although the impact of ICT on productivity growth could be greatest when firms are far away from the technological frontier, lack of adequate complementary factors such as skilled workers and late ICT adoption could constrain the extent to which ICT impacts firm productivity. While there is a plethora of anecdotal evidence regarding the ICT sector in Africa, there is very little evidence on the impact of ICT in other productive sectors of the economy more broadly; which is where most of the potential gains for poverty reduction and shared prosperity are concentrated.

To explore these questions empirically, we use firm-level data for six African countries - DRC, Ghana, Kenya, Uganda, Tanzania and Zambia, from the enterprise survey 2013 and the companion 2014 innovation module. The survey has an ICT module that measures computer, software and internet use; and it is comparable across the six African countries.

Overall, the findings of the paper suggest that larger, younger, more internationalized –foreign owned, importers, certified and with foreign technology license firms that are financially unconstrained and operate under higher degrees of competition are more likely on average to adopt ICT practices. The results also suggest a positive and significant impact of ICT on innovation; measured along the dimensions of the firm’s products, processes and organizational practices. Consequently, we find that ICT acts as an important enabler of innovation. The impact of these innovations on productivity are, however, only significant when more “radical” definitions of innovation are adopted. The results for the country by country regressions are more heterogeneous and show a more complex picture, but the positive impact of ICT on innovation is robust across countries and types of ICT.

The paper is structured as follows. The next section summarizes the existing evidence on the impact of ICT on productivity, mainly in OECD countries. Section 3 briefly defines ICT and section 4 describes the methodology used. Section 5 provides a description of ICT use in these six African countries. Section 6 assesses whether ICT firms are more productive, as well as measuring the impact of ICT on productivity. The last section concludes.

# **2. The Impact of ICT use on productivity: A brief literature review**

The literature analyzing the impact of ICT on productivity is summarized in Table A.1 in the Appendix. In this section we provide a short summary of the main results of this literature.

The adoption of ICT has been increasing steadily and rapidly over the years. Although ICT includes a diverse range of applications, internet adoption is an illustrative example of how ICT has been spreading rapidly across firms. Loundes (2002) showed that the percentage of businesses using internet in Australia more than doubled in three years. In 1998, 29% of Australian businesses used internet, while it increased to 69% in 2001. Recent data show that internet penetration is reaching nearly all enterprises in the developed world; 97.9% of businesses with ten or more employees in OECD countries have internet connection (OECD 2012). Even developing countries have a high percentage of firms using ICT. For instance, the percentage of Turkish and Mexican firms using internet is over 90%, according to OECD (2012). However, adoption of ICT is not evenly distributed across all types of firms. Walczuck et al. (2000) have pointed out that small firms in the Netherlands are not adopting internet at the same speed as their larger counterparts.

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