation is manifest in the loss of rents/profits that one would expect an SMME owner to obtain on the basis of her/his place-specific knowledge (e.g. when to go to places, how to get there, what to pay etc.). Such knowledge was traditionally held in the destination, but now detailed information is available globally and free of charge through websites such as Lonely Planet. The availability of this destination-specific knowledge has further empowered those firms (typically non-local) with the greatest access to higher-end clients in tourist-source regions, while making it more difficult for the SMMEs surveyed to carve out higher-value market niches. Instead, these firms serve increasingly a basic subcontracting role to foreign tour operators who can, from a distance, manage the day-to-day quality of their products quite effectively through the use of new ICTs.
In sum, Tanzanian and South African SMMEs are experiencing a widespread but thin integration of mobile phones, computers and the Internet into existing conventions, rules and norms of communication rather than a creative and proactive (informational) leveraging of these technologies in ways that dramatically transform SMMEs and industries. This thintegration, while important for the coordination of production and service activities, has done little to empower SMMEs and domestic industries vis-à-vis imports and foreign firms better able to access/manage information, exploit economies of scale and build high-value ties to markets and supply chains through face-to-face interactions and the relational proximities that come with common language skills and socialisation into the conventions, rules and norms embedded in international markets. Worse still, ICTs have helped foreign-owned businesses and corporations more deeply penetrate African markets and, in the case of tourism, allowed them to extract a share of the ‘place rents’ which would otherwise have been captured by local firms. Simply stated, the balance sheet indicates that new ICTs have done more to empower foreign firms, industries and consumers in the GIE and that deep informationalisation of these African economies/industries remains a long way off.
Conclusion
The experience of the South African and Tanzanian SMMEs surveyed here reveals several broad insights that can inform our understanding of Africa's prospects in the GIE. On the positive side, it is clear that the diffusion of ICT artefacts is an ongoing and dramatic phenomenon that shows few signs of abating in the coming years. Mobile phones have become ubiquities in most industrial sectors while computer and Internet use are on the rise in most others, having become commonplace in service industries like tourism. Beyond the basic adoption and use of the technologies, new ICTs are also becoming embedded within the institutions, rules, norms, routines, practices and conventions that structure everyday business activities, particularly those associated with inter-personal communications. As a result, SMMEs in both contexts have experienced improvements to their coordination, logistical, marketing and, in some cases, production capabilities and this, in turn, has helped the wood products and tourism industries in both places adapt to changes in markets and economic conditions. In these respects, ICT diffusion and integration is a success story in that it has contributed positively to the resilience and viability of South African and Tanzanian SMMEs.
While these positive outcomes are welcome, there are important limitations with respect to the potential role of ICTs as tools to facilitate economic and industrial transformations. Most significantly, there is little evidence that the capability improvements that have accompanied ICT absorption can be seen as being part of core transformations to SMMEs and their industries. Instead, these improvements are supplemental, incremental and/or ancillary benefits that do little to challenge or change the governance structures and institutions within which SMMEs are situated. What this means in real terms is that ICTs help SMMEs to survive in the context of rapidly changing markets, but they are not empowering firms to create and capture significantly greater knowledge rents as a result of innovation. Moreover, ICT use is not disrupting the traditional ways and means of accessing, processing and using information such that these industries might be redirected along new evolutionary trajectories that can lead to greater value creation, enhancement and capture within and from the GIE. Worse still, foreign firms and importers are capturing more value as a result of their ability to penetrate African markets, access place-specific knowledge and serve as intermediaries in part through their use of new ICTs. Furthermore, actors have emerged who express new forms of digitally mediated, seemingly placeless power (e.g. through Trip Advisor, Expedia). The seemingly ethereal nature of this power largely prevents its contestation.
In sum, the central promise of ICTs – as tools to level or flatten long-standing inequalities that have marginalised Africa in an age of informational capitalism – is not bearing out in our cases and there are few systemic indicators that we can expect such a transformation anytime soon. The reasons for this transcend the debates about, and strategies for, ICT4D initiatives as they lie in long-standing economic and structural-political explanations for underdevelopment in countries like South Africa and Tanzania: the organisation of the world economy, unequal exchange between North and South, the historical legacies of colonialism and apartheid, a lack of capital, and market environments and institutions that can stifle innovation, limit redistribution and enhance the flow of imported goods and services at the expense of those produced by local SMMEs. Aspects of these non-ICT-specific challenges may be ameliorated through improved communications and new forms of information exchange, but in the absence of dramatic (geo)political and socioeconomic reforms that improve the market, material and institutional environments wherein SMMEs operate, the promise of Africa's ICT revolution will remain largely latent. While ICT4D initiatives can serve instrumental purposes by helping SMMEs to incrementally become more productive, it is naive to think that this kind of technology-driven approach to industrial and economic development can succeed in broader terms if it occurs solely within the (highly constrained) context of the current structures of informational capitalism. More troubling perhaps are the ways in which the revolutionary promises of ICT4D distract from more conventional development challenges and create the illusion that informationalism by itself can compensate for other material, social and political challenges, such as the need for dramatic improvements in farming systems or active industrial policies.
Our research in South Africa and Tanzania has indicated that new ICTs are increasingly empowering large and often North-based actors, while many SMMEs remain unable to upgrade their activities through the use of improved communication systems. Moreover, new structural obstacles are emerging for these firms and industries, manifest in exclusionary webs and networks that limit value-adding opportunities, sustain uneven development and reduce the possibilities for empowerment through informational capitalism. Given the realities at work here, the question of ICTs' role should be reframed as one where these technologies are seen to play a (relatively minor) role in a larger, hugely challenging task of repositioning ‘Africa’ as a more autonomous, empowered and equal ‘actor’ within the GIE. Such work is a long-term project, and one that should not be trivialised as a techno-deterministic challenge, but a profoundly political one.