IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON THE GROWTH OF INFORMAL TRADE AMONG LOCAL ECONOMIES IN ENUGU STATE

IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON THE GROWTH OF INFORMAL TRADE AMONG LOCAL ECONOMIES IN ENUGU STATE

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Abstract

This study empirically examined the impact of Information and Communication Technology (ICT) on local economy in Nigeria, using informal trade in selected communities in Enugu State. Survey method data was used and data was generated from 360 informal traders. The study applied descriptive statistics method. The finding shows that on the average, 208 (representing 21%) informal traders utilized the bank in transacting businesses, 7 (representing 1%) informal traders utilized the courier services in transaction of businesses, 360 (representing 35%) informal traders utilized the phone for businesses, 328 (representing 32%) informal traders utilized the waybill, while 114 (representing 11%) informal traders utilized other means of ICTs in transacting businesses. The study also found that the use of bank, phone, waybill, and other means of transactions have significant impacts on the incomes and the living standards of informal traders while utilization of courier has no significant impact on the incomes and the living standards of most or the majority of the informal traders. Finally, the study found that gender access to bank transactions, phone, and waybill have very significant impact on informal businesses. The study therefore recommended that network providers such as MTN, GLO, Airtel, Etisalat, should ensure the availability of quality networks which should be extended to every nook and cranny of the local communities in order to encourage more usage by informal traders. Nigerian government through the Nigerian Communications Commission (NCC) should regulate all these network providers to reduced cost of communication, availability of quality networks, lower call and text massage charges, to help informal traders. This will lead to the reduction in cost of business, reduced risk of armed robbery, accident, business delays and increased incomes thereby, making informal traders to have a leap over poverty.

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

Over the last 20 years, Information and communication technology (ICT) has had a profound impact on the way citizens live and do things in the world. Its emergency has limited the use of typists, telegraph operators, and many other traditional jobs. Most sectors of the economy have fraction of their budget for ICT expenditure. Even among informal traders, certain amount of money is devoted to phone conversations, service charges for on-line bank transfer charges and recharging of data for internet services. Expectedly, the developments in the electronics complex have had universal impact on the rate and direction of business change, not only in the public sector, but also in other economic activities. Electronic commerce is now an alternative and convenient way of conducting business both nationally and internationally. This revolutionary way of conducting business has since broken down the geographical boundaries of the market, where people originally visited markets to buy or sell.

As an instrument of change, ICT has been described “as a collection of technologies and applications which enable electronic processing, storing and transfer of information to a wide variety of users or clients” (Cohen et al. (2002). Blurton (2002) conceptualizes this collection of technologies as a diverse set of tools and resources used to communicate, create, disseminate, store and manage information. These technologies include computers, the Internet, broadcasting technologies (radio and television) and telephony. ICTs and its applications are broadly classified into three categories, namely: (a) computing, (b) communication, and (c)internet – enabled communication and computing (Quibria et al., 2003).

Central to the ICT are the communication processes and infrastructures. The communication processes can either be one-way or two-way. In one-way communication, the information is disseminated to the receiver who does not have the opportunity to respond immediately. Examples of this include radio and television. Two-way communication allows for feedback between the sender and the receiver of information. The devices for this include phones, telegraphs, faxes and pagers. Relatively, recent communication technology like the Internet consists of a number of sub-networks that are connected to each other through which electronic communications are transmitted (Foros et al., 2005). The Internet represents the convergence of computing and communications, and forms the backbone of acknowledge-based economy and information society.

In Nigeria, the development of ICT in commerce industry started in the mid-nineties when the internet and telecommunications industry started becoming popular (Martin and Ernst, 2003). Its growth was not rapid until the advent of internet banking at the beginning of the 21st century. Service like the electronic cash transfer become used in Nigeria (Bada et al., 2006), which was facilitated by the introduction of global system for mobile communications (GSM) (Adomi, 2005; Adeyinka, 2008). The GSM revolution began in August, 2001 and changed the face of information and communications technology in Nigeria. Since the GSM launch, mobile telephony has rapidly become the most popular method of business contact communication in Nigeria.

ICT is an absolute necessity for taking part in today’s global economy and as such the role of ICT in the emerging global market cannot be overemphasized. ICT has also been credited with the potential to integrate world economies thus demolishing the barriers created by time and distance. It equally makes easier the trade in goods and services and encourages investment as well as the creation of new sectors of enterprise, new revenue streams and ultimately new jobs (Carayannis & Popescu, 2005). ICT has become the foundation of every sector of every economy, everywhere. The reasons are to:

·         reduce transaction costs and thereby improve productivity;

·         offer immediate connectivity – voice, data, visual – improving efficiency, transparency, and accuracy;

·         substitute for other, more expensive means of communicating and transacting, such as physical travel;

·         increase choice in the marketplace and provide access to otherwise unavailable goods and services;

·         widen the geographic scope of potential markets, and

·         channel knowledge and information of all kinds (Kramer, Jenkins & Katz 2007)

These attributes underlie the important part ICTs have played in firm-level and macro-level growth. At the macro-level, various studies have shown significant, positive impact on the macro economy. In Nigeria for instance, a large number of micro-enterprises operate in the informal economy of the country, there are limited researches on the utility level of ICTs by informal traders, particularly to market needs and opportunities. Hence, the decision to examine how ICT has been adopted and diffused in the informal economy among the local users in Enugu State.

1.2  Statement of the Problem

            The introduction of Information and communication technology (ICT) and its adoption by both the developed and developing countries brought about the increased exchange of goods and services. Information and communication technology has become valuable in commodity transactions in the world (Onwuemele, 2011). Consequently, nations that have acquired the necessary ICT infrastructure have been moving rapidly into the post-industrial information–based economy (Allemanand Rappoport, 2005).

            The use and/or utilization of ICT have gone beyond driving the global economy. Focus has shifted to driving the local economy. ICTs have been seen as the major catalyst for information and knowledge that can create development opportunities and choices for rural communities especially, in the informal trade. Under certain conditions, these can help to improve the living conditions of the rural poor through better and more sustainable livelihoods strategies (United Nations - UN, 2004). The application of ICT in different areas of human endeavor especially, in the informal trade and/or sectors has brought about many benefits not only to the world at large, nations (whether developed or developing), communities (whether in urban or rural), but also to individuals themselves (Onwuemele, 2011).

            In local communities in Enugu State, Nigeria, most of the informal traders indulge in agricultural products like; herbal medicine, garri production and sales, vegetable sales, ground nut and cashew trading, water melon and orange trading, among others. Most of the customers of these informal traders send money through the banks to them, they (informal traders) after confirming the credit to their bank account: will waybill such commodities (herbal medicine, garri production and sales, vegetable sales, ground nut and cashew trading, water melon and orange trading, among others) to them. This kind of informal transaction has been possible through banks as a result of ICT.

            Moreover, mobile phone is also seen as an integral part of ICT that has been used tremendously in local communities in Enugu State, Nigeria. It is one of the most important media of information and communication technology invoke at present. In every household, almost every adult has one although, very expensive. Those that have no mobile phones, use the phone boot to transact businesses and other communication purposes. This mobile phone aids in communication both to friends and family, and in business deals. Informal traders use mobile phones in their businesses communications. It is through mobile phone that informal traders and their customers communicate for exchange of goods and services. The customers of informal traders will call them on phone, give them a list of what they want, and credit their bank account for them to send them the demanded goods through waybill. Phones have increased access to business communications in the informal trade. In local communities in Enugu State, Nigeria, numerous informal businesses have cropped up as a result of the use of mobile phones. For example, the recharge card business came as a result of mobile phone usages. Phone accessories, repairs and maintenance of mobile phones businesses have also been indulged by many informal traders. Mobile phone has enabled increased communications and incomes in informal businesses (Kvochko, 2013).

            In these local communities in Enugu State, Nigeria, ICT infrastructure is grossly inadequate and poor. Hence, the necessary Information and Communication Technology (ICT) services, as public infrastructure, needed for meaningful investment are lacking and, where found, are very costly. This has led many people to establish ICT related informal businesses with respect to peoples demand on them. For instance, viewing centre business has been possible due to ICT. In this viewing centre, people that have not enough resources to buy and subscribe to cable networks to view football and other games, pay for the services elsewhere (people who buy, pay for the services, and then use it for business - informal traders).

            Information and communications technology utilization and its growth in the informal trade have been enormous in local communities in Enugu State, Nigeria. ICT has been seen as a major contributor to productivity growth and as a key tool for innovation in the informal trade. Users of ICT in informal trade usually have reduced cost in the business. For an informal trader who buys goods from say Lagos, for resale at Nsukka, do not need to go to Lagos again. The trader can put call across to the seller (through mobile phones) and demand for the product in question. After crediting the seller’s bank account through bank transfers or bank deposits, the product will be way billed to the buyer. This growth of ICT in informal business has also transcended to money exchanges, where many people who want to do international business would buy local currencies for resale to travelers coming into and moving out of the country and Enugu State. Through this means, working capitals are saved through effective geographical distribution of goods rather than consumers dealing directly with the producing firms. The activities of informal traders in the use of ICT result in fast turnover rate of goods and services. Informal trade which is seen as a change agent has applied ICT in transforming resources into useful goods and services, often creating circumstances that will aid growth and development of local communities (Omenma, 2009). Information and Communication Technology (ICT) has been the largest contributor to growth within capital services (Harchaoui, Tarkhani, and Armstrong, 2002; Mafe, 2000).

            The application of ICT in informal trade has been helpful in putting food on the tables of most people in local communities in Enugu State, Nigeria. It has encouraged more incomes and improved the living conditions of participants in the business. Many people in local communities in Enugu State, Nigeria have been threatened with alarming scenario of unemployment with the resultant effects ranging from extreme poverty, hunger to insecurity. As a result of this, many people now indulge in informal trades or businesses in order to survive. One of the areas which have been found to be putting food on the tables of the local communities in the informal sector in Nigeria and Enugu State in particular is the Information and Communication Technology (ICT) industry. Attractive career opportunities emerged in ICT informal trading. Such career opportunities among others include; phone calls through phone boots, networking, programming, repairing and maintenance, phone sales, parts and accessory sales, recharge card business, viewing centers, match betting, and retailing of accessories of cable networks (Michael and Samson, 2014).Hence, the application of Information and Communication Technology in informal trade has helped in creation of wealth, poverty reduction, job creation, and thus has increased incomes and the living standard of the local communities in Enugu State. However, informal traders are not yet taping the full benefits of ICT in enhancing their skills, incomes and/or living standards (Okeke, 2014).

            Hence, there is no doubt that informal trade and Information and Communication Technology is connecting producers, traders, investors and consumers in unprecedented ways in Enugu State local communities. But today, despite being one of the most rapidly growing technology markets in the world, there is still gender disparity in the use of these ICTs. While some researchers agree that most ICT informal businesses are being handled and managed by males more than their female counterparts, others argue that the females are more involved in ICT related informal businesses when compared with their male counterparts (Vickers and Peña-Méndez, 2015;Adesanya, 2014;Okeke, 2014;Chris, 2012; Uchegbu, 2002). However, this problem is subject of verification by this study.

            Therefore, informal businesses in local communities of Enugu State, Nigeria, need to continuously find better and faster ways to adapt to the competitive marketplace in order to compete in today’s high technology and fast paced environment. As a result of the pressures of competition and the need to maintain a high level of efficiency and productivity, informal traders have been forced to catch up to the technological progress by applying ICTs in their businesses. Hence, the application of banks, computers, and mobile phones in informal trade activities have been enormous and varied in the ways informal traders transact their businesses in exchange of goods and services, and business communications. Hence, it is against this background that this study tries to examine empirically, the impact of information and communication technology on local economy in Nigeria, using informal trade in selected communities in Enugu State as a case study. This is relevant since past studies on ICT and informal trade exist on global level, regional level, country specific, zonal, and component state level but, little or few of these studies has been conducted on local communities where the majority of the residents that dwell in the area constitute the poor, and indulge majorly in informal businesses.Therefore, this study set out to examine the level of utilization of ICT by traders in the informal sector; ascertain the  impact of ICT on the incomes and the living standard of informal traders in the local communities and ascertain if  gender access to ICTs have significant impact on informal businesses.




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