ICT Capabilities and the Cost of Starting Businesses in Sub-Saharan African Economies: A Data Analytic Exploration

ABSTRACT Small and Medium Enterprises (SMEs) are considered to be one of the reliable drivers of economic well-being of any economy. However, in the context of the poorest countries in the world- those of Sub-Saharan Economies, formal SMEs contribute less than 20% to the macroeconomic bottom line (the number is around 60% for high-income countries). Part of the reason is the presence of a large informal sector of SMEs, where the Cost of Business Start-Up Procedures (CBSP) serves as one of the barriers to legitimization of SMEs. In this investigation, we use the framework of Networked Readiness Index (NRI) to investigate whether (1) ICT Capabilities impact CBSP, and (2) the value of CBSP is associated with the socio-economic impact of ICT Capabilities. We use a five-step methodology utilizing Cluster Analysis, Decision Trees Induction, Data Envelopment Analysis, Association Rules Mining, and Ordinary Least Squares regression to conduct the inquiry in the context of 26 SSA economies. The results of the data analysis indicate that (1) certain ICT Capabilities are associated with the low levels of CBSP, and (2) low levels of CBSP are associated with the presence of socio-economic impact.