ICTs in Developing Countries

Research, Practices and Policy Implications

Bidit Dey, Karim Sorour, Raffaele Filieri, Bidit Dey, Karim Sorour, Raffaele Filieri

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9781137469496
• eBook ISBN: 9781137469502
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

ICTs in Developing Countries is a collection of conceptual and empirical works on the adoption and impacts of ICT use in developing societies. Bringing together a wide range of disciplines and contributors, it offers a rich examination of digital divide and ICT for development both in terms of contextual information and disciplinary perspectives.

Section II

Dynamics and Kinetics of the Adoption, Use and Appropriation of ICTs in Developing Societies

3

Impacts of Information and Communication Technology Implementation on Regulated Financial Services: The Case of Swaziland

Hillol Bala, Akshay Bhagwatwar, and Moshtaq Ahmed

Introduction1

The impact of information and communication technologies (ICTs) at the individual level as well as at the organizational and societal levels is evident from the large stream of research in various domains (Bala and Venkatesh, 2013; Dewan and Kraemer, 2000; Gillwald and Stork, 2007; Mithas et al., 2012). In recent years, ICTs have become an integral part of public sector organizations as well, impacting decision-making in government policies, financial systems, and governance regulations (Cordella and Bonina, 2012). While prior research in this regard has focused primarily on contexts relevant to western countries, many African nations have recently experienced rapid adoption of ICTs geared toward improving the social connectivity of people as well as in computerization of traditional public sector organizations (Cordella and Iannacci, 2010). Although the use of ICTs in African public sector organizations is still low as compared to their counterparts in western countries, ICTs are rapidly gaining recognition among African governments and policy makers as a tool for expediting economic growth and development (Gillwald and Stork, 2007). Leaders and government officials in African nations have started recognizing the importance of ICTs and experimenting with ICT implementation strategies to maximize the benefits for different stakeholders (Gillwald and Stork, 2007). Recent initiatives for ICT, such as those of the European Commission for Africa, New Partnership for Africa’s Development, and International Monetary Fund, are indicators of rising interests in ICT-related developments in Africa (Gillwald and Stork, 2007; International Monetary Fund, 2011). Given the rising importance of ICTs in African nations, a study of the peculiarities of the social and cultural structure of these nations and the impact on both the pre- and post-implementation phases will have interesting implications for future ICT projects in developing countries.

Recently, there has been a focus on ICTs that could help improve public sector financial management in African countries. Centralized financial management systems (CFMSs) represent a genre of specialized information systems (IS) that track financial events and financial information for a group of financial organizations that agree to share this information (Rodin-Brown, 2008; Williams and Williams, 2009). Such systems provide an integrated way of managing financial operations to support important financial decision-making.

In public administration, the use of CFMS implies computerization of public financial management processes, from credit management, loan management, and budgeting to accounting (Williams and Williams, 2009). Consequently, CFMSs provide an advantage to public sector banks, insurance, and other financial institutions by providing an integrated view of financial data. Many African countries are currently in the process of reforming their public sector financial systems by using approaches, such as CFMS (Heidenhof et al., 2002). Prior literature has noted that the existing practices related to public sector financial management in Africa are weak and incapable of efficiently monitoring public expenditures, credit facilities, use of public funds, and investments (Heidenhof et al., 2002).

In recent years, African countries have experienced financial growth and increased adoption of ICTs in the government as well as private sectors (International Monetary Fund, 2011). A critical point to note is the similarity in the economic, political, and cultural environments that most of these African countries share. While there is no doubt that the adoption of new and advanced ICTs is going to play a vital role in the economic progress of African countries, there is a wide array of factors related to the cultural and social structure of these nations that pose challenges to ICT adoption. The adoption process of new ICTs, the challenges posed, and the post-implementation impact in these nations differ from the traditional processes and impacts that have been previously studied in IS literature. In this chapter, we present a case study of CFMS implementation in the Kingdom of Swaziland. We focus on the post-implementation impact of CFMS and reactions to changes in social habits and institutional routines that were influenced by the system.

The rest of the chapter is organized as follows. We first present an overview of the socio-economic climate of the Kingdom of Swaziland. We then present the case study of the implementation of a CFMS in Swaziland, known as the Central Deduction Administration System (CDAS). We then discuss the effects of CDAS on the economic and social environment of Swaziland as well as the individual- and organizational-level reactions to such effects. Finally, we provide an analysis of the case study from various perspectives and discuss the implications for research and practice.

Background

Overview of Swaziland and the socio-economic climate

Swaziland is a small landlocked country in Southern Africa, surrounded by Mozambique on the east and by South Africa on the other three sides. It has a population of approximately 1.1 million people (2014), making it the largest monarchy in the African continent (Moor, 2011). The currency of Swaziland is the Swazi Lilangini (SZL). Farming is the dominant occupation in the nation, which faces a multitude of challenges due to frequent droughts, conventional irrigation facilities, and sub-par agricultural financing (Samuel, 2008). With more than 90 percent of its imports accounted for by South Africa, Swaziland depends heavily on South Africa for food supplies, machinery, and motor vehicles (Central Intelligence Agency, 2012). Swaziland has been facing many financial difficulties for more than a decade. The real gross domestic product (GDP) growth has remained close to 3 percent over the last decade and has gone down to 0 percent in 2013 (International Monetary Fund, 2012). In addition, approximately 40 percent of the people are unemployed while close to 70 percent of the people live below the poverty line, making less than $1 per day (Central Intelligence Agency, 2013). A gloomy economic climate, high unemployment, and the pursuit of a high standard of living have forced the people of Swaziland to depend heavily on borrowed money for their expenses and needs (International Monetary Fund, 2008).

In addition, the Swazi society faces many health-related challenges. HIV/AIDS has spread widely in the country. The HIV prevalence rate in Swaziland was 26.5 percent in 2012 with close to 5,500 deaths every year (Central Intelligence Agency, 2013). For the 15–49 age groups, it is estimated that 42 percent of the population is HIV infected (African Economic Outlook, 2011). The impact of HIV/AIDS is seen in the health expenses and life expectancy of people. With approximately 18,000 new cases of HIV expected every year, the life expectancy of Swazi people has dropped drastically to 33.2 years, the lowest in the world (Rosenberg, 2010). The high prevalence of HIV/AIDS had led to a sharp increase in medical expenditures (Corporate Research Consultancy, 2011). Swazi people are aware about health insurance policies and their benefits, but the prevailing notion among a majority of the people is that insurance policies are only for large organizations and rich people, thus leading to a large percentage of the population opting out of any health insurance (Corporate Research Consultancy, 2011). A primary reason for such negative notions is the experience of Swazi people related to cancelation of their insurance policies due to non-payment of premiums during the last decade. Consequently, a majority of the Swazi population that lives below the poverty line or belongs to low-income groups has opted out of any medical or health insurance policies. As a result, Swazi people are left with no option but to rely on micro-lenders and usurious rates for any urgent money needs (Corporate Research Consultancy, 2011). These moneylenders charge high interest rates and often ask for collateral before they lend.

The Swaziland financial system

Swaziland has four major commercial banks – Swazi Bank, Standard Bank, First National Bank, and Nedbank. The Central Bank of Swaziland regulates these banks. Over the last two decades, all the commercial banks have witnessed a steep decline in private sector lending, money supply, and bank deposits (Coppock et al., 2010). The relatively small size of the financial industry and rising costs of banking services have led to the rise of many credit cooperatives, microfinance institutions, and non-banking financial institutions (NBFIs). These institutions are an easy source of money for people who do not qualify for bank loans or who do not want to pay for the high cost of banking services (International Monetary Fund, 2008). In 2008, more than 266 cooperatives and NBFIs were operating in Swaziland. By 2008, the total assets of all the cooperatives and NBFIs in Swaziland had exceeded the assets of the commercial bank by a significant 23 percent (International Monetary Fund, 2008).

Methodology

We conducted a case study to understand the implementation process and impacts of CDAS in Swaziland. Data – both qualitative and quantitative – were collected during the course of the CDAS implementation from its inception to post-implementation during 2009–2012. In addition, data related to the non-compliant deductions by various financial services organizations were gathered from government records.

Data collection procedure

During the course of CDAS planning, development, and implementation, we collected d...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright
• Dedication
• Contents
• List of Tables and Figures
• Preface
• Acknowledgements
• Notes on Contributors
• Section I: Conceptualising Digital Divide and ICT for Development
• Section II: Dynamics and Kinetics of the Adoption, Use and Appropriation of ICTs in Developing Societies
• Section III: Policy and Practitioner Implications
• Index