In the Technological Age: The Internet and the Performance of Micro-Enterprises in Togo

Micro-enterprises (MEs) are important players in job creation and global economic development. However, in developing countries, most fail to realise their growth potential due to challenges that include informality and a lack of quality human capital. The internet, by increasing information flows and reducing transaction costs, can help MEs to develop. This study assesses the effect of the internet on MEs' performance in the service sector in Togo, using a large sample of 23,542 observations from the latest General Census of Businesses (RGE, 2017–2018), and exposes related channels and mechanisms. We find that MEs that adopt and use the internet are more productive than those that do not. This result remains robust to different regression methods such as instrumental variables and treatment-effects estimations. Complementary analyses show the positive effect of internet channels through applications such as e-mail, websites and e-business. We also find evidence that MEs with a Fixed internet connection perform better than those with a Mobile internet connection. Our investigations also yield interesting results regarding Togolese regions, service sub-sectors, managers' characteristics and MEs' status. This article thus highlights the need to promote digital development to enhance MEs' performance in Togo.