A report from the South Africa in the Digital Age (SADA) initiative has stated that 500,000 new jobs can be created over 10 years through globally-traded services.
SADA is an urgent multi-stakeholder initiative to develop a forward-looking digital economy strategy for South Africa.
It is convened by Genesis Analytics in partnership with the Gordon Institute of Business Science and the Pathways for Prosperity Commission at Oxford university.
Genesis has since been appointed by the government to develop a master plan for the digital economy.
“This is an opportunity to feed the findings of the SADA process into government strategy planning,” it said.
The advisory board features industry heavyweights such as Altron CEO Mteto Nyati, who serves as chair of the SADA advisory board.
Brian Armstrong of the Wits Business School and former chief commercial officer of Telkom also contributed his expertise, along with several other people.
The three key findings of SADA’s strategy primer were:
- South Africa can create 500,000 new jobs over 10 years through globally-traded services
- South Africa can create work for low-skilled labour through digital platforms
- South Africa can become a frontier technology hub for the region
Creating 500,000 new jobs in globally-traded services
The first opportunity relates to the trend of ICT opening services that have been proximity-based, but can now be provided anywhere in the world.
South Africa has a small but growing global business services sector generating 50,000 export-facing jobs. These can grow to 500,000 over 10 years, SADA found.
It will require South Africa to expand its market share of business-process outsourcing services in target markets, offer niche shared services, bring back work that has been outsourced, tap into the global demand for ICT and digital services, and innovate personalised and social services.
Create work for low-skilled labour through digital platforms
The second opportunity relates to digital platforms.
These are destroying many inhibitors that prevent markets from growing, such as information asymmetries, transaction costs, and a lack of trust. These platforms can absorb labour in the informal and domestic economy.
Digital platforms that aggregate and match demand and supply for low-skilled labour, or sell goods online with delivery services, create work for low-skilled South Africans.
This is already happening in domestic services, transport and logistics, and tourism.
Becoming a frontier technology hub for the region
The third opportunity is using AI, robotics, and the Internet of things to develop new digital business models.
Their application can reshape how products and services are created and consumed.
Hard work ahead
To realise these opportunities will require investment, coordination, and hard work.
The SADA report highlighted four imperatives to get right:
- Digital inclusion — ensuring that every South African can access the digital economy
- Ensuring that the education ecosystem can generate talent
- Government support
- Innovative business
According to the SADA initiative, some of this work has already begun.
“We have been working on adopting the globally traded services component of the strategy as the industry’s own,” it stated.
“This strategy has been accepted by the industry association, Business Process Enabling South Africa, the Department of Trade and Industry, and a group of CEOs from the industry. We are also working with the Presidency to address digital exclusion in South Africa’s townships and rural areas.”
Elizabeth Stuart, executive director of the Pathways for Prosperity Commission at the Blavatnik School of Government at the University of Oxford, said the process could transform South Africa.
“I’ve never seen a development process have an impact so quickly,” said Stuart.
“I find it astonishing that just a few months after starting the SADA process, not only has it dramatically increased targets for job creation in the [Business Process Outsourcing] sector – one in five of which will be for excluded youth – but South African trade associations have a completely new way of working to fully embrace the opportunity of digital.”