In today’s fast-paced digital world, the internet has become an indispensable tool for businesses of all sizes. From connecting customers and suppliers to managing operations and expanding market reach, the internet plays a crucial role in driving growth and innovation.
In Uganda, digital platforms like Jumia have redefined Small and Medium Enterprises (SMEs) operations, enabling broader market reach and online product offerings. SafeBoda leverages the internet to create jobs, benefiting over 18,000 registered boda-boda drivers as well as SMEs through reliable deliveries.
EzyAgric reports that its platform connects smallholder farmers to high quality extension services and easy access to markets and says it will benefit at least 200,000 farmers. Ensibuuko, another digital platform, says it serves approximately 200+ SACCOs to enhance financial inclusion services.
Additionally, social media platforms like Facebook and X (formerly Twitter) empower young entrepreneurs to showcase products, engage with audiences, and enhance brand presence. The utilization of these social media platforms by Ugandan youth has also empowered them to promote their business offerings, tapping into the digital gig economy. This engagement has generated employment opportunities, enabling many to earn a livelihood and partly solving the youth unemployment problem.
The country has made significant strides in improving internet connectivity and has prioritized Information and Communication Technology (ICT) development in the NDP III dedicating over 92 billion shillings in the budget for the FY 2023/24 to ICT development.
The government has also increased free internet hotspots to more than 80 locations in the country to ease access to the internet. Internet has the potential to ease access to local and global markets where SMEs can showcase their products and services to a broader audience, thereby expanding their customer base. The internet also serves as a treasure trove of information and resources for SMEs to learn, adapt, and innovate. However, despite this immense potential and the fact that ICT has been identified has a key enabler of socio – economic development with a potential to create employment opportunities and ease efficiency, challenges such as high costs of internet and limited infrastructure persist.
According to a report published by Kamer (2022), one gigabyte of mobile internet in Uganda costs on average, 1.32 U.S. dollars in 2022. The ICT minister’s recent announcement regarding a reduction in internet prices from $70 to $35 per Mbps per month is anticipated to primarily benefit Ministries, Departments, and Agencies (MDAs) in the short term, while its effect on the public might be limited. Private Internet Service Providers are likely to gradually adopt this change at a later stage, potentially not leading to an immediate decrease in internet costs for the public. Yet for SMEs in Uganda, the cost of internet access poses significant challenges that can hinder their ability to thrive in the modern economy.
Unlike larger corporations with greater financial resources, SMEs often operate on tight budgets, making every expenditure crucial. The cost of internet services, including data plans and broadband connections, can place a strain on their financial resources. The cost of internet directly impacts the operational efficiency of SMEs. In an era where digital communication is essential, slow, and unreliable internet connections can hamper day-to-day operations. From sending emails and managing online transactions to utilizing cloud-based services, SMEs rely heavily on a stable and affordable internet connection to remain competitive. High costs can lead to decreased efficiency, delays in communication, and missed business opportunities. This retards their use of internet limiting their ability to reap or harness the potential or opportunities available by using internet.
Addressing the Challenge
Bridging the digital divide for SMEs in Uganda requires a multifaceted approach. The government, regulatory bodies, and internet service providers have a role to play in ensuring affordable and accessible internet services. Here are some potential solutions:
- Innovation hubs and co-working spaces, with reliable and affordable internet, fuel collaboration, creativity, and knowledge sharing among SMEs. These environments foster diverse interactions, workshops, and resource-sharing, enabling cost-effective operations, flexible growth, and market access. By providing a dynamic ecosystem, they empower SMEs to innovate, learn, and connect, enhancing their competitiveness and contributing to a thriving business community.
- Digital Literacy Programs play a crucial role in empowering SMEs to harness the potential of the internet. By providing training and education on effectively utilizing online resources and platforms, these initiatives enable SMEs to overcome the challenges posed by high internet costs. Through enhanced digital skills, SMEs can optimize their online presence, access markets, and leverage affordable tools, thus maximizing their business opportunities and growth potential.
- Partnerships between internet service providers, SMEs, and industry associations hold the potential to drive innovation in pricing models and packages specifically designed to cater to the requirements of SMEs. Through collaboration, these stakeholders can create customized solutions that address the financial constraints of SMEs, ensuring affordable and reliable internet access that enhances their operational efficiency, market reach, and overall competitiveness.
By recognizing the importance of affordable internet services and implementing targeted solutions, stakeholders can help SMEs unlock their full potential and contribute to the country’s economic growth and prosperity. As Uganda continues its journey towards digital transformation, bridging the digital divide for SMEs is not just a necessity—it’s a strategic imperative.