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Using technology to increase competitiveness of small and medium-sized companies

MONTEVIDEO, Uruguay Technology is key for the survival of any company around the world today. Computers and the Internet have increased access to information and allowed companies to reach new customers. Sophisticated new tools help process business activities more efficiently, boosting productivity.

But for most micro, small and medium-sized companies (SMEs) in developing regions, access to technology has been limited.  This has been undermining their performance and preventing new businesses from being created.

The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank group, has approved more than $85 million over the past decade for projects that seek to change this reality in the region.  Uruguay, home for this year’s Inter-American Microenterprise Forum (XIII Foromic 2010), offers examples of the Bank’s work in this field.

Over the past decade, the MIF backed $14 million in technology-related projects in Uruguay that have helped the country develop new tech companies, given small firms access to technology to make them more competitive, and provided technology solutions to foster the development of small and medium-sized companies.

 “The MIF has a relevant role in helping the country capitalize on its talent to generate new businesses in the area of information technology, create more jobs and improve the competitiveness of the private sector by facilitating access to technology, ” said Ana Castillo, a MIF specialist in Uruguay.

Fostering entrepreneurship

According to the Uruguayan Information Technology Chamber, about 300 companies in Uruguay export software to 52 countries around the world, representing 40 percent of IT exports from Latin America and the Caribbean. Uruguay is the region’s biggest exporter of information technology products on a per capita basis.

To help Uruguay leverage this talent, the MIF has funded three projects in the country that are helping entrepreneurs start up their technology business as well as allowing existing ones to expand and export their products.

By teaming up with partners such as the Uruguayan Software Association and Uruguay’s Technology Laboratory, the MIF has supported the country’s first incubator program for technology startups, and provided seed capital as well as training and technical assistance for small information technology companies.  These programs have helped companies improve their management, increase the quality of their products, develop business and new market strategies, and manage software production.

Forty-six companies have benefitted from the MIF’s first incubator program in Uruguay, known as Ingenio. Over 9,000 individuals have participated in training and other activities from Red Emprender, a MIF-backed project to create new businesses. This program, which also helps incubate new companies, has supported the creation of 70 new ICT firms in partnership with the Ingenio incubator and other institutions.

Kizanaro, a software company that provides analytical tools for the soccer industry, and MTW Studios, a Montevideo-based animation company, are among firms that have used the training and technical assistance by Ingenio and Programa Emprender to grow their businesses in recent years. Kizanaro’s software is being used by several soccer clubs in Uruguay as well as teams in Chile, Peru and Colombia. MTW has created Uruguay’s first cartoon series “El Pequeño Héroe,” which was broadcast by Canal 4, one of Uruguay’s biggest television stations.

Improving Access to Technology

The MIF is also improving SME access to technology. In Uruguay, projects range from retailing to agriculture.  

For example, MIF is helping traditional small and neighborhood food stores use technology, modern business management and marketing tools to fend off increased competition from large retailers.  Since the project began in 2007, more than 150 companies started using information technology tools in day-to-day management.

For Marcelo Rivero, the owner of Montevideo-based Supermercados Maresca, the tools and training has been a boon. Since taking part in the program, he has increased the store footage 2.5 times and the number of employees to 48 from 19.

“The introduction of technology has been fundamental,” said Rivero, who inherited the shop from his father and has never had a formal business management training. “We didn’t have anything. We had to revise price tags ourselves. We didn’t have bar codes.”

In the health sector, MIF is financing a project to better integrate small and medium-sized healthcare service providers through a system of electronic medical records that will improve management skills and services provided to their patients.

In education, MIF is creating a market of technology-based service providers that will develop digital educational content and provide technical support for communities participating in the one lap top per child initiative (Plan Ceibal). This project seeks to capitalize on Uruguay’s ambitious plan to provide low-cost computer model with free Internet access in all of public schools.

And lastly, in the agricultural front, the MIF has supported a long-distance training program for farmers and their workers to use information technology tools. By training workers, for example, the program supports efforts to improve the competitiveness of the beef industry in Uruguay, the first in the world to have the totality of its commercial livestock tracked electronically.

Using technology to foster the development of small companies

The MIF is also committed to financial inclusion. The use of technology can allow financial institutions, particularly those specialized in microfinance, to reach low-income populations and provide entrepreneurs with resources to start or expand their business.

In Uruguay, MIF is financing a program to create an Internet-based platform that will improve SMEs access to non-bank financial services such as bill payment and microcredit.

The project is being done in partnership with Fundación Social Trade Organization (STRO), and will allow STRO to upgrade its existing electronic transaction system, known as C3U.The system allows micro, small and medium-sized companies to access credit and pay bills over the Internet.

With MIF support, STRO plans to create a single Internet portal to offer financial services. Users will be able to access the new platform from mobile telephones, allowing STRO to expand services to rural areas where Internet access is limited or not available, for example. The project will also allow STRO to better integrate its systems and automate certain transactions, a move that will speed up the approval of credit and reduce transaction costs.

About 900 SMEs are expected to participate in the pilot stage, which will also count with the participation of several banks, governments and private entities.

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