JOHANNESBURG – The World Economic Forum (WEF) on Africa’s focus this year on growth and the Fourth Industrial Revolution (4IR) is the most important initiative for Africa in 50 years, perhaps longer, as the continent faces a stark choice worth billions of dollars.
The buzz on Africa’s potential has faded in the past few years but a wholesale prioritisation of 4IR, also known as the digital revolution, would mean South Africa could make a giant economic leap forward.
The digital revolution is the most fundamental transformation we are likely to experience in our lifetime. We need to quickly embrace it or be left behind. This is particularly important to South Africa’s lacklustre economy.
The South African government had repeatedly signalled its intention to embrace of all things 4IR, but the key enablers of the digital economy are business and government, which need to work together to make it a reality for the country.
This means investing in digital infrastructure that enables independent devices (such as smartphones, computers and vehicle navigation systems) to communicate with each other and to exchange and analyse key data that provides humans with actionable insights.
This connectivity is enabled by digital infrastructure, such as 5G data networks and wi-fi platforms, which serve as a connectivity foundation for digital applications that enable online trade, inventory management and logistics management.
Also important is access to cloud data storage platforms, with adequate cyber-security, which completes the digital revolution eco-system.
The government needs local cloud data storage infrastructure more urgently than the private sector as they have security concerns over storing digital data outside South Africa. The private sector is comfortable with globally located digital storage cloud infrastructure that complies with protection of personal information and general data protection regulations as offered by the likes of Microsoft, Amazon and Google.
Shifting purchasing and supplying goods and services across the region to online platforms would enable access and participation in these activities from anywhere in the continent meaning increased market reach for suppliers and broader choice and better pricing for buyers.
We estimate that if African companies shifted more processes to digital, it could add 2percent to overall African regional economic growth, which amounts to an increase of billions of dollars. For example, by next year, the value of Africa’s mobile money industry is projected to top $14billion (R215bn).
It would also dramatically increase service delivery and add jobs, such is the scale of skills demanded by the task of shifting to a digital-first world.
While the benefits are clear, the reality is that funding for digital infrastructure presents a major challenge.
But we think the use of Public Private Partnerships, digital infrastructure investment-friendly legislation and tax incentives would help progress South Africa’s digital transformation. Structured through the income tax system, relief from corporate-level taxes on income from capital such as special corporate tax deductions, allowances and credits for investment in digital infrastructure could be introduced.
The government needs to introduce more digital education methods and technology subjects at schools to support what it likely to be a multidecade shift in demand for new skills.
Expanding technical college offerings to include coding and other technology subjects is a necessity.
Given that these skills require strong mathematical foundations, government needs to review their decision on introducing maths literacy in schools.
WEF Africa, which began nearly 30 years ago, will be held on September 4 to 6 in Cape Town and will draw many business and government representatives and leading thinkers in the fields of technology, inclusiveness and economics.
Sandile Hlophe is an EY partner and Africa region government and public sector leader.