# **1. Introduction**

This paper presents findings on the adoption and use of digital technologies (DTs) by microenterprises across Sub-Saharan African (SSA) countries. The paper explores associations between enterprise and entrepreneur (owner) characteristics, use of basic 2G-2.5G feature phones versus computers and internet-enabled 3G-4G smartphones and more specialized DTs enabled by internet, and business outcomes linked to productivity, sales, export status and the generation of more and better jobs. It explicitly focuses on informality and the extent to which top-performing firms include both informal and formal firms. The findings are based on a sample of over 3,300 firms across seven SSA countries, namely Ghana, Kenya, Mozambique, Nigeria, Senegal, South Africa, and Tanzania. Over 70 percent of enterprises are informal, with over half of the sample being selfemployed household enterprises with no full-time paid employees.

The paper provides new evidence, both with respect to associations between adoption of various DTs and firm performance and with respect to correlates of adoption. With respect to adoption, the paper explores the correlates of adoption of smartphones and computers while controlling for firm level characteristics such as the degree of informality, being in an urban versus rural location, access to finance, the level of education of the owner, and whether the owner has any vocational training.

As indicators of output-related performance outcomes, the paper uses labor productivity, sales, and whether the firm has customers abroad (a proxy for exports). The paper also measures the performance of enterprises against the objective of creating more and better jobs: as a measure of more jobs, the number of full-time employees plus owners generated by each firm, and as earningsrelated measures of better jobs, wages per full time workers and profits per owner. The latter variable is likely to be especially important to assess whether entrepreneurial firms generate sufficient profits to support the well-being of their owners.

The paper explores the associations between these performance variables and the use of access technologies as well as additional more specialized DTs enabled by access to internet. The distinction between adoption of an access technology such as smartphones and the use of specialized DTs is important: a smartphone can be used by firm managers and workers in ways that have no productive bearing on firm performance, such as watching videos, shopping online or engaging in communications with friends. Only when access technologies are used for purposes relevant for business performance is a positive association with performance to be expected. Fortunately, the data provide a rich set of information on various types of DTs as well as different uses of internet, unavailable elsewhere, especially for the type of largely informal micro firms covered in the survey. The paper explores the use of DTs that are especially useful for the firms’ external transactions with upstream and downstream product providers and consumers, financial intermediaries, and labor markets: for example, whether the firm uses internet to look for suppliers and better understand and market to customers, to access the financial system, or to recruit workers, in addition to more basic uses of non-internet-enabled mobile phones for communication and mobile money. The paper also explores uses of DTs to enhance internal-to-firm transactions, including to improve the internal management of the firm, namely by using accounting and inventory control/point of sales (POS) software. It thereby explores some dimensions of management practices that are related to those that have been shown to improve firm performance (e.g., Bloom et. al. 2014, 2012).

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