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Effect of Financial Constraint on Export Performance of Manufacturing Firms in SSA: Does ICT Adoption Matter?

1.

Department of Economics, Olabisi Onabanjo, Ago, Iwoye, Nigeria

Journal of Business Administration and Social Studies 2024; 8: 81-91
DOI: 10.5152/JBASS.2024.23031
Read: 492 Downloads: 225 Published: 06 March 2024

This research investigates the intricate relationship between financial constraints, Information and Communication Technology (ICT) adoption, and export performance among manufacturing firms in sub-Saharan Africa (SSA). The study based its empirical investigation on the standard probit model and employed data from the Enterprise Surveys, World Bank. The findings emphasize the significant impact of financial constraints on export performance, revealing that firms categorized as “Total Constraint” face a substantial 42.1 percentage point reduction in export probability. Importantly, the presence of “No Constraint” does not significantly alter export performance, highlighting the distinct impact of different levels of financial constraint. Moreover, the study reveals the transformative power of ICT adoption on export performance, with “Mobile Phone (ICTMOB)” and “Internet (ICTINT)” usage showing statistically significant positive coefficients, underscoring the critical role of connectivity and information exchange in global markets. The research further explores the interactive effects of financial constraints and ICT usage, demonstrating that firms facing financial constraints benefit significantly from adopting ICT, with substantial percentage point increases in export intensity. These findings contribute to our understanding of how ICT adoption bridges financial constraints and export performance in SSA’s manufacturing sector, offering valuable insights for policymakers and stakeholders seeking to foster economic growth and development in the region. To harness the potential revealed in this study, policymakers in SSA should prioritize investments in ICT infrastructure development and accessibility, particularly in regions with lower penetration rates. Additionally, targeted financial support programs tailored to the specific needs of manufacturing firms facing financial constraints should be designed and implemented to alleviate initial barriers to export market entry. By combining ICT development with targeted financial support, SSA countries can empower their manufacturing sectors, promote economic growth, and reduce the disparity in export performance observed in comparison to other global regions, fostering greater economic resilience and development.

Cite this article as: Babasanya, A. O., Osisanwo, B. G., & Oduola, M. O. (2023). Effect of financial constraint on export performance of manufacturing firms in SSA: Does ICT adoption matter? Journal of Business Administration and Social Studies, 8(1), 81-91

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