An anchor government growth project designed to reduce the country’s crippling communication costs and boost jobs will be delayed — probably by a year — because a government department did not submit the project’s budget in time.
The project, part of the government’s ambitious Accelerated Shared Growth Initiative for South Africa (Asgisa), envisages parastatal Sentech rolling out a wireless broadband network countrywide to challenge Telkom’s fixed-line monopoly and bring telecommunications prices down.
Lower prices are seen as being key to attracting investors in the business processing outsourcing (BPO) industry, which includes call centres. The government sees this industry as a key job creator, particularly in rural areas.
Sentech’s broadband roll-out was announced earlier this month by Deputy President Phumzile Mlambo-Ngcuka, who has been tasked with coming up with a plan to drive higher levels of economic growth.
Mlambo-Ngcuka said immediate implementation would begin in the first half of 2006, with the first of five rural BPO centres set for Limpopo province.
Sentech was expecting the funding to be included in Minister of Finance Trevor Manuel’s Budget tabled last week, but there was no reference to this and other expected funding.
During a parliamentary media briefing in early February, the economic cluster of ministries said the broadband network is expected to be completed in 2006/07 and was aimed at reducing telecommuni-cations prices to internationally competitive levels.
Sentech spokesperson Michelle Potgieter said the telecoms company had been hoping for clear guidelines for the broadband funding in the Budget. It had not received any confirmation of funding from the Department of Communications.
“We are in discussions with the Department of Communications,” said Treasury spokesperson Thoraya Pandy. “They submit plans to us and these are approved by Cabinet. We can only budget for plans that are submitted by the respective departments.”
It is unclear what caused the disconnect between the deputy president, who said the project was ready to roll, and the Department of Communications, but announcing a high-profile project that does not have Budget approval suggests poor communication or a lack of admini-strative capacity, or both.
Department of Communications Director General Lyndall Shope-Mafole told the Mail & Guardian that the department was hoping to secure funding from Treasury for the project by the end of the year and it would not be completed in the 2006/07 financial year as stated.
“There is no budget yet, but it is possible to get money from the Treasury later in the year,” said Shope-Mafole.
Mlambo-Ngcuka said during her parliamentary briefing on Asgisa that BPO, particularly the development of call centres, was part of the government’s strategy for creating jobs in the rural areas.
She announced that through BPO South Africa had already attracted 5 000 jobs from the rest of the world and there was potential to create a further 100 000 direct and indirect jobs by 2009.
“A tailor-made incentive environment for BPO is being finalised,” said Mlambo-Ngcuka, adding that the government was aiming to remove all obstacles to the industry.
Communications department spokesperson Albi Modise said the Sentech leadership was still negotiating the financial arrangements and that a number of financing options were being looked at.
Sentech’s head of communication, Pranill Ramchander, said it had a commitment from the communications department but was still waiting for official documentation regarding the allocation of funding.
“In terms of exact amounts, we are not sure. That is what the CEO has told me,” said Ramchander, adding that Sentech did not want to discuss its network plans until funding was secured.
Pandy said there was a possibility that funds for the project could be allocated in the medium-term budget in October.
The Budget did allocate R205-million to Sentech over the next three years, but the communications department has confirmed that this funding is allocated for Sentech’s digitisation programme, to switch the country’s broadcasting network from analog to digital.
The Presidency declined to answer questions submitted to it by the M&G, choosing to forward them to the communications department.