President Cyril Ramaphosa has recently punted the potential of job creation in the digital economy, but his government is the biggest handbrake on the local ICT industry.
In his weekly newsletter, Ramaphosa said South Africa’s economic recovery plan is not about a return to what was, but about transformation to what is next.
“We have to both recover the ground that we have lost due to the coronavirus pandemic, and to gain new ground by placing our economy on a fundamentally different growth trajectory,” he said.
He said the country has to use this opportunity to forge a new economy in a new global reality.
“One of the concrete ways that we can do this is by harnessing the job creating potential of the digital economy, whose growth has only been accelerated by the coronavirus pandemic,” he said.
Ramaphosa highlighted that South Africa was ranked first in the world as a destination for global business process outsourcing.
This sector includes call centres, technical support, and back and front office services for major multinationals and South African firms.
Ramaphosa said South Africa has many advantages that make it an attractive destination for business services. These include:
- Sophisticated digital infrastructure, including mobile networks and high-speed broadband.
- A young, dynamic and skilled workforce that delivers a world-renowned quality of service, along with deep knowledge in technology and financial services.
- A high level of English proficiency.
- South Africa is positioned in a similar time zone to its key export markets.
The President punted the work done by the government to create an environment which supports the local ICT industry.
“Led by the Department of Trade, Industry and Competition, government has worked closely with Business Process Enabling South Africa to market our country as a destination for investment,” he said.
The government has also introduced the Global Business Services Incentive two years ago to encourage investment and support job creation in the sector.
While the government has indeed done many good things for the industry, its failures have cost, and continue to cost, the local tech sector billions.
Over the past 25 years the government has played an active role in the South African telecoms market with devastating consequences.
It provided Telkom with a legally protected monopoly for years, keeping competition at bay and trying to maximise its shareholding in the company.
The government also tried to block the Seacom and EASSy submarine cables from landing in South Africa’s to protect Telkom’s lucrative SAT-3 system.
The late communications minister Ivy Matsepe-Casaburri even fought a court case against Altech and others, opposing their right to build telecoms networks.
After the High Court ruled in favour of Altech Autopage Cellular, Matsepe-Casaburri applied for an urgent interdict to stop companies from competing against Telkom.
If it was not for the government’s active protection of Telkom’s monopoly, South Africa would have been far further along in the rollout of broadband networks.
The latest challenge is the long overdue migrating from analogue to digital terrestrial television and getting additional spectrum in the hands of operators.
The digital TV migration process should have been completed by November 2011, but ten years later it has still not been completed.
This is also holding back the spectrum auction process. Allocating more spectrum to operations is the easiest way to increase competition and ensure lower mobile data prices.
There are many other examples of government failures and missed deadlines. These include:
- Missing the deadline for the business plan development related to the State ICT Infrastructure Company Act and the State Digital Services Company Act.
- Missed deadline for the implementation of Digital Economy Masterplan.
- Missed the deadline for the revision and implementation of the ICT SMME strategy.
- Missed the deadline for establishing of a BRICS Institute for Future Networks.
It will therefore be good for Ramaphosa to take a closer look at the performance of its government to support job creation in the digital economy.
The best thing he can do to help the local ICT industry and grow jobs in the sector is to create an enabling environment – and then get out of the way.
This includes getting digital migration done, handing spectrum to operators, and removing policy uncertainty.
If the government can achieve these goals as planned, Ramaphosa may just achieve what he set out to do.
That is if Eskom can provide the country with electricity, of course.