South Africa has had a brutal start to the new decade, with companies across key industries announcing plans to lay off staff, further adding to the country’s economic and unemployment woes.
However, not all hope is lost, as a group made up of key figures from business, academia and government believes the country has the potential to “become a frontier technology hub for the region”.
Known as ‘South Africa in the Digital Age’ (SADA), the multi-stakeholder team was set up to develop a forward-looking digital economy strategy for the country. It is convened by Genesis Analytics in partnership with GIBS and the Pathways for Prosperity Commission at Oxford University.
This week, SADA unveiled the findings of its “Strategy Primer for South Africa's Digital Economy”, which charts three main opportunities for creating digital work.
As a result, SADA has identified establishing SA as a frontier technology hub, exporting globally-traded services at scale and unlocking demand for low-skilled labour through digital platforms as three areas with the potential to improve the country’s employment prospects.
To become a frontier tech hub and gain the full benefit of the digital revolution, SA should welcome global players and encourage them to locate value-adding activities into the country, says the strategy report.
It is also critical for SA to build its own digital businesses and to do so at a far larger scale, it adds.
“Through such businesses, South Africa can digitally shape and contribute, not only absorb and receive. South African businesses, and their owners and tech mavens, add far more than a welcome tax base.
“Evidence shows that when digital businesses are developed here, they tend to locate their back-offices and key activities here, creating opportunities for a wide range of skills. Their presence has a powerful spillover effect, encouraging further innovation, beneficial competition and yet more start-ups.”
Mteto Nyati, Altron CEO and chairman of the SADA advisory board, explains: "South Africa has the potential to become a specialist in applying new technologies in sectors where it has a traditional advantage – such as mining, agriculture or financial services – and for these business models to be exported to the region.
“In doing so, South Africa can capture much of the value that would otherwise be exported to countries that have successfully achieved this already, such as India, and support a vibrant digital economy with the associated growth in jobs."
Mark Schoeman, manager for youth and technology at Genesis Analytics and SADA strategy primer convenor, adds: “South Africa becoming a frontier technology hub would mean a vibrant digital economy in which large numbers of firms translate global technology into new business applications, and in which firms can rapidly scale into regional and global markets from their South African base.”
Tech hub Utopia
Although becoming a frontier tech hub has been pegged as a means to make a dent in SA’s unemployment, work must be done for this to be realised.
SADA proposes a concerted effort for such a plan to come to fruition.
Firstly, there needs to be a deliberate policy of digital demand creation. This, according to SADA, can be through universal digital inclusion, digital-friendly government procurement and opening corporate digital procurement to new South African providers.
For the second point towards SA’s tech hub aspirations, SADA recommends addressing the large gap in early-stage funding for digital businesses through a variety of measures.
The group points out that addressing the high-level skills gap is the third action required. “Better schooling and expanded faculties of engineering and computer science are long-term solutions. In the meanwhile, rapid granting of work permits are critical, for both technical and entrepreneurial skills.”
Lastly, SADA indicates new forums for joint goal-setting and rapid problem-solving for industry and government, such as those in leading peers like India.
“With respect to the last point, SADA has paid close attention to the productive relationship between India’s IT sector and its government. Through a well-resourced industry body, NASSCOM, and expert counterparts in government, India has progressively focused on frontier opportunities in which it could develop and then leverage domestic skills in the international market. It is exciting to report that South Africa is developing similar forms of cooperation.
“The success in GBS exports is the result of a productive and longstanding partnership between DTI and government; other departments such as the recently combined Department of Communications and Digital Technology, and the recently renamed Department of Science and Innovation (DSI) are working effectively with business and other stakeholders, and the Public-Private Growth Initiative (PPGI) is an active forum for problem-solving.
“Whilst South Africa has some key elements in place for being a digital frontier economy, a deliberate national initiative on the digital frontier could dramatically increase activity.”
The SADA process is led by an advisory board that includes Nyati as chairman; Irene Charnley, CEO of Smile Telecoms; Phil Mjwara, director-general (DG) at the DSI; Audrey Mothupi, CEO of Systemic Logic; Mpumi Mpofu, DG of the Department of Planning, Monitoring and Evaluation; and Pathways for Prosperity Commission’s Stefan Dercon, Benno Ndulu and Maria Ramos.
Nick Binedell of GIBS and Stephan Malherbe, chairman of Genesis Analytics, were co-directors of SADA, with Schoeman as convener.
According to SADA, its initiative is to forge partnerships and put the strategy report into practice. Furthermore, the multi-stakeholder group notes it is also working with the Presidency to address digital exclusion in SA’s townships and rural areas.
To read SADA’s full strategy report, click here.
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