How Digital Technologies Help Senegal Create Better and More Jobs
Mark Dutz, Marcio Cruz and Carlos Rodríguez Castelán
Binta sells vegetables at a Dakar market to support her family. By using a low-cost tablet as a simple point-of-sales application, she learns to think more strategically and improves her management skills. She reduces the inventory stocks of what doesn’t sell and orders more of what sells well. She identifies her best customers and prints receipts to keep their loyalty. Fast food and laundry shops owners use the app to keep track of who already owes them money to collect on their next visit. Sellers such as Binta no longer need to keep this valuable information in their head or write it down on a piece of paper. As a result, their confidence grows and their business expands. Above all, digital technology enables continued learning, improves skills, increases earnings, and the hiring of more workers.
“Digital Senegal for Inclusive Growth: Technological Transformation for Better and More Jobs” presents new data on enterprises and households adopting and using digital technologies. Senegal is the first country to implement the Firm Adoption of Technology survey developed by the World Bank. Enterprises were asked about the range of technologies they use for specific tasks such as planning stock levels relative to sales or preparing farming land, and which technology they used most frequently for each business task. The data shows strong links between the use of technologies and higher sales, and better and more jobs.
Adopting technology yields significant benefits. Where mobile Internet is available to households, consumption levels increase by 14 %, and extreme poverty decreases by 10 % – and more jobs with higher earnings are created. Enterprises using better technologies have higher productivity, generate more jobs, and have more unskilled workers on their payroll. Using more sophisticated technologies, such as a software application, rather than writing accounting or inventory control by hand, generates a 14-% increase in the number of workers on average. For informal microenterprises, using a smartphone per se does not create more jobs. What makes a difference is the specific use of digital technologies such as inventory control and point-of-sales software for oversight and planning, and having access to electricity and a loan.
Small, medium, and large enterprises in Senegal seeking to upgrade their technologies face three key obstacles: 1) financial constraints, making them unable to pay for digital technologies; 2) lack of skills and technical capabilities; 3) lack of demand, because of lack of information, and technology not adapted to user needs and skill levels.
What stops Senegalese firms from adopting more sophisticated technologies
To support enterprises in creating better and more jobs, governments can play an important role in three areas.
Technology and skills upgrading policies: Access to information and technical assistance can support enterprises in adopting technologies and developing capabilities. Informal microenterprises willing to use these technologies should have access to government support programs. By filling out the Firm Adoption of Technology survey, enterprises can benchmark themselves against others of their size in their business area and assess the technologies and skills most useful for them. By using technologies appropriate for their skill level, workers can learn as they work, improve their skills, and increase their earnings.
Business environment policies: The competitiveness of specific value chains should be strengthened by improving coordination and promoting market access. Policies should focus also on improving conditions for entrepreneurs who create tools accessible to all, including to lower-income workers, such as apps using local languages and voice-activated apps for illiterate workers. Rather than requiring workers to upgrade their skills for difficult-to-use technologies, apps should be designed to meet current skill levels and allow workers to build them up.
New financing mechanisms: By tracking users’ spending history, digital technologies can facilitate the delivery of financing in smaller amounts, without burdensome collateral requirements. Larger amounts can be provided progressively based on a track record of on-time payments. Micro, small and medium enterprises that previously would have been denied credit can be financed with partial credit guarantees and new forms of equity investments. These types of financing are critical to generate more sales, and better and more jobs.
What is the promising good news? These findings have helped Senegal design its national program to accelerate the competitiveness of small and medium enterprises and job creation. The World Bank is supporting this program through its “Senegal Jobs, Economic Transformation & Recovery Project.”
Efficient public policies require an ongoing process of learning from experimentation. Share your thoughts on how to improve support for digital technologies to create better and more jobs!