“I think if we do [sign up] we will probably find the ability to develop our own digital industrial policy severely constrained
Radical change is coming, says Rob Davies, and it will take the form of the Fourth Industrial Revolution.
Speaking at the ANC’s Progressive Business Forum breakfast briefing on Sunday morning, the long-standing minister of trade and industry said radical change, or rather disruptive change, in South Africa will come in the form of the “profound technological changes taking place.”
Industrial firms typically sit at the head of the value chain, but “what we will see in the near future, and already starting to happen, it will be data management and digital firms … manufacturing will be at a subordinate place in those value chains,” the minister said at the briefing, which took place on the sidelines of the ANC’s 54th national conference.
E-commerce, for example, only constitutes 1% of retail in South Africa at the moment (as opposed to 30% in China), yet already: “warehouses are emerging, traditional stores are under pressure and some of them have already closed. A trendline is emerging and it’s something we are going to have to get used to,” Davies said.
Technological advancements may prove a useful tool for small enterprises to lower barriers to entry, through reducing the amount of fixed capital they require as they use and build on digital technologies, Davies said.
But while technology will lower barriers for some people, it could raise them for workers, and it’s already beginning to be seen in South Africa. Workers will increasingly have to master digital processes, which will require a higher skills level, said Davies.
Clothing manufacturer Adidas, for example, shifted its manufacturing from Asia to Germany. “3D printing, robotics, artificial intelligence, is lowering the cost of production and lowering cheap labour advantage,” said Davies.
Automation also won’t just be in the manufacturing sector but will also hugely impact the services sectors, entire value chains and sectors within value chains, he said. “We are going to have to adapt ourselves to this reality.”
Important now is that technology does not perpetuate problematic patterns in the economy.
“My estimation of this, is if this is rolled out in a way that is inclusive and supportive of inclusivity, it could yield significant benefits to humanity,” the minister said. But if rolled out in a context of widening inequalities and winner-takes-all markets, it has potential to exacerbate this.
Davies said there was “enormous and strong pressure mounting” for South Africa to sign up to the Digital 2 Dozen.
This is part of the Trans-Pacific Partnership (TPP) and includes obligations designed to promote the digital economy through a free and open Internet and commerce without borders.
“I think if we do [sign up] we will probably find the ability to develop our own digital industrial policy severely constrained,” said Davies. Government still needed to still decide on whether this is what it wanted, he said.