Assessment of the Digital Inclusion of Small and Medium Enterprises in the Middle East and North Africa

Small and medium-sized enterprises make up about 80-90% of private sector enterprises in the MENA region and employ more than 50% of the formal workforce in some countries. New digital startups make up only a small portion of this. Despite the limited share of SMEs in domestic production in the MENA region compared to other regions, digital transformation is a key opportunity for these enterprises to benefit from the growing digital economy and provide a remedy to severe youth unemployment and sluggish economic growth. As the source of most employment, this sector should be targeted for greater integration of information and communication technologies (ICTs), but enterprises often lack the resources, both financial support and expertise, to increase their use of technology.

In this policy brief, the authors examine the state of Internet coverage and use in the Arab region, noting the stark divides between gender and urban and rural users. They then present an original analysis of multilevel data from a sample of SMEs from Morocco, Jordan, and Egypt collected by the Economic Research Forum to examine the level of ICT integration they currently experience. The brief finds that while there is a basic awareness of ICT use among SMEs in the region, especially those with more than 50 employees, there is still limited integration of these technologies in reaching new customers or facilitating sales, which limits their overall impact on business operations and expansion.

Recommendations

1. Developing digital skills in the education system, especially among women
2. Target training and information to small and medium-sized businesses
3. Funding for SMEs to modernize ICT capabilities
4. Increase the number of Internet users and efficient ICT infrastructure