AS THE world moves towards an increasingly digital future, expanded connectivity infrastructure has become a defining feature of a modern economy.
It allows people and businesses across the globe to connect with and access a world of digital innovation. Whether it’s for social media and entertainment or improved business performance through digital processes, connected technologies have become part of nearly every aspect of our daily lives.
Connectivity is vital for the growth and future success of every global economy, the economic benefits of which have been widely researched in many countries.
Only recently, however, has a thorough study been conducted on the economic impact of connectivity delivered by submarine fibre optic cables in South Africa.
The study, by RTI International, found the overall economic impact of connectivity to be significant, leading to increases in GDP and improvements to the likelihood of being employed.
Why are subsea cables so important to our economy, and what can we do to get more South Africans connected?
Transitioning to a digital-first economy
Over the past few decades, South Africa has transformed from a resource-based economy relying on rich mineral reserves to an economy driven largely by tertiary sectors such as financial and business services, transport and manufacturing. Unlike more labour-intensive and low-skilled sectors, the sectors all rely heavily on ICT infrastructure that requires connectivity.
RTI International’s study demonstrates this, finding that sub-sea cable connectivity led to a 6.1 percent increase in GDP per capita between 2009 and 2014. This can be attributed to factors such as technological innovation, access to international markets, and improved education for people living in connected areas.
Connectivity also has a role to play in addressing unemployment, which remains one of South Africa’s most pressing socio-economic challenges. In the aftermath of the pandemic, unemployment rose to a record high of 34.9 percent by the third quarter of last year.
The RTI International study found that people were 2.2 percent more likely to be employed if they lived within 500m of a fibre network. The study also highlighted that connecting South Africa’s most densely populated areas would translate to the greatest increases in total employment.
Connecting Africa to the world
Sub-sea fibre optic cables are the backbone of the internet. But before Africa had a sub-sea cable system, the continent relied on sporadic satellite connections that made internet access largely inaccessible and expensive.
At the same time, South Africa’s telecommunications market suffered because it did not have a competitive structure, which changed in 2008 when a court ruling allowed other industry players to build infrastructure and provide internet services.
A year later, Africa saw its first commercial undersea cable. The SEACOM cable spans 17 000km and connects the eastern and southern coasts of Africa to the rest of the world, through faster and more affordable fibre connectivity.
The RTI International study credits the sub-sea cable for disrupting the market, resulting in a substantial decrease in wholesale prices for direct fibre and an increased uptake of broadband connectivity.
Since then, South Africa’s fibre-to-the-home connectivity has expanded significantly, connecting more than 600 000 homes in a market that was growing more than 30% a year in 2019. Now, 90% of South Africa’s population lives within 10km of a fibre line, because of our extensive domestic network in most major cities and towns.
Digital technologies are evolving rapidly, which is why we need a modern approach to policy and regulation to keep up with other digitally-driven economies. Our policy and regulatory environment in the telecommunications sector has been sluggish and unco-ordinated, for example the failed attempt to deliver universal broadband access through SA Connect.
But there are many reasons to be optimistic. Our government has recognised the importance of the Fourth Industrial Revolution for the future of our economy, and at a BRICS meeting on November 11 last year, our minister of communications announced a fast-track programme that aims to connect all South Africans to the internet within 24 months. Government agencies will be funding the development of affordable internet access for low-income neighbourhoods.
There’s no doubt that South Africa needs more partnerships between the government, NGOs and the private sector to help narrow the digital divide.
By allowing more people and businesses to participate in the digital economy with affordable connectivity, we can create more jobs, accelerate economic recovery, and pave the way forward to a more connected future.
Steve Briggs, Chief Sales & Marketing Officer at SEACOM
*The views expressed here are not necessarily those of IOL or or title sites.