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SA disconnect leaves the country lagging behind its peer nations

In December 2013, the Cabinet approved the SA Connect policy, a broadband roll-out plan to deliver fast, affordable internet across the country by 2020. The first phase would bring broadband to schools, health facilities, government offices, Thusong one-stop service centres and post offices in eight rural district municipalities.

The policy was considered so important that it was included as part of the nine-point plan announced by President Jacob Zuma in his 2015 State of the Nation address. A year later, in his 2016 address, he promised the government would “fast track the implementation of the first phase of broadband roll-out to connect more than 5 000 government facilities in eight district municipalities over a three-year period”.

In 2015, the treasury announced it would put aside R1.1-billion for SA Connect over the next three years, up from R740-million and, in the 2016 budget, a further R500-million was allocated.

Clearly, broadband is viewed as a priority for delivering services, although there was criticism last year that even R1.6-billion is not enough, given the size of the task.

Despite the financial allocation and priority attached to this programme, it has been plagued by problems and the roll-out of broadband has essentially been stalled.

Late last year the State Information Technology Agency decided to cancel the tender for this service, citing a lack of qualified bidders.

It is not clear now how the government will proceed but it is critical that we start to see some progress on expanding overall access to broadband services, particularly in underserved areas in the townships and rural areas.

It is well known that broadband has powerful economic effects. It promotes productivity and innovation, and can also play an important role in delivering social services and alleviating social inequality.

India, like South Africa, suffers from enormous inequality and has instituted a “digital India” programme to bridge the divide between the haves and have-nots and to create a digital society. The foundations of this programme are social media, mobility, analytics and the cloud to empower citizens digitally and provide governance and services on demand. It aims to extend the reach of government services to citizens even in remote areas, just as the SA Connect policy aims to do.

Digital India’s flagship fibre network has faced several delays and is expected to be complete only in 2018 or 2019. But other elements of the programme are progressing well, with e-government transactions increasing by 200% over two years, from 840-million to 2.6-billion in 2015. In South Africa, the first phase of the SA Connect roll-out has still not been implemented.

In Australia, digital technologies are expected to contribute $139-billion in 2020, from $79-billion in 2014. This represents a growth rate of more than 75% and an increase in gross domestic product (GDP) from 5% to 7%. Most of this growth — 97% — is expected to take place outside the traditional information, media and telecommunications industry, demonstrating the pervasive influence of broadband on the overall economy and in a variety of industry sectors.

Broadband connectivity is a fundamental component of business process outsourcing (BPO). South Africa’s BPO industry is a significant employer — it has created 215 000 jobs and contributes R50-million annually to GDP. The local BPO industry grew 18% year-on-year between 2010 and 2012, from an estimated base revenue of $825-million in 2010 to $1.1-billion in 2012. In 2014, South Africa accounted for 1% of the global business process and information technology outsourcing market ($151-billion in 2010) and has the potential to increase its market share by an additional 3% by 2030.

But South Africa’s high cost of communications, including broadband, impedes further growth of this industry, especially with the country competing against other economies such as Brazil, Ghana and Kenya.

According to Gartner, an American research and advisory firm that provides information technology insight, the cost of telecom services in South Africa is less competitive than in the Philippines and India.

South Africa’s BPO industry has been able to establish itself as a credible player internationally and has seen good growth over the years. But there is room for more growth, and the establishment of BPO businesses in the townships could help to address youth unemployment. But as can be seen from the examples of Australia and India, we need to be much more ambitious about broadband planning.

Sharoda Rapeti is the director of Business-Process-as-a-Service at Deloitte

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