GLOBALISATION brings new challenges, problems and solutions in an economy. The world at large is rapidly changing from an industrial economy to a networked economy.
The industrial economy was built on having capital, machine and labour, but according to The International Council For Small Business, in a networked economy the focus falls on the combination of computer networks and creative human skills.
The main objective of the networked economy is not the utilisation of computers as tools, but the relationship of connections between them.
In a globalised networked economy, the sufficient utilisation of networks can be a competitive advantage.
Globally, the marketplace is restructuring itself for the new fast, intense unknown.
The rise of social media has democratised access and connection tremendously for those who are part of the game.
Unfortunately the pace of change globally is such that those who are in the peripherals may not be able to catch up if they do not adapt to new ways of doing business in a rapidly evolving world.
In the past, businesses struggled to position a strategy of solving existing problems, but in the networked economy the focus is really on finding new opportunities.
Social capital is the intellectual capital of the networked economy and includes the use of information and the application of specialised skills.
Globally the networked economy relies on interdependent relationships between the economy, the government and society at large.
More crucial is that, society has to be empowered by knowledge and information to drive communities and businesses.
Lesotho’s response in this networked world economy is important if it wants to deal adequately with the macroeconomic challenges of growth and employment. Small and Medium Enterprises (SMMEs) and the influence of networks on them are important in Lesotho’s economy.
The local economy is largely characterised by high unemployment and lack of adequate infrastructure, which are obstacles to high economic growth.
SMMes are crucial for the stimulation of real economic growth as has been the case across the world for years.
This is so because these enterprises are the ones that have the capacity to absorb the majority of the labour force in the private sector.
In recent years the technological development in the telecommunications field has led to the convergence of voice technologies and data storage.
Wireless communications and mobile access to the internet is the motive for mobile e-commerce, which has meant users can function without offices and conventional set-ups.
Connectivity rates are still relatively high in Lesotho and most of Africa even though studies have shown that costs of doing business have decreased tremendously for telecom companies.
The case seems to be that telecommunication companies are not necessarily passing the benefits of decreased costs to consumers.
In recent times in neighbouring South Africa, the government has had to intervene over alleged collusion amongst the telecom giants MTN, Vodacom and Cell C.
Telecom industries are inherently concentrated markets with just two or three players in most countries.
This is so in Lesotho as well with Econet Telecom Lesotho and Vodacom Lesotho controlling the market locally.
We do not necessarily need more players in the market but what we need is better regulation so as to ensure that the full benefits are passed on to the consumer by these corporations.
According to a study done by Swedish economist Richard Swedberg, there are three types of capital needed in the networked economy to be competitive.
Firstly there is the traditional capital such as reserves in the bank, profitable investments and lines of credit.
The second type of capital is human — experience, skills, charm, health and education.
According to his analysis these two sources played a role in the industrial economy as well, but the third type of capital, namely social capital, forms the basis of the networked economy.
Social capital fundamentally refers to relationships with friends, colleagues, clients, consultants and other players in the economy.
In the new knowledge economy it seems the old adage of ‘it’s not what you know but rather who you know’ becomes more relevant than ever.
Furthermore the knowledge economy entails the application of knowledge in such a way that competitiveness can be achieved by buying, selling, making payments and managing B2B (Business-to-Business) activities and B2C (Business-to-Consumer) transactions faster and more cost effectively.
The information age has meant that a teenager growing up in suburban New York and rural Maseru could potentially grow up with similar exposures and tastes.
This means there is great potential for a developing country such as ours to leverage itself economically by investing in telecommunications as a key growth sector.
In Lesotho, the smaller businesses started by the younger and newly educated generation are beginning to realise this fact, and are beginning to take advantage of this Web-based technology and digital economy of the future with knowledge as a competitive advantage and primary asset.
The government and regulators have to step in and aid these new age entrepreneurs by creating an easy and enabling environment as this is a key sector for economic growth going forward.
Matela Lechesa is a freelance writer based in Maseru.
