/ 29 March 2022

South Africa looks to capitalise as digital economy set to grow

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President Cyril Ramaphosa has underlined the importance of expanding digital access to help to grow the economy. (RODGER BOSCH/AFP via Getty Images)

Spending on public cloud services in the Middle East and Africa will grow 28% to $6.2-billion in 2022, according to Ranjit Rajan of the International Data Corporation (IDC).

Rajan, the market research company’s vice-president in the region, was speaking at the Huawei cloud summit for the Middle East and Africa on Monday. “Public cloud adoption has grown significantly over the last several years, albeit starting from a low base, in this region. And we expect that to continue,” he said.

The two-day summit, held in Dubai, was aimed at expanding the influence of Huawei’s cloud business in the region and positioning the Chinese technology giant as a strategic partner for digital transformation.

“We really are in a digital first world now. If you look at consumers, enterprises, governments, all of them are prioritising digital options over non-digital. They are prioritising the building of digital capabilities across operations, customer experience, employee experience and so on,” Rajan said.

“This has a significant impact on technology spending. And regardless of the geopolitical situation, the macroeconomic disruptions, this is a feature that is here to stay.”

According to Rajan, spending on digital will increase significantly, with 68% of the global economy forecast to be influenced by digitisation. Growth in the digital economy, the IDC expects, will be four times the growth of global GDP, increasing at a rate of 16%.

In South Africa, President Cyril Ramaphosa has recently underlined the importance of growing the country’s digital economy.

“We are determined that South Africa must not be left behind by the digital economy, just as we are determined that no community and no person should be left behind in experiencing the vast benefits of being digitally connected to the world,” the president wrote in his newsletter last week.

Ramaphosa’s weekly newsletter referenced the country’s long-awaited auction of high-demand spectrum, which is expected to lower data costs and thus expand access to digital services.

The release of new broadband spectrum has been identified by the government as a key reform for driving economic growth. 

The treasury’s blueprint for economic growth, released in 2019, stated that the delay in the spectrum allocation process “is the single biggest constraint on the growth of the telecommunications sector and is a bottleneck for broader economic growth”.

The economic reconstruction and recovery plan, launched in 2020 as the country grappled with Covid-19 and the devastation from the resultant lockdowns, notes that the spectrum allocation is “critical to unlocking investment in communications and the digital economy”. Spectrum allocation is one of the priorities of Operation Vulindlela, a treasury initiative aimed at removing barriers to investment.

On Monday, Telkom announced that although the partly state-owned telecommunications company had managed to secure spectrum, at the cost of more than R2.1-billion, it would persist with its court application to declare the auction invalid. Telkom said it was “constrained in our ability to acquire the amount of spectrum that we need to compete effectively”.

Meanwhile, South Africa is undertaking other digital reforms, including the publication of the country’s draft national data and cloud policy. This policy seeks to strengthen government’s capacity to deliver services to its citizens, ensure informed policy development based on data analytics, as well as promote South Africa’s data sovereignty.

“This policy seeks to enable South Africans to realise the socio-economic value of data through the alignment of existing policies, legislation and regulations. The policy further seeks to put in place a conducive and enabling environment for the data ecosystem to thrive.”

Speaking to the Mail & Guardian on the sidelines of the Huawei summit on Monday, Luvuyo Keyise, chief executive of the State Information Technology Agency (Sita), said the government’s slow digital migration was partly the result of policy uncertainty. Sita is one of Huawei’s clients.

“Sita has so many solutions that it has developed that government departments are not using. They are sitting on the shelf,” Keyise said.

“We are now also drastically looking at policies where we can force them to use what is there already. Because we have spent taxpayers’ money building things like e-recruitment.”

Communications and Digital Technologies Minister Khumbudzo Ntshavheni “is pushing for action”, Keyise said “not for talk”.

The journalist’s trip to Dubai was sponsored by Huawei.