Nº 6 2015 > ITU Telecom World 2015
Boosting “SMEs” for ICT growth
What can governments do better?
Small- and medium-sized enterprises (SMEs) have a critical role to play in driving growth within any economy, especially in the information and communication technology (ICT) sector.
Governments worldwide are becoming aware of this, and are beginning to realize that they need to help spur domestic ICT innovation to power their economies in a digitalized world.
But how can governments work with SMEs to better foster their growth? What is their role? What type of interventions work best? And how can ITU — as the United Nations specialized agency for ICTs — assist the process?
These questions formed a major topic of discussion at ITU Telecom World 2015. The questions cropped up repeatedly in hallway discussions and inspired a vigorous exchange of ideas in exhibition booths and forum sessions.
While there are no easy answers, the importance of identifying how to implement best practices locally cannot be overstated. “The ICT industry cannot be successful if we don’t cooperate with SMEs,” said ITU Secretary-General Houlin Zhao, addressing a round-table dialogue between key government, international organization, and SME players.
Mr Zhao used his address during the opening ceremony to stress the importance of ITU’s emerging role in enhancing the growth of SMEs. “There is no real established platform to bring all ICT stakeholders together to foster SMEs to increase ICT growth,” said Mr Zhao. “That is why we want to do it. This event will be a significant milestone to boost momentum of SMEs.”
ITU’s role and the launch of “Emerge”
Several event participants from a wide range of public and private sector roles used the various forum sessions at ITU Telecom World 2015 to directly ask that ITU play a key role in enabling — and accelerating — meaningful dialogue between governments, large ICT companies, and SMEs.
“Our survival relies on entrepreneurship,” said Sami Al Khursani, Managing Director of the Saudi Aramco Entrepreneurship Centre. “How can we foster it? How can we create tactics to ease the process? We need to have a national agenda, perhaps regional, that governs the behaviour of all parties.”
“ITU is perhaps the only organization in the world that could be a catalyst [for dialogue between SMEs, big companies, and governments],” said Paul Michael Scanlan, President of Huawei’s Business and Networking Consulting Department.
“ITU is entering uncharted territory and engaging unusual suspects,” said Tayo Akinyemi, Director of the Pan-Africa Technology Network AfriLabs as she addressed ITU Telecom World 2015 during the closing ceremony. “I’m looking for some urgency about what’s next for ITU in regard to young innovators. Do not be afraid to inject the DNA of these unusual suspects into ITU.”
Fitting then that ITU launched the new “Emerge Partnership” on Tuesday, 13 October, Day 2 of the event.
Emerge aims to bring together a core group of stakeholders to provide thought leadership and best-practice advice on how to boost the growth of ICT startups and SMEs. Emerge Partners will be actively engaged in supporting innovation and entrepreneurial ecosystems, and include representatives from the United Nations and other international organizations, the ICT industry, incubator/accelerator managers as well as development/innovation practitioners.
With Emerge, large multinationals, start-ups and SMEs will work together to outline key priorities and requirements for policy-makers to provide a vital enabling environment for innovation and private enterprise.
So, what can governments do?
As a precursor to the collaboration to come with the new Emerge platform, participants across ITU Telecom World 2015 discussed the role governments can play in successfully boosting domestic SMEs. A common theme running through the discourse was that governments need to become more nimble and flexible in their approach if they wish to successfully foster domestic SME growth.
“SMEs know you need to move fast or die,” said Michael Weber, co-founder of the Geneva-based startup incubator Seedstars, adding that governments should adopt that same attitude if they wish to remain competitive vis-à-vis peer nations trying to spur growth in such a rapidly changing industry. “Governments need to move much faster. SMEs need to have certainty that government regulation will move faster. We hope governments take risks.”
Promote a culture of risk taking
“Taking risks” was a key theme with several panellists in various forum sessions highlighting the need for a culture of risk-taking to emerge if SMEs are to take off.
“It’s a culture shift that we have to aim for in order to get our citizens to invest in trying ICT start-ups,” said Jaqueline Pateguana, Adviser to the Ministry of Transport and Communications in Mozambique. “The key is to change the culture.”
Rwanda is an example of a developing country where that culture shift is well underway, says Alline Kabbatende, Chief Operating Officer of the RwandaOnline platform, which helps government and businesses move their processes online. “In Kigali, we are working to create this ’cool factor’ around start-ups,” says Ms Kabbatende. “There is a new cool factor about saying: ’I’m trying this’ and ’I failed.’”
Fear of failure was identified repeatedly as a difficult obstacle to the necessary culture shift. “You need to identify role models… at the local level,” said David Maasz, Chief Executive Officer of the Entrepreneurship Foundation, when asked in a panel session what government can do to foster a culture of innovation among young would-be ICT entrepreneurs. “They will automatically inspire the others. If they [young ICT entrepreneurs] get the right role models, they’ll immediately think about failure differently.”
Create mechanisms for collaboration
Several forum participants cited lack of government-SME collaboration as a key problem. In many countries, for instance there is no mechanism for collaboration between the government and SMEs.
“Government does have a responsibility to ensure that innovation happens at the institutional level,” says Ron Sege, President and CEO of Echelon Corporation and long-time Silicon Valley entrepreneur. “It’s not what the government can do to help, it’s what the government can enable, especially: 1) Promote risk taking, and 2) Foster collaboration,” within the entire ICT ecosystem.
What type of government-SME collaboration works best? Participants and panellists shared many lessons learned, both while networking in the hallways and exhibition booths or during the forum discussions.
Isidro Laso Ballesteros, Head of the European Commission’s Start-up Europe Programme, shared some advice during a panel discussion that rang true for many listeners in attendance. Governments must talk with the start-ups from the beginning, said Mr Ballesteros. “Don’t do top-down with civil servants and big private sector players only,” he said, referencing lessons learned from sub-optimal efforts in Latin America. “Mingle with start-ups where they are, don’t ask them to come to you. Keep it local.” Governments can also be enormously helpful by collect data, but should avoid grants, because this goes against risk-taking and entrepreneurship and creates dependencies that ultimately stifle innovation, he added.
Crowdfunding could have some promising applications in smaller countries that don’t have well-developed small lending financial processes, like they do in the United States, said Stian Westlake, Executive Director of Policy and Research at the London-based innovation charity Nesta.
Long-term focus and commitment
Finally, governments should be prepared for a focused and sustained commitment to really foster the growth of SMEs needed to fuel a digital economy.
Mr Westlake pointed out that success stories, such as Estonia, Israel and Finland “always kept innovation in mind and had a national focus on innovation.”
Dina Nath Dhungyel, Bhutan’s Minister of Information and Communications, highlighted the importance of government commitment to overcome some of the challenges and problems his government faced in launching Bhutan’s IT Park. “Our patience and persistence from the government side has been critical,” he said. “The political will of the government is a must.”