/ 5 December 2015

SA flunked golden IT opportunities

Sa Flunked Golden It Opportunities

President Thabo Mbeki’s commitment to the information economy was clear from his State of the Nation speech in the National Assembly on February 9 2001. “Because of the critical importance of this sector,” he said, there would be new measures “to ensure that we do not fall further behind the rest of the world as a result of the digital divide.”

Key among his new measures was a presidential task force on information society and development, a blue-ribbon panel that read like a who’s who of world leaders in the field.

It included Larry Ellison, the Silicon Valley founder of Oracle; Carly Fiorini, the chief executive of Hewlett-Packard; Mark Shuttleworth, the South African founder of the multibillion-rand Thawte Consulting; and an academic guru in the field, Professor Manuel Castells of the University of California.

South Africa was punching above its weight. Mbeki’s words brought budding geeks alive to the unrivalled possibilities of this new world. It should have been a golden era.

Telkom, the national phone operator, was the sole supplier of internet access. In his speech, Mbeki boasted that 412 000 new phone lines had been installed in the financial year 1999 to 2000. This was a considerable figure, amounting to an increase of about 8% in a single year.

But it was a mirage. These figures were “churn” – new lines opened as a previous round of new lines died. And 2000 turned out to be the last year Mbeki could boast of Telkom growth.

The new lines Mbeki trumpeted brought the total for the country to 5 493 000 lines, an increase of two million since 1994. But the programme had not been properly thought through. It collapsed within a year of that speech.

The new lines were unaffordable. New subscribers cancelled. Telkom laid more lines. The following year, Telkom lost 31 000 lines. Over the next 14 years, the net loss was a staggering 2 054 000 lines. By 2015, Telkom had fewer lines than in 1993. During that time, the dotcom boom created millions of jobs around the globe, and changed the way the world worked, played and did business. But South Africa’s internet remained slower and more expensive than its peers.

For the poor, fixed lines should have been the cheap option, but they weren’t cheap. The two cellphone operators, MTN and Vodacom, set up before the ANC came to power, filled the gap with spectacular success. They weren’t cheap, either, by international standards, but they facilitated short prepaid calls, travelled with you, and soon offered text messaging. In time, they would replace Telkom for internet and email communication.

Ivy Matsepe-Casaburri, Mbeki’s new minister of telecommunications, presided over the loss of one million Telkom lines and South Africa’s further decline in internet rankings. But Mbeki kept her on until she died.

To the despair of the sector, the Jacob Zuma era saw another million lines lost in seven years. No single year showed an improvement. Why? Zuma appointed five successive ministers in five years, causing perpetual instability that only accelerated the abysmal decline.

South Africa’s incubating software companies could not survive the high prices, inefficiency and slow internet service. South African owners and employees emigrated to countries with internet fast, efficient and cheap enough to support their dreams. I know several. They return now and then with their new-found wealth to run the Comrades Marathon or watch the World Cup, leaving behind their British-staffed offices for South African vacations at favourable exchange rates.

Politicians are not going to blame themselves for the failure, especially if there is a ready-made ideological narrative such as “market failure”. But as David Lewis, a left-wing trade unionist who became an effective regulator heading the Competition Commission and later the director of Corruption Watch, put it, the market in telecommunications did not fail. We never tried it.

Still, a nagging question remains: Did Mbeki and the people around him know? Did they monitor, evaluate and react to outcomes?

In 2015, Professor Alan Hirsch, the chief economist in the Mbeki presidency, said he regularly briefed Mbeki on the numbers – so the decline was known. He confessed the reason for the steady decline in South Africa’s information-economy ratings was a mystery to him.

The experts, including Allison Gillwald, point to extensive political interference that compromised the integrity of the process and chased away most big, reputable investors.

Though he did not deny extensive political interference, Hirsch professed himself unaware that this was any different from other countries.

He agreed that both directors general, Andile Ngcaba and his successor Lyndall Shope-Mafole, have bypassed their ministers to maintain a special relationship with the president.

Asked whether this was not the president’s fault, he replied that it was not clear what the president could have done. Though agreeing Matsepe-Casaburri was not a success as minister, he disputed that the president had much control over Cabinet appointments, pointing to the many loci of power, including Cosatu.

And the blue-ribbon international advisory panel? “People stopped coming,” he said. “They got frustrated, probably.”

John Mattison has been a journalist, in South Africa and elsewhere, for three decades. This is an edited excerpt from his book God, Spies and Lies: Finding South Africa’s Future through its Past, published by Missing Ink and Ideas for Africa